The expense software industry has changed enormously over the past few years. We’ve seen huge amounts of investment, with several new and very well-funded entrants. From a customer perspective, increased competition has driven innovation and provided an array of solutions to choose from. This level of competition may seem an ideal situation for customers, but it comes with some dangers. Often industries that expand rapidly can experience a shake-out, especially if the overall economic climate worsens, such as a tightening of investment.
The last thing you want after implementing an organization-wide technology solution is to have your vendor be unable to fulfill its contractual obligations, either because it doesn’t have the resources to invest, or because it is unable to continue in its existing form. There’s no way you can see into the future, but there are questions that you can ask to minimize the risk:
- Are you profitable?
- What’s your business model?
- Can you scale?
If you’re looking for your next expense management solution, I suggest you ask them of every vendor.
1. Are you profitable … and if not, when will you be?
Why do you need to know?
Spend control is critical to your organization’s own financial stability. That’s why you need expense software. So shouldn't you expect the company that makes the software to practice what they preach?
Many early stage tech companies spent the past few years focused on “growth at all costs.” Low interest rates meant that capital was cheap and plentiful. Instead of ensuring steady, sustainable growth, companies funneled huge investments into customer acquisition, in the hope that profits would follow.
Heavy spending may not cause a problem when venture capital flows freely. Higher interest rates have made it increasingly difficult to secure additional funding with preferential terms, requiring companies to significantly reduce cash burn to stay viable.
When companies need to reduce their overall expenses it can mean a few things: product roadmaps are stripped back or delayed; customer service levels are reduced; at worst the long-term survival of the organization could be at risk.
If your prospective - or current - expense software partner is not profitable, you should ask:
- How much “runway” (i.e. the amount of time until financially self-sustaining) do you have?
- How far are you from achieving profitability?
- What strategic changes might you have to make, to your product roadmap, service level, or rewards if economic circumstances change?
What’s Emburse’s answer?
Emburse focuses on profitable, sustainable growth, which has enabled us to avoid these drastic actions. Growing steadily on the back of prudent investment and sensible spending, means that we’re not only EBITDA positive (and have been for several years), but can also continue to invest in product innovation and customer success.
2. What’s your business model?
Why do you need to know?
Part of the challenge that the expense management market has seen over the past couple of years centers on a changing understanding of viable business models. Over the past couple of decades, most business software has moved to a subscription-based model - customers pay a fixed amount based on an agreed number of users or transactions.
The expense management market saw a significant change in the late 2010s, with the introduction of corporate card-based solutions. How this works is that a company uses the vendor’s corporate cards for its employee spend, and in return is provided with a companion software solution - often at low cost or even for free. Even better, each time an employee swipes their corporate card, the customer gets a cut of the fees (aka interchange fees) that the merchant pays to the card network, such as Mastercard. Free money! Even better, the card providers kept increasing the amount of cash back offered in order to win new business from competing companies. What more could anyone ask for?
The challenge here is the amount of interchange fees that the corporate card providers receive is fixed. As competition grew and they increased the cash back offered to lure new customers, it ate into their revenues, compounding their profitability challenges. Recently, many of these card-first companies (who often depend on external funding and aren’t yet profitable) have realized that this model isn’t sustainable, and have needed to move to a more traditional model. They now charge SaaS fees.
What’s Emburse’s answer?
Emburse has always believed that the software subscription model is core to successful, sustainable, long term growth. While interchange revenue can augment this revenue, other players’ moves to more traditional fee based pricing structures have proven that it cannot support strong, consistent growth on its own. We offer several different pricing models, so you can be sure that one will work for you. We also offer our own card, but we’ll let you bring in your existing card provider - we’re all about flexibility and choice.
3. Can you scale with us?
Why do you need to know?
Building software that works for a domestic 100-person company just as well as it does for a global 100,000 person employer isn’t easy. Our solutions have been in the market for well over a decade doing just that.
You’ll also want a software partner that can scale with you as you grow. The larger a company gets, the more challenging it becomes to support its T&E requirements, and your solution may need to integrate with:
- Multiple countries’ tax and regulatory requirements, many of which change each year
- Different corporate travel partners that have strengths in the regions where they operate.
- A range of bank partners and card providers across the globe
- Several accounting, HR or ERP platforms
What’s Emburse’s answer?
Very few expense technology providers have the background or global expertise to support complex global organizations. In fact, Emburse is uniquely positioned to tackle legacy players like Concur in the enterprise space. We’re the only independent T&E provider with the level of sophistication in its solutions to handle expenses for the largest global companies. That’s why large global organizations like Exxon Mobil, Garmin, Hard Rock Cafe and OKI trust us to support their employees around the world.
We also offer unlimited flexibility. We focus on delivering a best-of-breed experience in expense, empowering our customers to select whichever vendors best fit their need, whether it be HR, ERP and accounting software, travel booking, or banking and card provider. In contrast, many newer entrants’ business model requires locking a customer into their own card program and travel booking solution. Choice isn’t an option.
Deep expertise, a tried-and-tested approach and flexible, globally scalable software are just some of the reasons why many of our 20,000 customers have trusted Emburse’s solutions to manage their employee spend for more than years. They know that we’re there for them, today and tomorrow, no matter where they are in the world now or will be next.