Find Your Fit (Part 3 of 3)

Expense automation guide: Selecting an automated expense management solution

Dive into the expense automation features and capabilities that can help your organization effectively control spending patterns across the business and deliver a return on investment.

Make an informed decision

This comprehensive resource strives to help you select the right expense management solution for your business. Discover the benefits that help you unlock visibility into spending and ensure ROI for automating expense management with features and applications, from reducing expense report errors to increasing compliance and uncovering real-time data insights.

Expense policy compliance Accounting software sync Submitting & managing expenses Card management Reporting & analytics

Expense policy compliance

With profitability at the forefront for most organizations, businesses can’t afford to hurt the bottom line through poor spending practices. The cost of failing to monitor corporate spending can be staggering, with non-compliance and expense fraud happening far more frequently than you’d think.

By implementing expense management automation, you increase transparency into your expense policy, mitigate misunderstandings, automate policy enforcement, and deliver an immediate return on investment for your technology investments.

New research found that nearly a quarter (24%) of employees admit their financial circumstances have led them to make personal purchases and pass them off as a business expense.

Another study found that almost 20% of expense reports contain errors.

Automate rules

An automated expense management solution should allow you to analyze spending data across the business and then implement system-triggered rules that enforce your policies, flagging any rejected expenses for further analysis. Your finance team can then review the flagged expenses and take action accordingly. Having finance policies that can be modified lets your organization adapt to changing market conditions while ensuring each expense approval are always in policy.

Look for two types of rules with this capability:

Policy rules

Policy rules boost compliance by automating your expense policy to prevent or warn of out-of-policy expenses before they’re submitted.

Examples:

Requiring a receipt for expenses over $75
Daily budget for meals
Time employees have to submit expenses

Approval rules

Approval rules can auto-approve expenses, identify anomalies, and improve awareness when set for specific targets.

Examples:

Setting the expense management system to flag transactions like recurring expenses
Flag international business class flight upgrades
Route certain line items for additional approval based on GLD value

You will see a stark difference between real-time expense reporting and batch reporting. Based on the captured data, rules and automation in a real-time solution can be applied at a granular basis for expense and employee levels.

Accounting software sync and data export

Any tool you add to your finance toolkit should work well within your existing ecosystem. Your expense data should easily flow into your accounting

software, matching expense categories to your current chart of accounts and mapping custom expense fields like customer or department.

Beyond simply syncing the data with your accounting software, look for an integration that automatically matches and reconciles expenses with bank debits.

Accrual vs. cash sync

Another stark difference between real-time expense reporting and batch reporting is the ability to choose between syncing expenses to your accounting software, using the cash or accrual method. Only real-time solutions offer this feature, as batch reporting requires expenses to be indexed individually.

Tip

There shouldn’t be any restrictions between you and your data. Ensure you can download your expense data as a CSV or PDF file.

Submitting and approving expenses

Your expense management solution should expedite expense submission and reimbursement. This requires many features that offer a great user experience and streamline expense creation and approval. Features that bolster efficiency include:

Mobile apps

Expenses don’t always happen at a desk. Look for a vendor who offers a robust mobile app for submitting and approving expenses. Capturing expenses as they happen gets better data from employee spending, allowing finance to better understand how and where spending is happening. Reviewing, approving, and managing expenses from a mobile app will make it more convenient for managers and expedite bookkeeping.

Automated expense creation

Expense automation ensures that more accurate expense data is entered, making the review for the expense management process more straightforward. Look for features such as matching a receipt to card feed transactions, reading paper receipt data, automatically drafting and suggesting expenses, and categorizing expenses based on past behavior.

Tagging expenses with custom fields

There is a delicate balance between collecting information essential to finance or required for regulatory purposes and overburdening your employees. An effective and efficient expense solution should leverage intelligent fields that can be auto-populated. Avoid solutions that combine several tags into a single field, as these will prevent reporting.

Audit trail

Expect a complete audit trail of expense submissions, approval, and changes made to any submission. This is a critical feature, especially regarding internal compliance and IRS reviews. This feature is enhanced when a solution tracks communications for a specific expense.

