Expense Management Solutions
An In-Depth Guide
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What are Expense Management solutions?
Expense management solutions help businesses streamline and automate the handling of employee expenses. This includes capturing and creating expense reports, validating and approving them, reimbursing employees and reconciling payments. It also covers managing card programs and providing analytics and insights to track spending and enforce policy compliance.
Modern expense management solutions cater to businesses of various sizes and requirements, offering features such as mobile expense reporting, travel booking capabilities and integration with corporate card programs.
With these solutions, businesses can manage critical parts of their expense processes, such as support for receipt and invoice processing, validation and approval workflows, and data capture and policy enforcement capabilities. These solutions also support various payment methods, card programs and partner ecosystems, and offer analytics and reporting to meet stakeholder goals.
How Expense Management solutions factor into the S2P process
Expense management vendors are not directly part of the source-to-pay (S2P) process, and therefore not included as a typical step in the S2P process. However, they play an important role in that they complement and intersect with S2P processes. While S2P covers the sourcing to payment part of the procurement lifecycle, expense management solutions streamline the expense capture, validation and reporting within the cycle, to ensure that all expenses are compliant and appropriately tracked.
Similar to how AP and procurement solutions manage purchase orders and supplier invoices, expense management tools manage expenses. The solutions also provide integrations with financial systems and procurement platforms to ensure that expenses are captured and reconciled in real-time and can be reported to other systems.
Expense management systems handle the workflow of capturing receipts, validating expenses against company policies and facilitating approval workflows. Integrations to other systems ensure a unified approach to managing company spend and improving compliance and financial reporting.
These vendors also offer analytics and reporting capabilities that help organizations track and control their spending, similar to S2P solutions’ spend analysis functions. By leveraging expense management tools, businesses can enhance their S2P functions and gain spend visibility and control.
Why Expense Management solutions are important
Business travel is a trillion-dollar global industry, the complexity and volume of related expenses of which make expense management a critical business function. Travel-related expense management has also become increasingly essential for the remote workforce and for businesses looking to reduce costs and fraud and simplify employee workflows. This leads to the need for a robust expense management tool to control and optimize spending, especially travel-related spending.
These tools help track and control inefficient, low-value spending by employees, such as travel/event-related expenses (and potential reimbursements), and audit expenses to prevent fraud and errors that can result from previously manual expense processing. Moreover, advanced technologies, such as optical character recognition (OCR) and machine learning, are taking over expense reporting to digitize and categorize expenses accurately and quickly. This frees up valuable time for employees and finance teams to focus on strategic tasks rather than manual data entry.
Expense Management solutions also support various card programs, including virtual cards and corporate credit cards, facilitating seamless and easy payments and expense tracking.
How do I know my organization is ready for an Expense Management solution?
Any organization with spend data can use a spend analysis tool — there’s no minimum threshold. That said, small, young organizations likely don’t need one.
Here are some signs that it’s time to step in with an Expense Management solution:
- Your employees are traveling more frequently, increasing the complexity of managing and reporting expenses.
- You are handling expenses across multiple geographic regions or currencies, requiring a system that can manage complexities.
- You are moving from manual processes, such as spreadsheets, to automated financial systems and need a solution to integrate seamlessly.
- Your organization needs a comprehensive solution to unify and manage expense data.
- You lack the internal resources to effectively process, reconcile and manage expenses manually.
- You need a solution to enforce and monitor compliance with your corporate expense policies more effectively.
- You want to streamline the efficiency of expense report approvals and reimbursement processes to reduce delays and errors.
- You want to optimize and manage various card programs, including corporate and virtual cards, with greater ease and control.
- You are aiming to enhance visibility into your expense data for better decision-making and financial oversight.
If any of the above describes your organization, it’s time to begin looking for an Expense Management solution.
Some factors to consider when beginning the journey are:
- Cost: Expense management solutions vary in cost depending on the size and needs of an organization. Solutions geared towards large enterprises typically come with higher costs due to their advanced features and extensive support, while those for smaller businesses are more affordable. Some expense management tools are marketed as ‘free’ but generate revenue through other means, such as transaction fees or partnerships with card providers.
- Card programs: Expense management tools offer various card program options. Some solutions provide their own proprietary cards, others allow you to integrate your existing cards and many offer a combination of both. Proprietary card programs often come with benefits like higher credit limits and no foreign transaction fees, while integration with existing cards offers flexibility and ease of transition.
- Global support: Global support is especially important for large enterprises with operations in multiple regions. This includes support for various currencies, international tax compliance and region-specific expense policies. For card programs, having partners with global coverage ensures that employees can make purchases and receive reimbursements seamlessly, regardless of their location. Features like multi-language support and global customer service should also be considered when managing expenses across different regions.
