Before we go into that, let’s look at what expense management is.
Simply put, expense management is the act of keeping track of employee spending and reimbursing the employee for what is spent on company purposes. On a broader scale, expense management also includes the policies related to company spending.
There are two methods that companies use to manage their expenses. We call it: The Traditional Way and The Automated Way.
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TRADITIONAL WAY |
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Paper Receipts Management |
Spreadsheet Management |
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Employees collect receipts and submit them as a claim every month. |
Companies manually create and update a spreadsheet that details key expenses every month. This is usually done in Excel or through online templates. |
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Pros |
Cons |
Pros |
Cons |
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No costs spent on expense management software |
Prone to manual error Prone to loss of receipts Time-consuming High indirect cost due to manual error Unable to monitor out-of-policy expenses Unable to forecast budgets due to lack of visibility |
Reduce reliance on paper No costs spent on expense management software |
Prone to manual error Time-consuming High indirect cost due to manual error Unable to monitor out-of-policy expenses Unable to forecast budgets due to lack of visibility |
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AUTOMATED WAY |
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Expense Management Solution |
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Companies use a computer program to manage, track, approve and pay company expenses. This includes using expense management software, and, in the case of solutions like Budgetly, prepaid corporate cards. |
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Pros |
Cons |
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Saves time Simplifies expense management process Removes manual error Removes indirect costs stemming from manual errors Real-time tracking and monitoring of expenses Employees can focus on other, more productive work |
Perceived security risk Perceived costs of automating |
Current trends forecast that most big and small businesses are moving towards the automated way. Statistics have shown that 64% of companies recorded a positive return on investment after adopting an expense management software. In fact, companies who do not automate find themselves losing more money from manual error and manual entry of receipts.
The key is not just to automate, but to automate well. The right expense management solution must be able to productively manage company expenditure, and it should leave finance personnel and business owners with fewer worries than more. So if you’re an Australian small-to-medium sized business looking for the right expense management software, here are some tips.
1. Identify the problem.
First, take a look at how you currently run your expenses and ask questions that could help you identify process flaws. You could ask questions like:
- What is the flow of my current expense management system?
- Does it have any pain points? What are my biggest pain points?
- What can be better improved?
- Are my processes complying with audits and government regulations?
- Is it easy for employees to spend and be reimbursed by the company?
- Do I have control over my employee spending?
You may find that your employees are frequently losing expense receipts, or that you are unable to fully track employee spending. These are all pain points which you can use as knowledge before the next step.
2. Check for must-have features.
By identifying the pain points, you can now look at the essential features that should be included in an expense management solution. Are you losing too many receipts? Get a solution that helps employees capture these receipts so that you never lose them again.
While different companies may have different requirements for their expense management solution, these are the general features that you should be looking for.
- Available on a mobile app
- Able to integrate travel and foreign currencies
- Able to integrate with accounting software such as Xero
- Able to track and approve expenses in real-time
- A highly secure and protected software
- Able to automatically reconcile bank and corporate cards (or in the case of Budgetly, because you are using prepaid corporate cards with allocated budgets, it’s already taken care of)
3. Research the costs.
Prices are different across each expense management solution. They may vary between hundreds of dollars, to just $89 dollars a month.
So, it’s important to calculate where your business financially is at this point, and if the solution fits the scale, size, and revenue of the company. Do as many price/feature comparisons as you can.
If your business is still small or just starting out, a good tip is to choose a flexible solution that can scale as the company grows. For example, Budgetly is priced per card, not for the software itself, so businesses can add on cards to their business account over time, as they hire more employees.
4. Research the solution.
At this stage, you’ve probably narrowed it down to one or two preferred solution options. It’s now time to check for reviews from people who have used it before. Here’s what you should look for when doing your research:
- What is the general feedback?
- Are these reviews from the same industry?
- Are these reviews from trustworthy sources?
- Are these reviews current?
User reviews provide viable information on how the solution has worked for their business, and how it can possibly work for yours. If you don’t see any reviews, ask the company for a customer reference you can speak to before you buy. Once you’re satisfied with what you’ve discovered, the final step would be to talk to the vendor and request a demo!
At Budgetly, we believe in minimising our customers’ pain points. Our prepaid corporate card and expense management system provides an easy way to capture and keep your receipts, all in one place. From just $10 dollars a month, you get a card with full Xero integration, unlimited users, and our highly secure expense management software.
To learn more about Budgetly and how we help small businesses, request a demo today and let’s start your finance automation journey.
