What is expense management?
Companies acquire assets on a daily basis. The payment of these assets, or goods and services, is called an expense. Expenses have a short life span so to speak, which is where it differs from a cost. There are many different types of expenses. It can be anything from office chairs, IT equipment, subscriptions to marketing tools, driving to a customer for a meeting in your own car, a cup of coffee, etc.
All businesses have expenses. For most companies, it will make sense to digitize and automate the expense management process for optimization, overview and precision.
This article deals with the management of expenses on the employee side. That is, expenses that will naturally arise when an employee complete daily work tasks. The handling of such business related expenses is called expense management.
What does expense management consist of?
The term “expense management” is a collective term for a long list of subprocesses in relation to handling expenses. In other words, it is the process involving the handling and controlling all employee related expenses.
Expense management is concerning all procedures and processes which is started in the exact moment when an expense is registered. It is important that it comply with company policies and standards – not to mention laws and national regulations.
Expense management can be divided into two categories: the traditional and the automated.
Traditional expense management
The traditional process for handling business related expenses is the “old-fashioned”, paper-based, and manual method. Following this method, the employee fills out an excel sheet or another paper-based form and attaches the receipt, or receipts, either physically or scanned. Receipts and other attachments are then handed in or sent to the accounting department, which typically has to ensure that the information from the receipt is entered, approved and posted in the company’s financial system.
The process mentioned above process is rarely effective – and what happens if the physical receipt disappears? Or if the image is too blurry for the accountant to read the information?
Automated expense management
The automated process includes a system that can automate and manage the registration of expense documents and the reimbursement of employee expenses. Today, the systems are available in many forms – both as license-based software, but also as cloud-based solutions (SaaS – Software as a Service).
Unlike the traditional process, the employee will pretty much make the receipt ready for posting without any sheets or forms. At least, this is possible with most suppliers. The accountant does not have to enter information, as the employee do this through an app most likely. This app enable the employee to scan and upload the receipt, fill in the required information and send it for approval. Once the expense has been approved, it can be sent directly to the financial system, if the supplier can integrate with it.
How to get started with an automated process
If you are on the market for an expense solution, here is a few pointers:
• Always remember to investigate integration options
• Ask questions in relations to the supplier’s understanding of the process, functionalities and approach to data safety.
Find more inspiration about digital expense management in our library, where you can find ebooks and papers about the subject.
Want to know more?
In Acubiz we have more than 20 years of experience digitizing the processes in relation to expense management. You are always welcome to contact us for advice or information on how we can help your company.