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The Forestry Commission cuts through expenses management with CedarOpenAccounts

27th Feb 2006
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The cost of processing employee expenses is huge compared with the amount of money that is actually paid out. Not only do employee expenses have to be signed off by line managers before going to the finance team, they also require the original paper-based submissions to be completed by employees and accompanied by receipts. The expenses then have to be processed through the finance system.

This process is both time consuming and inefficient, but exactly what many organisations, including the Forestry Commission, had in place, treating routine expenses claims like any other invoice.

Based in Edinburgh, the Forestry Commission is the government department responsible for managing the nation's forests throughout England, Scotland and Wales. It employs more than 3,000 people across the UK, from the Board of Commissioner to rangers and foresters, and has an annual employee expenses bill of over £2 million.

Being a forward thinking organisation, The Forestry Commission has a proactive policy of examining its own processes to find areas where inefficiencies lie and implementing innovative solutions to remedy them. Understanding the inefficiency of the expenses claims process, the organisation looked around for an electronic system that would automate expenses management, from employees inputting a claim, through the approval process to a direct link to its financial management system for payment.

Having evaluated all of the available options, it chose the Employee Expenses Management Module from CedarOpenAccounts, as it offered exactly what the Forestry Commission needed in terms of ease of use and configurable workflow, allowing them to adapt the system to business changes. One other important criterion was that it also integrated quickly and easily with CedarOpenAccounts' eFinancials core financial management system, which the Forestry Commission had been using for eight years.

'Expenses are one of the most involved and costly of all financial processes, because there are inefficiencies all the way through ' from the manual completion of claims to the large number of checks that have to be made,' said Steve Atkins, head of finance systems at the Forestry Commission. 'Our aim has always been to balance the cost of processing to the amount of money we actually pay out. That's what we set out to do.'

The new CedarOpenAccounts Web-based system allows claimants to input their expenses directly, posting entries against pre-defined expense codes that are fully configurable to reflect departmental rules.

The system is flexible enough to work with the Forestry Commission's complex expenses rules. Where there are agreed rates, claimants don't have to calculate anything, as the system does it automatically. For example, it is possible to claim different mileage rates or accommodation allowances dependent on the travel arrangements or location of a business trip.

Claimants then add in further details about what the expense is and why it's being claimed, capturing valuable management information for both HR and finance staff, including the potential to further identify cost control opportunities and negotiate contracts. The information captured also provides visibility to management about where and on what employee initiated expenditure is being incurred.

The system makes the life of the finance team easier because accounting information is validated against the finance system (Cost Centre, Account and Job, if required) in real-time, ensuring accurate accounting is achieved. It also automatically calculates the VAT element of claims against pre-defined rules that can greatly assist in identifying what can be claimed back.

'Under the manual system, we only claimed back around £4,000 in VAT from a total expenses bill of £2 million,' explained Atkins. 'With the CedarOpenAccounts system in place, we expect to be much more efficient in our VAT claims, particularly for things like hotel bills. Early indications show our VAT recovery as seven times greater than the manual system and we expect this to make a significant contribution to our return on investment.'

The new expenses management system, as configured by Forestry Commission, is heavily based on self-authorisation, with checks being made by the cost centre managers who receive automated monthly reports on claims for their cost centre. They generally do a ten per cent check, which dramatically reduces the amount of time it takes to process and approve claims and, in turn, also reduces the costs involved. This is configurable so the Forestry Commission can switch self approval on or off and change the self approval limits for individual employees.

Once the expenses have been approved, they are automatically integrated into the eFinancials financial management system for payment, eliminating any rekeying requirement by finance staff. It also keeps a full record of all transactions and provides a clear audit trail.

Staff still need to produce receipts to accompany the claims and back up VAT reclaim. These are retained at local level for inspection when required. Although there is no actual paper claim, the Forestry Commission has developed a document, showing the details of each claim, which is stored in its electronic document archive and linked to the accounting system.

'We worked closely with CedarOpenAccounts on the implementation, along with being involved in developing the features we need in an expenses management tool,' said Atkins. 'We have already seen quantifiable improvements in terms of the accuracy of claims, along with reduced processing costs of around 60 per cent. In addition, we have a single electronic record of each claim, which has helped us with our analysis and reporting, revealing further savings.'

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