Conventional expense management processes leave vast room for improvement. At best, they give the accounting department the ability to track and organize business expenses and departmental budgets. At worst, they spend valuable employee time, require saving stacks of receipts and invoices, allowing for user error and delayed processing time. Aberdeen Group conducted a study that identified the cost of processing a single expense report ranges from $29.38 to $41.12 without an Expense Management system.
The right spend management platform streamlines the process of monitoring costs, simplifying coding, automating approval workflow, improving compliance with corporate expense policies, and providing greater visibility into KPIs with enhanced reporting capability. The best expense management solution reduces operating and expense processing costs.
Many expense management solutions exist in the market, but we will break down the scope of offerings and the features differentiating these tools and systems, to help you simplify selecting the best expense management solution for your organization.
This quick guide will help you identify the needs of your business and the expense management system to match your unique spend tracking requirements.
Understanding Expense Management
Expense management refers to the systems utilized by a business to process, pay, and audit employee-initiated expenses. Traditionally encompassing expenses related to travel and entertainment, it has recently expanded to include the array of costs employees incur on the job, either with a corporate card, debit card, credit card, or personal spending.
Updating Your Organization With Emerging Technology
Before you begin the process of initiating a new platform or changing your current expense management processes, ask yourself if an update is necessary. Typically, organizations choose to change and update their procedures and implement an expense management solution for one of the following reasons:
- Spend Control – Increasing visibility to reduce expense costs and losses through policy enforcement
- Improved Efficiency – Eliminate the paper trail and data re-entry
- Reporting – Simplify KPIs by generating spend reports, tracking who spends and why
- Compliance – Enforce organizational policies and guidelines through simplified user adoption
Simple Steps to Success
- Find the right system and go for it – Select the best solution, keeping in mind that most organizations experience significant increases in speed, cost saving, and compliance within weeks of implementation. Time = Money
- Change can mean growing pains – Prepare your troops for transition, but the right expense management should cut down the inconvenience of adopting a new system. Change = Necessary
- Visualize the future of your business – Anticipate potential needs in your organization by evaluating current requirements and what projected growth may require. Efficiency = Growth
Expense Management Process
A typical expense management cycle looks like this:
Prepare: Discuss and Define
Define your current organizational challenges to create a ranked list that the expense management platform should solve or simplify. Implementing an expense management system has many benefits, but the best choice for your business is the one that meets your priorities.
What are the top three-five biggest challenges your organization faces when it comes to managing expense reports?
Once you’ve narrowed it down, meet with your team, departments, and managers. Ask them the same question to determine:
- Do their responses match your prioritized list?
- Did they find it difficult to limit their response to three-five challenges?
- What new challenges did you uncover in their responses?
- Are certain employee roles impacted more than others? Why?
Next, consider the following deep-dive questions:
- Have you factored the size of your business into your needs?
- How many people in your organization file expense reports?
- Approximately how often do they submit an expense report?
- How do employees currently submit spend requests and expenses?
- Do your employees travel for business frequently? Does this include international travel?
Demo: Compare and Evaluate
You have outlined your highest priorities, allowing you to start comparing various spend solutions, and how they address your organization’s’ top concerns. Most companies offer free demos, providing insight into their system’s capabilities and user interface.
As you begin to demo expense management systems, refer to the Expense Management Solution Checklist. This checklist allows you to familiarize yourself with the differences between options by noting each system’s functionality. It lists several key function to help you differentiate between systems. (See Checklist Below)
Decide: Select and Adopt
Now that you’ve completed the research stage, it’s time to choose a budgeting and business management system and move forward to implementation! You have outlined your priorities, taking timing and functionality into consideration, empowering you to choose the best fit for your organization’s unique needs. Go with your informed gut.
Make sure not to rush the decision or implementation. Time is money, but employee adoption can spell success or disaster when it comes to executing a positive change in your expense management and reporting. Choose a system that provides insight and visibility into spend, while facilitating simple employee adoption, then carpe the per diem!