Streamline workflows and organization

The expense management software you select should allow you to configure your approval workflow and your organization’s data structure. This gives you the flexibility to understand spending patterns better and make informed decisions that position your business for success.

Organization

Be sure you can group your employees by department, team, or project. This will affect how your policy is applied, the system-triggered rules you can create, and your accounting sync.

Approval hierarchy

Look for the ability to add levels of approval, such as a department manager. This helps control departmental spend and improve policy oversight.

Non-employee users

You may need the flexibility to invite users outside your company for actions such as paying contractors, providing access to your accountant, or issuing expense reimbursement to interview candidates.

Integrated travel and expense management

Expenses add up quickly when employees travel, making expense tracking for travel spending complex and requiring manual work. Look for a solution that enables users to easily book travel and submit trip expenses through one connected experience. Unifying travel and expense management allows you to seamlessly capture travel expenses and enforce your expense policy. Bringing travel expenses together in one integrated automated expense management software unlocks visibility into travel-specific spend dashboards and expense reporting. Finance can now break down silos that limit their view into spending across the business.

Finance teams relying on outdated, manual expense management systems face many operational inefficiencies that significantly impact their bottom lines. More than half (51%) of respondents from a Forrester Survey reported being held back by process inefficiencies that led to bottlenecks in their organizations.

Card Management

Why should you consider incorporating virtual cards into your automated expense reporting purchasing decision? Keeping up with the rising

tide of employee-driven vendor spend has never been more taxing. Many companies now empower employees to make critical business expense purchases from vendors directly. This helps projects run smoothly but leads to out-of-policy spending and extra reconciliation cycles.

Virtual cards make monthly closeout and cash flow accounting simpler and more efficient for a finance team. That’s because they capture expense details at the point of transaction for immediate, automatic reconciliation.

They differ from a traditional corporate card in a number of ways.

It reduces the burden on your employees for out-of-pocket expenses. Half of your employees cannot cover an unexpected expense of $1000.

It gives you real-time visibility into purchases without waiting for expenses to be submitted.

It helps you ensure purchases are compliant before and after they happen.

It allows you to capitalize on rebate programs to re-invest the proceeds to grow your business.

Virtual card management

Virtual cards are bank-issued credit cards or pre-funded cards typically used for vendor or T&E spending. Existing business, corporate, and p-cards can all be converted into virtual cards with the help of a card management provider. With virtual cards, you can enjoy added security and control over spending. These cards automatically implement spending policies, and administrators can set up front purchase limits to avoid reconciling expenses later.

You can issue employee cards with pre-set usage limits, like purchase categories, budget, period, and approved merchant categories, and make them available for immediate use, if necessary. As for your employees, they like virtual cards because they’re empowered to make purchases without fear of transacting outside of policy. Your finance team will like virtual cards because approving spending up-front eliminates the need for an expense report and ensures no surprises at the month-end close.

Finance leaders are increasingly responsible for providing data and insights to support strategic decision-making, with 82% of CFOs reporting increased responsibilities over the past five years.

Reporting and analytics

Without insightful analytics to distill complex patterns and trends, improving forecasting and budgeting is complicated, if not impossible. Disconnected, static data sets that must be manipulated in a manual process prevent teams from gaining a holistic view of spending across the business. Organizations need comprehensive spend data and analytics with drill-down capabilities to gain insight into specific spend categories, uncover areas of risk and noncompliance, negotiate with vendors, and understand the underlying factors impacting financial performance. Real-time access to these insights enables a finance team to make more informed and timely decisions and adapt quickly to changing economic conditions.

Financial wellness is not only considered the cash an organization spends. It also encompasses the power to understand the reasons behind spending and what dollars drive real automation ROI across the business.

- PWC

Conclusion

Expense management automation turns your expense data into actionable insights that improve spending visibility and help finance make more informed strategic decisions, delivering real automation ROI. Use the Emburse ROI calculator to calculate your potential cost savings.