ROI

Automating business expense reporting is becoming more and more popular, as businesses look to increase efficiency and streamline their accounts. If your organization is still living in the dark ages of manual data entry and spreadsheets, then integrating a cloud-based expense reporting software application with your existing ERP (such as Intacct, NetSuite, Microsoft Dynamics, QuickBooks or similar) will streamline these processes and save you and your organization time and money.

Saving valuable time and money sounds wonderful in theory, but how can you show concrete evidence that an automated expense software solution will help your bottom line? Using the tools below, you can begin to build a financial case for implementing Nexonia Expenses with your company’s existing accounting program.

CALCULATING THE ROI – HOW MUCH WILL YOU SAVE?

How do you calculate return on investment for expense reporting automation? The same way you calculate ROI for any other business activity. The general formula is ROI = [(Payback – Investment)/Investment)]*100.

In this specific case, ROI = [(A – (B + C + D) / (B + C + D)] *100 where:

A = Savings on all expense reports

B = Subscription cost

C = Cost per report

D = cost of set up and training, additional one time charges

Let’s take a closer look. According to multiple studies by the Aberdeen Group, processing a single expense report costs an average of $20.65 without automating the process. With automation, this plummets to an average cost of $8.33 ($12.32 in savings (A)) for each single report.

SO WHAT WILL IT COST?

Your investments will consist of a few elements: the rate per user (B), cost per report (C), and training/setup costs and other one-time charges (D). Nexonia’s subscription rates are straightforward; they are consistent monthly charges per user with no additional cost per report. Setup and training can be a fixed one-time charge, or even cost nothing at all. Other additional costs can include a one-time fee for additional services, ERP integration fees, etc., or they can be ongoing monthly payments for your corporate credit card feeds or any other charges.

EXAMPLE: MAGIC CO.

Now, let’s say we’re evaluating the first month ROI for an automated expense reporting software implemented by Magic Co. Let’s assume the company has 100 users who file on average two reports a month, and they’ve signed up with a great expense reporting provider who doesn’t charge for setup and training. To get an idea of the upper end of the projection, we’ll say that the monthly fee is $12 per user (although usually the amount is lower). As an additional cost, we’ll say that Magic Co. is also integrating their corporate credit card for flat monthly fee of $100. So, what do we have?

[($12.32 savings per report x 100 employees x 2 reports) – (($12 x 100 users) + ($0 cost per report x 100 employees x 2 reports) + $100))/ $1300] x 100 = 89.5%

Even with a potentially higher-than-normal monthly subscription per report, Magic Co. ends up with 54% of positive ROI after the first month of implementation! You can already see that expense tracking software is a great win for your organization, and could be even valuable depending on your existing costs and potential monthly user rate.

Of course, there’s also the ROI measured by time. Automating expenses will in fact reduce the amount of time you and your staff are typically spending manually entering this data. So, if there’s no initial risk and an obvious positive return within the first couple of weeks… why are you still losing money with spreadsheets?