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When you are a small company, tracking expenses traditionally can be easy, but once the business starts growing, you need an expense management system to handle the expense reporting.
In a study done by 6sense, 189, 277 reported that they use an expense management system, out of which 57,350 are small companies (0-9 employees).
Initially, the expenses of a company aren’t much, and manual tracking is feasible. However, once a company decides to scale, it can be hard to manually enter, approve, and process all the expenses.
According to ExpenseIn, the average time taken to complete an expense report manually is 20 minutes.
Using expense management software helps you track, approve, process, and spot fraudulent claims by employees as well. Automating the process can save a huge amount of time and streamline the reimbursement process.
But which expense management software to choose? There are plenty of options available, and in this blog, we have shared a list of expense management software features you need to look for
What is Expense Management Software?
Expense management software is a tool that digitalizes the process of reimbursement for companies. It includes the required functions for reimbursement, starting from receipt submission to approval from the employer.
An expense management system can automate the entire process and remove all the time-taking steps like data entry by employees, sorting through paper receipts, lengthy approval chains to get reimbursed, and compliance with company policies and tax regulations.
Why Use Expense Management System?
The manual form of expense management is painstakingly time-consuming yet there are many companies that take their sweet time to shift to expense management software. Here is why you should be using expense management software –
1. Saves Time
As mentioned earlier, expense management can be complex and time consuming. Employees who handle this can feel stressed and overwhelmed by the volume of unproductive work.
However, using an expense management system can save time and help them focus on more high-priority tasks at hand. The hours these employees spend on expense management can be invested in something more valuable, like budget planning and spending analysis.
2. More Organized
Manually taking care of expense management is alright until you don’t realize what you were doing and get stuck on something else. It can be disorganized and lead to a lot of discrepancies in data and payment.
But automating the reimbursement process can get things organized. Employees can enter the required data/ receipts, which will be then processed, and it will be followed by payment approval. The entire reimbursement process is simplified when you use an expense management system.
3. Allows Transparency
In manual expense tracking, employees are often not held accountable for their expenses, and sometimes their actions can be unethical. However, using expense management software makes it easy for both the employee to get reimbursed, and for the employer to verify the expense. The expense management system promotes transparency in the reimbursement process, thus preventing expense fraud by employees.
10 Expense Management Software Features to Look for
Choosing an expense management system that not only makes your job easier but also integrates well with the existing tools you use can be daunting. So, here are the must-have features you should look for:
1. User-friendly & Intuitive Interface
Any expense management software you choose should be easy to use. Employees should be able to learn how to use the software without much hassle. To ensure that the expense management system is user-friendly, try to identify these things during the demo: –
- How long did it take for the users to learn how to use the software?
- Does the tool have a simplified dashboard with clean UI?
- How easy is it to input data into the system (with receipts and details)?
- Does the software offer interactive charts and graphs to visualize expenses?
- How often is the Help & Support of the software available?
All these questions will give you a clear idea of how intuitive and user-friendly the tool is. You can try different tools and determine their ease of use based on these questions.
2. Advanced Reporting and Analytics
With a manual expense management process, it is impossible to have advanced reporting or analytics. It is hard to keep track of a paper trail, but having every expense recorded on a digital platform will give you better reports.
Having advanced expense reports in your hand can help you analyze employee spending behaviors according to various departments and identify major expenses that can be avoided. Reports and analytics will also help keep track of any policy violations that may happen during the reimbursement process.
While manually tracking expenses won’t give you the liberty to look at expense reports and analyze the spending, an expense management system can help you visualize the expense data.
3. Real-time Visibility into Spending
One of the major drawbacks of manual expense management is that there is no transparency in the data. Any employee can submit a reimbursement request to the finance team, and they will carry it out. Sometimes managers and other stakeholders are left out of the loop.
But an expense management system helps bring transparency to data sharing. When an employee submits receipts and reimbursement requests, everyone (based on the hierarchy), will be in the loop.
