Do You Really Need Expense Management Software? 7 Reasons to Get one Now
Managing expenses is one of the main concerns of every company. Trying to do it with manual processes, paper receipts, and notes is ineffective and expensive. The solution might lay in using software to track and monitor employee spending. In this post, we’ll explain what is and why you should deploy expense management software.
What is Expense Management Software and how does it work?
Let’s start by defining expense management as the group of procedures, policies, and processes used to control employee’s expenses and reimbursements. For instance, tracking corporate payments or travel allowances. The expense management process can help set limits and generate reimbursements for workers.
Companies may use one of these three methods to manage expenses:
This traditional albeit outdated method is surprisingly still in use by many companies. Employees bring their paper or scanned receipts to the company’s accounting department so they can approve the expense every month or quarter.
Companies that want to improve their expense management typically start by using spreadsheets. The downside of this method is that it doesn’t really provide automation, and it still requires a considerable amount of time in manual processes.
Expense management software
This method simplifies the process. An expense management software for business automates processing expenses, generates expense reports, and sends an alert to the manager if the report requires review. When the expense is approved, the system rolls it out automatically to accounting.
Managing expenses manually proves to be inefficient, time-consuming, and is at risk of human error. However, many companies are still behind in technology adoption. According to recent research, nearly half of companies don’t track how much it costs to process expense reports.
Who Needs to Use Expense Management Software?
Leaving the paper records and transitioning to expense management software can simplify the work of all sizes of companies. Since the system works with their accounting software, it automates and streamlines expense reimbursement processes.
Organizations that need to track employee’s expenses, can also leverage virtual cards to further control spending. Furthermore, a good expense management software can centralize expense records and reports, creating a single point of truth for the data.
How does expense management work for small businesses?
Even small businesses can benefit from an expense management software. Maybe you don’t have a dozen employees with corporate cards but you still have corporate expenses you need to process and report. Unfortunately, most small businesses don’t have a dedicated team for expense management. That’s where expense management software comes to help.
7 Reasons for deploying an expense management software
This is the obvious benefit of deploying expense management software. Automating your processes saves you from having to input every expense. Your software will do the work, including creating expense reports, paying reimbursements automatically.
Manual processes result in human error. When your expense reports are managed by employees they go through a series of manual stages, and the risk of error increases with the number of steps required. An automated system is much less likely to make mistakes. This is especially useful for regulated companies that need to keep sure their expense reports are accurate to the dot.
Faster reimbursements for employees
Managing expenses manually is very time-consuming. A typical expense reimbursement process would include:
- The employee makes an expense.
- Collects the bills.
- Compiles the expense report.
- Submits the report for approval.
- The manager accepts the report.
- The reimbursement is processed.
- If the manager rejects the report, it is sent back to the employee for corrections and the entire process starts again.
Whereas, with expense management software, the entire process is automated and consists of a few steps:
- The employee log expenses are automatically sent for approval.
- The manager approves the expense, and the reimbursement is processed.
Some expense management solutions are compatible with mobile, so the software enables employees to report expenses from anywhere.
Better application of expense policies
Expense management is also about controlling expenses, setting rules and limits based on your company policies. Top expense management solutions allow you to customize the rules, set limits, and alert expenses that don’t comply with the policy. This helps prevent expense fraud.
Expense management software categorizes the expenses and creates a trail report for audits. This feature helps organizations comply with regulations and tax laws without the hassle of having to do it manually.
Better visibility over metrics
The centralized dashboard of expense management software offers a clear picture of where the money is going. You can track the level of expenses of each employee, approval times, and set a budget for each category.
When you automate your processes, your employees don’t have to spend valuable time managing the expense reports. This leaves them free to focus on more business-critical processes. The software saves you from having to deal with expense reports in a spreadsheet. You can access the reports by category or by the project.
Final thoughts – Choosing an Expense Management System
Now that you know all the advantages of an expense management solution, it is time to choose the right software. Ensure your solution is customizable, allows document management, creates audit trails, and integrates smoothly with other software. Identify your company’s needs and look for a solution that aligns with your business goals. Deploying the right expense management software will be a game-changer.