The Expense Management Solution Basic Selection Criteria Checklist guide will help you identify the needs of your business and the expense management system to match your unique spend tracking requirements.
Basic Criteria Checklist
- Pre-paid, Debit, and Credit Cards. Does it work with pre-paid, debit, and credit cards?
- Supported Mobile Portal. The newest platforms provide availability via a mobile application or web page accessible by smartphones and tablets. (i.e. iPhone or Android.)
- Mobile Payments. Does the platform provide employees with the flexibility of physical cards AND the added convenience of virtual and mobile cards?
- Offline Capability. The capability of the system does not need to depend on access to an Internet connection. Can you code expenses while on a flight or riding the subway and upload the report later?
- Receipt Scanning. How do employees upload receipts, and does the platform have the technology to pre-populate the expense report from the receipt scan?
- Automatic Alerts. Does the system have the capability to generate automatic alerts to assist in policy compliance? Types of alerts could include: corporate policy violation, missing receipt, duplicate expense, un-submitted and overdue expenses, and automatic email notifications.
- Travel Management Travel Booking & Itinerary Viewing. Can employees book travel from within the software or auto-populate expense reports from their travel itinerary? This can include the added facility of trip authorization and itinerary updates.
- Captures Mileage, Time and Additional Billable Expenses. Does the solution include fields for travel management and auto-populate, or require manual entry?
- Flexible Expense Coding. Does it allow the user to code an expense to multiple cost centers (i.e., expense category, project, client, location, etc.)? Do they limit the number of cost centers per spend? Are there enough for your organization’s chart of accounts? Does the technology allow you to split an expense and code it to two categories or projects?
- Expense Auto-categorization Feature. Does the system have the capability to begin recognizing how an expense may be categorized based on the vendor?
- Assistants/Admin Login. Does this platform contain a feature allowing access to an individual’s profile from another profile?
- Flexible Approval Process. Would you have access to a customizable approval process allowing the ability to approve/return individual expenses from the report, set parameters on number of approvers, etc.?
- Map Feature. Would you be able to synchronize with mapping technology (such as Google Maps) to auto-populate mileage and reimbursement rate for the expense report?
- Currency Conversion. Does the platform limit the amount of allowable currency conversions?
- Reporting and Analysis Capability. Customizability of report and analysis formats is key. Does the solution allow for the inclusion of key performance indicators (KPIs) and other significant data points prioritized by your organization?
- Audit Trail. Where, how, and for how long does the system store receipts? Are you limited to a short window of availability?
- Policies and Procedures. Could you customize the platform to the extent that you may create, update, and manage policies?
- Accounting System Integration. If you have an ERP system, how does the system work with your current ERP? Can the systems interact directly or do they require a file upload or workaround?
- Reimbursement Structure. Does the system support multiple payment types, including payroll, direct deposit, PayPal, and other formats?
- Credit Card Integration. Does the system link between the employee profile and corporate or personal cards for timely statement updates? Also, does the system works with your specific bank?
- Other Supported Integrations. What other workflow systems are you considering (Accounts payable workflow software, payroll, time and attendance, etc.)? Some expense management software includes other modules or can integrate with separate systems.
- Billing Model. Does the company charge per user, per month, or per report? Is there an implementation fee? Are there incremental charges (i.e., if you have more users per month than expected)?
- Implementation Time. How long will it take for the system to be fully operational within your space?
- Customer Support. What level of user support and training does the spend management implementation team provide with the contract?
- Additional Features or Add-ons. (Fill in any other important features unique to your organization.)
We dug deep to create the world’s first free, fully-automated budgeting and expense management platform, and it gives you instantaneous visibility into company-wide spend. Born from loathing a truly broken process, Divvy turned that legitimate dislike into the catalyst to reinvent. Not even innovate: burn to the ground, salt the earth, and build something that works on new ground—from scratch.
Divvy is the first free and fully automated spend management platform. Seize the Divvy. Start Now.
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