Expense requests and approvals can be a time-consuming and challenging task for businesses of all sizes. However, with the rise of digital technology, automating financial tracking and management has become more straightforward, leading to significant benefits for companies.
Expense management automation software is designed to streamline financial tracking and management by automating data entry, categorization, approval, and reimbursement tasks.
As a result, this saves companies time and reduces the risk of errors, fraud, and overspending.
Benefits of Expense Management Automation
With business travel spending projected to exceed $1.2 trillion in 2023, effective expense management is becoming increasingly crucial. As a result, expense management automation is emerging as a valuable tool for businesses that want to manage their finances efficiently and stay on top of their expenses.
In addition, expense management automation offers a wide range of benefits for businesses seeking to streamline their financial operations and improve decision-making.
Time is a precious resource for any business, and expense automation can help save just that. With automation, the entire expense process can be completed in a matter of minutes without the need for paperwork or spreadsheets.
For example, the expense request is sent instantly, and the manager can approve it immediately.
Compared to the traditional expense reporting process, which can take up to 20 minutes on average to complete one form, expense management automation saves employees a significant amount of time.
Accuracy & Error Reduction
Expense management automation offers benefits in terms of accuracy and error reduction.
According to the Global Business Travel Association, 19% of expense reports contain errors, which can be costly and time-consuming. With automated expense management software, the manual inputting of expense reports is eliminated, reducing the likelihood of errors.
By using an expense management system, employees can capture receipts using their mobile phones and upload them directly to the expense application. Thus, the finance team saves valuable time and helps ensure policy compliance.
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Improved Financial Visibility & Control
Improved financial visibility and control are one of the most significant benefits of automated expense management. With real-time tracking and reporting, businesses gain complete visibility into their spending, allowing them to manage cash flow better and make informed financial decisions.
This level of visibility also enables companies to identify spending patterns and areas where they can cut costs or invest more, leading to greater financial control and improved financial wellness.
Automated expense reporting provides extensive reports on expenses, policy violations, reimbursements, and more, allowing businesses to analyze data quickly and make data-driven decisions.
Expense management automation can help businesses reduce costs in several ways.
By eliminating the need for manual processing of expenses, companies can save on labor, paper, and postage costs. With automated expense management software, businesses can also more easily identify areas where they can cut costs by analyzing detailed expense data and identifying spending patterns.
Eventually, this information can be used to negotiate better deals with vendors, resulting in cost savings. Furthermore, automating expense management can reduce the risk of errors and policy violations, which often result in fines and other expenses.
Better Compliance & Audit Readiness
Expense management automation provides several benefits for better compliance and audit readiness. Automated systems allow businesses to easily enforce their travel expense policies and maintain compliance by detecting and flagging expenses that violate them. This reduces the risk of out-of-policy expenditures slipping through the cracks and employees being reimbursed for policy violations.
Additionally, the detailed expense reports and audit trails provided by automation make it easier for businesses to comply with regulations and always be audit ready.
How Expense Management Automation Works
An expense approval request can be submitted for various reasons, including client gifts, trip expenses, event expenses, or technology reimbursements.
In a traditional expense management system, here’s the process that follows:
- Employees save the receipts and submit them to their manager for approval.
- Followed by policy compliance checks from the finance department.
- Review by the accounting/finance team and direct supervisor.
- Final inspection by the appropriate approvers.
- Approved reports are sent to the accounts payable coordinator for payment.
- Tax purposes reimbursement payments are issued to employees or credit card companies.
On the other hand, automated expense management systems can improve this process by providing various features such as automatic expense creation, e-receipts, credit card integration, and integration with finance systems.
When employees book business travel, the expenses should be automatically created from the booking, and e-receipts can be uploaded and used to populate information into the expense line item.
In addition, credit card transactions can be imported directly into the expense system through dedicated card feeds, and workflows can be set up to auto-pay small claims and add further checks for larger amounts.
Expense management automation works best if it’s mobile-first and has a dedicated application that allows employees to submit expenses on the go. Workflows can also be set up to ensure approvals are swift and easy to manage.
With a cloud-based portal, the worker enters all documentation, and the program automatically routes the data to the appropriate managers and approvers. The entire process, including submission, approval, and notification, all take place in one convenient and secure location.
This centralized approval system can result in faster payments with fewer backlogs, improving worker happiness because employees get repaid faster.
Popular Expense Management Software
Companies are proactively seeking to manage their travel and expense budgets, resulting in a surge in the use of expense management tools. With various software available on the market, it can be challenging to determine which one is best for your business.
Airbase is a comprehensive spend management platform that simplifies the expense management process for companies with end-to-end solutions for managing invoices, virtual and physical cards, and approval workflows. Real-time data and analytics enable businesses to make data-driven decisions and gain greater control over their spending. Finance teams can easily track and manage expenses, ensuring compliance with expense policies and eliminating the need for manual reconciliations.
Additionally, Airbase consolidates card spend, traditional accounts payable, and expense reimbursements, reducing processing costs and optimizing cash back. The platform also automatically creates audit trails for every transaction, eliminating errors and making documentation easily retrievable for audits or other needs. Designed to scale, Airbase packages provide the features and functionality needed today with options to add as businesses grow in size and complexity.
