Expense management is crucial to your business operations.
According to a report by The Aberdeen Group, manual expense reports cost small and mid-sized businesses around $52 to process a single expense report. However, if your company processes around 500 expense reports monthly, this cost can ramp up to $26,000. And if you consider potential errors in these manual reports, the price can be much higher.
This is where the need for expense management systems (EMS) arises.
An expense management system is a software solution that automates and streamlines expense reporting processes. It typically includes receipt capture, expense categorisation, policy enforcement, approval workflows, and reimbursement processing. Having an EMS helps organisations control costs, improve financial planning, and make more informed business decisions.
Expense management systems are a form of business automation. This is where technological applications are used to perform repetitive tasks freeing up employees for more high-value work. This use of technology also falls under digital transformation because it modifies an existing process to improve efficiency and meet business and market requirements.
In today's business landscape, the Chief Financial Officer’s (CFO) role has evolved beyond traditional financial management to include driving automation and digital transformation initiatives.
As businesses become more complex and data-driven, CFOs are responsible for leveraging technological solutions to improve financial processes, reduce costs, and drive growth, which includes adopting digital tools such as an EMS. By embracing digital transformation, CFOs can gain better insights into business performance and optimise financial operations.
Businesses need an expense management system to streamline and automate their expense reporting processes. Manual expense reporting can be time-consuming and error-prone, creating policy enforcement and compliance challenges. Meanwhile, efficient expense management enables companies to:
stay compliant with tax rules
control costs
maintain accurate financial records
enhance their overall financial growth and productivity
When managing expenses, a good EMS can be a game-changer for businesses of all sizes. Not only can it help streamline the expense reporting process, but it can also provide valuable insights into spending patterns and identify areas for cost savings.
However, with so many EMS providers in the market, it can be challenging to know where to start. Here is a guide to choosing the right EMS for your business:
Before looking for potential providers, you should identify what you need in an EMS. Different businesses have different financial needs depending on their scale and how they run their business. Here are the factors to consider when determining your specific EMS needs:
Current processes and barriers
Know what’s working in your financial processes and what’s not. This evaluation will help you identify the areas of your reporting process causing inefficiencies, errors, and delays.
By understanding the pain points and barriers, you can determine how an EMS can address these issues, streamline the process, and improve accuracy and efficiency. Additionally, you can determine the specific features and functionality needed in an EMS, such as a daily feed or a receipt exception feature.
Employee needs and experience
Alongside your general business needs, you should know your employees’ needs and financial behaviours: How do your employees typically incur expenses? Do they usually make purchases with a company-owned credit card? Do they typically buy items with their personal cards? Would virtual cards help them be more proactive?
Understanding these factors will help you further narrow down the features you need, whether it's software that can check expense reports against a corporate credit card or one that lets employees take photos of their receipts.
Goals and Priorities
Once you assess your current processes and employee needs, it’s time to ask yourself what goals you want to achieve with an expense management system. For example, do you want to save time and money or reduce fraud?
Set tangible and realistic goals, and then list features you think will help achieve those goals. Make sure to keep your business priorities in mind. What are the features most important to your business at the current time? You may only need an Accounts Payable (AP) manager to send invoices or pay overseas suppliers. At a later phase, you may need virtual cards for your employees.
Evaluating your existing process and figuring out what your business and employees need in an EMS will help you narrow your options and make searching for the right provider easier.
Researching EMS providers is critical in choosing the best expense management system for your business. With so many providers in the market, deciding which one you want can be confusing.
Researching and evaluating different providers can help you make an informed decision and select a solution that meets your specific needs. Key factors to consider in your research are:
Features
Consider the features your organisation needs, such as receipt capture, policy enforcement, approval workflows, and integration with accounting systems.
This is where your evaluation of your company’s processes will be helpful because it guides you in determining what features you need and should prioritise.
Integrations
Integrations can improve the efficiency and accuracy of the expense reporting process. For example, integrations with accounting or HR systems can automate data entry and reduce manual errors, saving time and resources.
Organisations can improve their expense management process by choosing an EMS provider with robust integration capabilities and realise greater value from the system.
Customer Support
While the EMS may have robust features, the customer support quality can make the difference between a successful and a failed implementation.
A provider with responsive, knowledgeable, and accessible customer support can help organisations troubleshoot issues, optimise system usage, and maximise return on investment.
Data Security
EMS systems contain sensitive financial and personal data, so choosing a provider with strong security measures is essential to protect this information. The provider should have secure data storage, encryption, and access controls to protect data from unauthorised access, theft, or loss.
By selecting an EMS provider with a strong focus on data security, organisations can safeguard their sensitive information and maintain compliance with relevant regulations.
ProSpend is the all-in-one platform to manage expenses, supplier invoices, purchase orders and travel spending - all with complete budget visibility.
Our products allow businesses to harness the power of automation through industry-leading software while integrating directly with your ERP system. They work together to bring all your spending processes into one powerful platform.
No matter your needs or business priorities, ProSpend’s platform can be tailor-fitted for each customer’s unique requirements. It also enables businesses and employees to make smarter decisions and be more proactive with their spending rather than reactive.
So, whether you’re looking for an expense management system, a virtual card provider, or a travel manager, ProSpend has all that and more in one simple platform.
Given how crucial expense management is for a business, there is no room for errors that cost both time and money. Investing in an expense management system for your business is a smart move that can yield significant benefits in the long run. By taking the time to research and evaluate different EMS providers, businesses can find a solution that fits their specific needs and goals.
Book a demo with ProSpend today and discover how we can help you save time and money!