Moreover, it makes the reimbursement process hassle-free for employees, who can easily monitor expenses from the dashboard and track the request whether it is paid, unpaid, scheduled, or pending.
4. Easy Expense Reporting Process
- Expense management software’s goal is to make expense reporting easy for employees and tracking easy for the management. But how do you determine that the system you want to use has an easy expense reporting process? Try to look out for these features when searching for an expense management tool :
- Does it have a clear option on the dashboard for reimbursement claims?
- Are the reimbursement forms easy to fill out for the employees?
- Are the approvers notified of the approval workflows?
- Are employees able to see the real-time status of the claim?
- Are the employees able to easily attach the documents for the claims? Does it support different formats of files?
5. Integrations with Preferred Accounting Software
When selecting an expense management system, make sure you choose one that offers integration with the most widely used financial tools, CRM platforms, and HCM systems.
Seamless integration with other existing financial tools is crucial because it helps ensure consistent data transfer across platforms. So, if you are already using a financial tool to track expenses, you can transfer the data from one platform to another, or you can transfer the employee data from the HCM platform to another.
The best option is to use an HCM system that already has an inbuilt Expense Management Software like Akrivia HCM. Using such a tool will not only simplify data transfer but also reduce entry errors and data discrepancies.
6. Checks Policy in Real-time/ Policy Compliance
In manual expense management, the approver must manually validate the claim and check for policy regulations, and it can be time consuming. There are expense regulations and rules that companies are liable for.
However, with manual tracking policy compliance can be tough because it is not error-free.
On the other hand, an expense management system ensures precision in financial reporting. Go for software that allows your company to define expense policies, show expenditure reports for departments, and set spending limits.
7. Expense Approval Process Workflow
Choosing an expense management system that allows you to configure multi-level workflow and set rules-based workflows can come in handy. These features ensure that the reimbursement claims adhere to company policies, before they reach the approval stage. It also reduces the amount of back-and-forth that employees must go through to get approval for their claims.
8. Mobile Optimization and OCR tech
Before choosing expense management software, check if there is a mobile app version available. While a desktop version of the tool is always easy to use, an app makes things more convenient for employees.
It allows employees to apply for reimbursements on the go without having to worry about logging into the software on their laptops. It also makes it convenient for users to attach documents/ files/ images of receipts by simply clicking a picture.
OCR technology in expense management system apps makes it convenient for users to capture receipts, bills and add them to the expense claim. OCR (Optimal Character recognition) helps convert the text in an image to machine readable text format, thus making it easier to automate the reimbursement process.
9. Scalability and Customization
When you start a business, you can manually handle the expenses. But once you start scaling it, you need an expense management system that can accommodate your growing business.
While looking for expense management solutions, look for tools that offer customization options so you can design them according to your requirements. Ensure that the tool is scalable and can handle the size of your business.
10. Multi-currency Functionality
If your employees often go on international business trips or must make international transactions for the company, it can be exhausting to convert all the expenses to local currency manually. So, it is better to go for expense management software built for international spending.
In manual conversion, there can be errors while analyzing the claim. But when using software that supports multiple currencies it is easy to avoid errors.
Additional Expense Management System Features
There are some features that are not necessary but can add more convenience to your expense management process. Here are some additional features to look for:
1. Automated Tax Calculation
Companies are always expanding. In that case, having software for expense management that has automated tax calculation can come in handy. It can identify the expenses that are eligible for tax and then ensure tax compliance.
2. Data Security
A company must be mindful of employees’ data as well as their financial data. So, using expense management software that offers data security is always mandatory. While looking for expense management tools, look for data security certifications like ISO 27001, PCI-DSS.
Conclusion
For any growing business, expense management software is a must. It makes tracking the reimbursement process easy and keeps a digital library of all your expenses. Investing in a good expense management system can save time and optimize your finances. Does your company use expense management software? What are the features you look for? Tell us in the comments below.
