Expense Management, probably the term you have heard most often but wonder what it is all about, or if you are looking to use one for your business but not sure which ones to choose, then fear not, you are on the right platform.
- What Is Expense Management?
- Types of Expense Management
- Common Challenges faced in Expense Management
- Choosing an expense management system
- Benefits of using expense management software.
Expense Management, is the system a business uses to process, pay and audit their business spend. These costs normally include employee travel, accommodation, etc.while done on an official visit.
The main purpose of expense management is to track how the employee spending behavior and how business pay for the costs incurred. Expense management includes the policies and procedures that govern such spending, as well as the technologies and services utilized to process and analyze the data associated with it.
What Is An Expense Management Software?
Expense Management Software is one of the most essential business software, which tracks and manages the expense claim, authorization, audit and payment processes. The software focuses on powerful policy compliance to ensure that the businesses do not overspend. The spend analytics provided by the expense management software helps in optimizing the business spending.
Now that you’ve understood about expense management, let’s understand the types of expense management that occurs in an organization.
- Travel & Expense Management – Commonly known as TnE, it is defined as a means to organize and manage travel arrangements and costs for traveling employees. Employees create and submit a travel/expense request through a mobile app which gets validated automatically. Based on the approval, the finance team can then process the payment in just a single click.
- Petty Cash Management – It is a type of expense management which is a very small amount of cash kept on hand to cover expenses that are too small to bother writing a check. Business purchases like postage, staff birthday celebrations, paying utility bills, office supplies are impractical to pay by credit card or cheque.
Businesses are expanding rapidly with an exponential growth rate. As a consequence, there is a substantial increase in employee travel and expenses. This is becoming increasingly difficult to tackle the situation especially for those who suffer from problems with cost management.
- Vague Travel Policies – When travel expense policies are unclear to employees, it is an obvious consequence that acceptable payments will be overseen. Common travel costs such as accommodation and food should be clearly stated in every organization
- Lack of visibility – Major hurdles occur daily in the auditing and optimization process due to poor expense visibility. An insufficient display of data could lead to erroneous accounting. Due to the lack of an efficient system, important insights are often overlooked.
- Inefficient Processes – Manual processes such as entering information into a spreadsheet and then re-entering data to the accounting software often lead to the accounting errors. This can lead to a barrage of mistakes especially in a large organization.
How to choose an expense management software?
While there are a number of expenses management software out there in the market, finance teams tend to get confused about selecting an expense management solution appropriate for their business.
- Mobile App – Employees are always on the go and it is highly difficult to keep a stack of travel & expense records. There are chances of losing/misplacing receipts, unaccounted expenses creating complete dismay. Having mobile apps for instantaneous tracking can catch and prevent fraudulent expenditures before they happen. Both you and the traveler can access all reports and receipts happening in real time.
- Multi-Level Approval Process Control – Expense management software should be highly flexible & configurable allowing you to customize multiple levels of approval-flow based on the organizational hierarchy. Multiple approvals can be configured involving various stakeholders depending on the action being taken. Approvals can be at reports level or at a payment stage.
- Travel Desk Integration – Your traveling employees would feel a lot happier if they are able to book their travel itinerary, tickets and claim expenses all under one single report through an integrated mobile app. These modern travel desk applications can have a hierarchy system of approvals, comply with your organization travel policies and seamlessly integrates with your existing travel desk and automate the entire process of business travel.
- Digital Receipts – Smart OCR technology is capable of identifying the information on the receipt like expense date, amount, merchant name and category so that your employees don’t have to enter anything manually. It also saves the email and receipt attachments and you don’t even have to download and upload files.
- Accounting Software Integration – Integrating your T&E reporting platform with your company’s accounting tool consolidates your tracking and reporting tasks. This integration combines all your financial data into one place, so you no longer have to toggle between platforms. A single source of automated data results in fewer duplications, errors, and miscalculations.
By using an Expense Management software, organizations can streamline and automate their business spending, gain complete control and high visibility and reduce costs by running real-time reports.
- Easy Tracking – Receive an instant notification on every business spend that occurs in real-time.
- Superfast Reporting – Paperless reporting of expenses borne by employees can in just a tap of the button thereby saving tons of productive hours.
- Policy Compliance – Enforce strict regulation policy outlining all the expenses covered by an organization and the ones that don’t. Also, increase or decrease the limit based on the spending behavior.
- Powerful Analytics – Receive rich data from various business spending and get a concise report in a single dashboard transforming finance team into finance intelligent team.
- Custom Approval Workflow – Ensure a faster turnaround time by simplifying the approval process. Set up an approval matrix based upon your organizational hierarchies and receive instant notifications.
- Accounting & ERP Integration – Finance team can process your business expense data and sync the data with your accounting tool.
The benefits that finance teams can see after moving to FinlyFinance are the improved accounts payable, enforced employee policy governance, streamlined processes, total control on budget spend, faster claim settlements, and the reduced risks associated with routine reimbursement payments.