Precoro is a robust cloud-based procurement and expense management software that automates and streamlines purchasing processes for small businesses, startups, and midsize businesses. It offers a range of features, including purchase request creation and tracking, purchase order management, invoice management, and spend analysis, among others.
With Precoro, businesses can easily manage procurement workflows, gain better control over their spending, and ensure compliance with their procurement policies. The platform also provides smart notifications and thresholds for precise routing, making it easy for businesses to manage and track their approvals on the go.
Another feature of Precoro is budget management, which enables businesses to set budgets for locations, departments, and custom fields, with automatic budget limits and real-time budget control through a progress bar. The platform also offers insightful reports, including visual, standard, and custom reports, which can be easily exported into accounting software, eliminating the need for manual data entry.
Zoho is a comprehensive suite of business applications encompassing a range of software, including expense management. The platform offers a variety of features, including travel management, which enables users to handle all aspects of their employees’ business trips. With Zoho, users can easily make travel and hotel bookings, establish pre-travel approvals, and much more.
Another valuable feature of Zoho is spend control, which allows businesses to set budgets, enforce policies, and configure purchase approvals to prevent overspending on unauthorized expenses or purchases.
The platform also provides audit and compliance capabilities, including an AI-driven fraud detection engine to help businesses audit their expenses better and maintain compliance with tax regulations. Zoho is also highly extensible, offering automation, customization, and collaboration features and integrating seamlessly with leading travel, HRMS, accounting, ERP, and collaboration solutions.
Pleo is a mobile-first expense management platform that offers virtual and physical cards, receipt scanning, and expense reporting. With real-time expense tracking and automatic expense categorization, Pleo allows businesses to manage their expenses efficiently. The platform also integrates with popular accounting software, making it simple to keep track of finances.
Moreover, Pleo offers additional features beyond expense management. Pleo Invoices simplifies the entire accounts payable process from start to finish. Pleo Pocket takes care of mileage expenses, reimbursements, and ATM withdrawals.
Additionally, Pleo allows users to add their cards to Apple Pay, making purchases for work even easier and safer. The platform also offers virtual cards for online spending, exclusive perks, and cashback on purchases. With an extra level of approval through Assurance, Pleo provides a complete solution for all expense management needs.
Implementing Expense Management Automation
Implementing expense management automation can save companies time and money while improving accuracy and compliance. However, successful implementation requires careful planning and execution.
Steps for Successful Implementation
- Define Goals and Objectives: Identify the goals and objectives of the automation project. This includes understanding the current process, identifying pain points, and defining what success looks like.
- Choose the Right Solution: Research and select a solution that meets the identified goals and objectives. Employers should evaluate the solution’s features, functionality, and integration capabilities.
- Develop a Project Plan: Develop a detailed plan that includes timelines, resources, and responsibilities by identifying stakeholders, developing communication plans, and setting milestones.
- Тest and Validate: Test and validate the automation solution before rolling it out to ensure it meets the defined objectives and integrates with other systems.
- Train and Support Users: To ensure a smooth transition to the new system, the company should provide user manuals, training sessions, and ongoing support.
- Monitor and Optimize: Monitor the effectiveness of the automation solution and optimize as necessary to ensure ongoing success.
Tips for Managing Change & User Adoption
In today’s world, businesses use various tools and technologies to enhance operational efficiency. However, expense management is often overlooked or deprioritized for multiple reasons.
For example, some businesses may not think they are large enough to benefit from automating expense management. Others may be content with existing legacy technologies or processes they believe are sufficient. Also, some organizations may prefer to rely on familiar tools such as spreadsheets or paper-based expense reports rather than adapting to newer solutions.
As a result, change management is critical to the success of implementing expense management automation.
Here are some tips for managing change and user adoption:
- Communication: Communicate early and often about the automation project, including establishing the new system’s benefits, addressing concerns, and providing regular updates.
- Involve Key Stakeholders: Involve key stakeholders in the automation project, such as finance, accounting, and IT departments, and employees who will use the new system.
- Provide Training and Support: Provide comprehensive training and ongoing support to users to ensure they are comfortable using the new system.
- Address Resistance: Address resistance to the new system by identifying and addressing the resistance’s root cause.
- Celebrate Success: Celebrate successes and milestones to recognize the effort and progress made by the team.
Therefore, involving all stakeholders in the process, providing comprehensive training, and communicating the new system’s benefits are essential to help ease the transition.
Common Challenges & How to Overcome Them
Implementing expense management automation can come with its own set of challenges. Here are some common challenges and how to overcome them:
- Resistance to Change: Address resistance to change by involving employees in the process and communicating regularly.
- Integration Challenges: Ensure the automation solution can integrate with existing systems by selecting a solution with strong integration capabilities and involving IT leaders in the project.
- Security Concerns: Address security concerns by selecting a solution with robust security features, involving IT in the project, and regularly monitoring for potential security issues.
- User Adoption: Encourage user adoption by providing comprehensive training and ongoing support, addressing user concerns, and celebrating successes.
In summary, expense management automation presents a tremendous opportunity for businesses to enhance their financial operations and decision-making processes.
The benefits of automating expense management are manifold: employees, line managers, and leaders can save valuable time that would otherwise be devoted to administrative tasks related to expense claims, while finance teams can exercise tighter control over expenses, minimize errors, and detect fraudulent activities better.
Adopting expense management automation allows businesses to achieve a competitive edge in today’s dynamic business environment and drive greater success.