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.
You can digitize the expense management process with Acubiz
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 involves managing employee expenses – expenses that naturally arise when an employee carries out their daily work. This can include outlays or costs for travel.
Expense Management includes all procedures and processes initiated when the expense is recorded. The process must ensure compliance with the company’s policies and standards and, above all, compliance with current legislation.
Expense management can be broadly divided into two categories: traditional and automated.
Traditional expense and reimbursement management
The traditional process for handling business-related expenses and reimbursements is the “old-fashioned,” paper-based, and manual method. Here, the employee fills out an Excel sheet or other paper form and attaches the receipt – either physically or scanned.
The receipt and attachment are then handed over 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 accounting system.
The above process is rarely effective – what happens if the physical receipt disappears? Or if the image is too blurry for the bookkeeper to read?
Fortunately, automated expense management exists, which you can learn more about below.
Automated expense management and reimbursement
The automated process involves a system that can automate and manage the registration of expense receipts and reimbursement of employee expenses. These systems are available today in many forms – both as licensed software and as cloud-based solutions (SaaS – Software as a Service).
Streamlined handling of employee expenses
In contrast to the traditional process, the employee will primarily prepare their expense receipt for bookkeeping themselves with automatic expense management. This is possible with most vendors.
The accountant does not need to enter information, as the employee, often through an app, takes a picture of the receipt, fills in the required information, and sends it for approval. When the expense is approved, it can be sent directly to the accounting system if the vendor can be integrated with it.
This makes handling all employee expenses easier for all parties in the company, which is why it is more streamlined than traditional handling.
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.