If you have employees, chances are they will spend money that they will claim back from the business. Is the $200 bottle of wine an acceptable expense? Is there an easy and quick way to process those expenses? This guide will look at how you can use expense management software to improve employee productivity and ensure your records are more accurate.
Expense management refers to the systems deployed by a business to process, pay, and audit employee-initiated expenses. This most likely will include policies and procedures that govern such spending, as well as the technologies and services utilised to process and analyse the data associated with it. Expense management software helps simplify this.
WHY consider Expense Management Software (EMS)?
Imagine you leave a restaurant, open an app on your smartphone, take a photo of the receipt, select the applicable expense item, and submit for approval and payment. You are done in less than a minute. Why? – Because EMS cuts down manual processes, it is easy and fast for both the employee and employer.
Predominately being cloud-based solutions make the software affordable.
What is the difference between manual vs automated expense control?
Advantages of automated expense control:
- Productivity. Time and money lost due to misplaced receipts, forgotten expense approvals, and error-prone manual data entry, can put a significant drain on employee productivity and morale. Expense management software can curb these issues and increase efficiency.
- Captures GST. The GST on each receipt can be accurately captured for allowable credits (talk to your accountant to understand what is allowable, for example, entertainment is not)
- Automatic integration. Allows expense data to be loaded straight into your accounting package without any manual processing.
- Analyse spending. The ability to track spending by expense category, unit or vendor provides insight into spending trends and identifies areas for cost savings. Organisations can improve their cash flow cycle and forecast for future expenditures.
- Compliance. Internal policies, as well as external government and tax regulations, can cause non-compliance risks for a business. Expense management systems help reduce risks by evaluating expense reports against internal and external regulations.
How do I select an expense management system that is right for me?
Features you should evaluate include:
- Accounting integration – Many systems integrate with popular accounting packages such as Xero and MYOB allowing for easy export of reports and eliminating the need for manual data entry. Be sure to read our essential guide on Accounting Software.
- Expense compliance – Having some spending policies is a good idea, like a meal allowance whilst traveling. Will the software enforce spending policies and assist with fraud detection flagging expense overruns, duplicate expenses, missing documentation, and so forth?
- Car mileage – Ability for an employee to track kilometres traveled for a work trip using their car.
- Approval – Does it streamline the review and approval process by enabling you to approve based on expense type and other variables?
- Analytics reporting – Will reports help forecast and budget for future expenses, identify spending trends, and highlight cost savings opportunities?
- Automatic expense import – Do you want it to connect to email accounts and credit cards, allowing users to pick and choose charges to add to expense reports?
- Smartphone receipt capture – Enables users to scan, email, or take a picture of receipts for easy submission.
- Direct deposit – Do you want it to link directly to employee bank accounts for quick and easy expense payments.
Summary – photo receipts and accounting software integration
There can be some very fancy features offered from the expense software vendors but in the case of the small business, we recommend you go with the software that offers the basic features like uploading photos of receipts and accounting package integration to minimise costs. You may also find your accounting package either has this feature built-in or an add on module can be purchased.