A report released early this 2019 by Technavio analysts tells of the increased rate of adoption of travel and expense management software by small and medium-sized businesses.

This trend is not surprising, given that expense management is a crucial aspect of running a business. For your enterprise to succeed, you need to develop a business expense management strategy to curb excessive or unnecessary cost.

But managing your cash outflow can be challenging and even rigorous control can lead to errors. That is why Technavio notes that the travel and expense management software niche is also growing. The research institute forecasts that this sector will grow to $2.49 billion from 2019 to 2023. 

The escalating need for companies to control their employees’ spend has prompted this response in the software and app development niche.

It is because businesses are discovering that integrating an expense management tool in their workflows simplifies their processing of expense reports and reimbursements.

However, there is more to expense management solutions than just a comprehensive list of purchased items and their corresponding costs. 

The 6-Step Plan to Simplify Expense Management

1. Invest in an expense management tool
2. Configure rules and automate
3. Track employee spending
4. Reconcile transactions
5. Generate digital expense reports
6. Optimize spending

1. Invest in an expense management tool

Spreadsheets are one of the go-to ways for businesses to keep track of their spending. However, even if you are a spreadsheets whiz, working with Excel or similar software still takes a copious amount of time.

With the array of SaaS software categories to choose from, you can certainly find a product that suits your needs best.

While a business expense management tool cannot drastically reduce your bills, it can streamline the tracking of employee expenditure, make reconciliations and reimbursements faster, and even aid you in discovering ways you can reduce your spending further! 

There are plenty of other benefits of using an expense management app and they all lead toward accelerated workflows, accurate information, increased returns, and deeper expense insights.

2. Configure rules and automate 

The convenience of using an expense management tool lies in its rules configuration and automation capabilities. These allow you to keep a tight reign over your budget or at least make sure that employees are using their corporate cards as prescribed or are inputting acceptable expenses only.

This means that you can truly apply your company’s spending policies and prevent any unapproved expense from going through the cracks. 

Additionally, by setting up expense rules and approval workflows in your selected application, you can begin automating part of your financial process.

You can easily validate inputted data and receipts, accelerate the approvals of expenses and reimbursements, and streamline the flow of information to your accounting software.

Depending on the software that you choose, you may not need to tinker with the system often and only wait for things to happen.

3. Track employee spending

Once you have your expense management software set up fully, you can onboard your employees, especially the ones who have access to corporate credit cards and those who are always on the move.

By doing so, you can keep a close watch on how they use the cards and what kind of expenses they add to the system. This means that you do not have to wait until the end of the day or of a period to track their spend.

What’s more, since you have real-time access to employee expenditures, you can immediately review, approve, reject, or return expense reports for edits or clarification.

This way, you can process card payments and reimbursements rapidly so that your accounting and finances teams can focus on other tasks. 

4. Reconcile transactions

Regardless of when you review expense reports, you still need to reconcile transactions to prevent double entries, inaccurate accounts, and overspending. This can also prevent expense fraud, which can affect your budget limits and overall financial health. 

Expense management software in the market can automate this stage of the workflow in part or in whole. Regardless, you still have full control because you always have the option to manage employee expenses manually. As a result, you can have the peace of mind that everything about your employees’ expenses is in proper order. 

5. Generate digital expense reports

Managing expense reports is made seamless by expense management tools because they can give you a full overview of your employees’ spending activity.

You would also be able to drill down into which categories or items are most common and which are rare or peculiar.

This enables you to understand your employees’ behaviors and helps you come up with ways to curb spending. Thus, you can gain a higher ROI overall. Checking out some fintech blogs may provide good insights regarding this niche.

6. Optimize spending

The previous step is crucial in optimizing your employees’ expenditure. Since you know what things your employees use company money for on a regular basis, you can determine whether those are essential to the execution of their tasks.

If not, you can update your company spending policy to restrict the use of corporate credit cards and the inclusion of such items in expense reports and reimbursement requests. 

Expense management in a nutshell

Tools like expense managers assist you in accomplishing your finance-related tasks faster and more accurately. Applying expense management best practices is easier, too, since you would be able to automate certain processes like company expense policies. 

Moreover, by having an expense management system, you can pinpoint expenses that may qualify for a tax return. This can save you a lot of money that can go towards your profit or to operational expenses.

Posted by:Andreea Serb

Andreea Serb is a Content Marketing Lead at Innovo42. Follow her on Twitter @Andreea_Serb to discover stories and fresh perspectives from the industry.