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How To Find the Best Expense Management System
Choose the best expense management system to track business spending and to close your monthly accounting books faster.
For businesses of all sizes, we all know how critical expense management is as an artery to the beating heart of your business operations. Especially when this process is done manually, it consumes so much of your time and business resources.
We want to take the pain out of expense management by detailing some factors you can take into consideration when setting up your expense management system and getting started in automating your expense management processes.
Expense management and why is it important?
Expense Management refers to systems and processes that the business puts in place to claim, approve and pay any business-related expenses made by employees. These expenses tend to be business travel expenses and any other costs that help to maintain and expand the business.
Continuous employee expenses are a constant for every business that’s still running. Especially for Small and Medium-Sized Businesses (SMBs) and start-ups with high growth potential and are expanding their workforce, with more employees there will be more spending.
Studies show that on average, businesses devote 10% of their budgets to T&E (travel and expense). That said, expense management can directly impact your bottom line when you can trim unnecessary business expenses or make processes more efficient.
For business owners, having spend management at your fingertips also helps you to maintain compliance with policy and legislation, and gain credibility with your investors. For your employees, you’d also want them to get reimbursed timely and accurately so that you don’t end up accumulating unsettled claims and letting this disrupt business operations.
Expense management software and what does it do?
According to Fyle, an expense management software is an application (can be a web platform or/and a mobile app like Android) that helps employees manage and report their business expenses. On the backend, it is used by finance teams to manage reimbursements, expense reports, and for travel management.
Some expense management software solution providers include zoho expense, abacus, Sage Intacct, expensify, rydoo, Netsuite, and Spenmo.
Think about the traditional expense management solution. Physical receipts, handwritten notes, emails and Excel sheets can get messy and leave room for fraud, risk of human error, and cumbersome processes in general. Automation helps to streamline every aspect of the expense management process to minimize these risks.
Some common features across expense management software solutions include:
|Feature||Functionality for team|
|Automating expense reports||
What to look for in an expense management system?
Before you scurry off to find the best expense management software, we want to bring to your attention to expense policies. They are a starting point that you need to set in stone (Of course they’re malleable and dynamic with your business needs, but you need to have it as a foundation first before bringing onboard any of the other elements related to expense management).
These policies outline what expenses are reimbursable and how the business will reimburse its employees for the business spends incurred. Google is plastered with downloadable templates for expense policies when you search for it, and here are a number of components that you can consider including in your expense policy:
- Scope: Who does it cover in the organization? Full-time employees? Freelancers and independent contractors covered?
- Type of Expenses Allowed: Also to include whether expenses are paid directly by the business via a corporate card, etc., or paid by employees first then reimbursed to them.
- Type of Expenses Not Covered: Provide clear details on what expenses are not reimbursable.
- Employee compliance and responsibility: Consequences to follow in cases of falsified or exaggerated claims.
- Contractors: If the organization is in contract with any hotels and travel agencies to get the best possible prices, employees need to book through these contractors.
- Procedure: How to file claims? Where to file claims? Who to ask if there are further questions on expense policies?
Some criteria and factors to consider as you’re shortlisting an expense management system are as follows:
- Storage capacity
- Ability for customization
- Check policy violations
- Approval process management
- Integration with external services/systems
- Vendor management and alternative payment methods offered
- Travel expense management
- Digitalizing receipt management
Advantages of automating your expense management system
We have made a case for using SaaS-based expense management software which you can find in this article.
Some of the other macro-benefits for your business when you automate your expense management system includes integration with card programs. For example, prior to software use, your business may see one founder’s credit card being circulated around the office for all types of payments. But with Spenmo:
- Everyone gets a card: Unlimited number of virtual & physical cards issued
- Card application done directly on the platform, no excess documentation
- Pain-free expensing: Freeze & unfreeze spending with just one click
Manage cards anytime, at any device
The other macro-benefit for your business is gaining insights on spending trends. For example: Prior to software use, you may only find out your monthly business spend at the end of the month when your accountant/finance team compiles the transaction. But with Spenmo:
- Expense tracking: Download reports within minutes
- Expenses are reconciled on the dashboard ready to be exported into your accounting system
- Quick & efficient business decision making with a snapshot view of transactions
Lastly, the macro-benefit for your business is in policy compliance in the form of a digital audit trail. For example: Prior to software use, you may be scrambling through different boxes and folders for invoices/receipts, contracts, payroll records and other transactional documents during tax time. But with Spenmo:
- You retrieve all related attachments to a transaction number with Ctrl+F
- Automated reminders triggered by the platform when a rule is violated
- Added security: Spending controls prevent overcharging; primary card information protected as virtual cards use a different set of numbers
Expense management is also a yin and yang balance. You want to be able to gain control and visibility into your business expenses and at the same time, you want to provide your employees the flexibility and ease as expenses are incurred to generate revenue for the business. Ultimately, the takeaway is to assess the unique needs and issues of your business before finding the best expense management system.