How Expense Management is done: Common features of Expense Management technology
Expense management handles the management and optimization of expenses. Common features include the capture and submission of receipts and invoices through various methods, such as mobile app uploads, email integrations and direct uploads from other systems. These technologies use data digitization techniques like OCR and ML to automate the extraction and categorization of expense data. The tools ultimately ensure that receipts are accurately processed and classified.
Once data is captured, the tools apply predefined taxonomies and validation rules to ensure compliance with corporate expense policies. Expense management tools provide real-time guidance to users, flagging potential policy violations and anomalies, such as duplicate receipts or incorrect coding.
An important feature of expense management tools, similar to AP solutions, are approval workflows. These streamline the expense report review process to ensure efficient and timely reimbursement for employees.
Expense management solutions also typically support card programs, including virtual, debit and corporate credit cards, depending on the tool and customer needs. They offer matching and reconciliation features that match card transactions with expense reports. Another common feature is a partner ecosystem that includes integration with a network of partners that enhances the tool’s native capabilities, providing support for travel and expense management, such as concierge services, personalized booking suggestions and sustainability tracking.
These solutions also typically have reporting features to provide insights into spending patterns through customizable dashboards. Advanced visualizations can be tailored to focus on specific aspects of expense data, such as geographic regions, supplier performance or compliance metrics. Advanced capabilities may also include benchmarking to compare spending with peers, trend analysis to observe changes over time and scenario planning to evaluate the impact of different spending strategies.
Expense Management use cases
Expense management solutions can have various use cases, but commonly they are made to:
- Streamline expense capture and submission: Facilitate the efficient capture and submission of receipts and invoices through multiple channels, such as mobile apps and email. This streamlines the process of collecting and processing expense data from employees, reducing manual entry and increasing accuracy.
- Data digitization and categorization: Employ technologies like OCR and machine learning to digitize and categorize expense data. This automation helps convert physical receipts into digital formats and categorizes expenses into predefined taxonomies, such as travel, entertainment or office supplies.
- Policy compliance: By applying predefined validation rules and real-time policy reminders, expense management tools ensure that expense submissions comply with corporate and spend policies. This helps to identify and correct issues, such as policy violations or duplicate receipts, before they impact further financial reporting.
- Expense approvals and reimbursements: Automated workflows streamline the approval process for expense reports, making employee reimbursement timely.
- Managing card programs: Support various card programs, including virtual, debit and corporate credit cards, by providing reconciliation features that align card transactions with expense reports.
- Travel and expense (T&E) management: For travel-related expenses, tools provide support, such as concierge services, personalized booking suggestions and sustainability tracking.
- Reports and insights: Generate detailed reports and dashboards that provide insights into spending patterns, policy compliance and financial performance. This can include category-specific breakdowns, trend analysis and benchmarking against industry standards.
How technology supports Expense Management — Top 5 capabilities
- Expense capture and report creation
Average vendors over basic-level tools for expense capture and report creation such as mailroom submissions (paper and all image formats) and portal/app uploads of receipts. Advanced ones further enhance this process by allowing users to submit receipts via mobile photos, email or direct uploads. This streamlines the process and ensures that all expenses are accurately recorded and categorized. These tools also provide options for digitizing receipts using OCR technology, with some leveraging AI/ML. This ensures that all expenses are accurately recorded and categorized. - Expense report validation and approvals
Basic solutions may include manual approvals based on organizational hierarchies and expense amounts, with reminders and auto-escalations. Advanced solutions offer pre-configured forensic validation rules, such as checking for duplicate receipts, verifying merchant existence and validating employee payment data. They also provide real-time policy reminders and automated validations through business rules, reducing the risk of errors and policy violations. - Card programs and reconciliation
Basic tools may support local/regional issuance of cards and provide reconciliation files and automated audit processes. Advanced solutions expand this capability by offering global issuance of cards with customized rules and settings, fully integrated reconciliation processes, detailed fraud detection analytics and cash-back programs. These features enable tracking of card transactions and integration with expense reports, leading to accurate financial records and efficient management of card spending. - Expense management analytics
For analytics, basic tools offer generic dashboards and insights into user spend, receipts and approvals. Advanced tools provide more sophisticated analytics, including real-time travel updates, sustainability insights, troubleshooting insights and community-driven actionable insights. They also can leverage AI/ML for enhanced fraud prevention and detection, offering a comprehensive view of expense data. Customizable dashboards and reports offer a clear view of expense data, enabling users to monitor compliance, track performance and benchmark their spend. - T&E management
Basic solutions may provide automated suggestions and minimal human involvement in travel booking processes. Advanced solutions offer personalized booking suggestions, 24/7 multilingual chat and traveler support, and concierge services for planning travel accommodations.
These tools can integrate sustainability tracking, allowing organizations to view and select travel options based on emissions, partner with carbon management providers and report on GHG emissions. Capabilities, such as personalized booking suggestions, concierge services and sustainability tracking, help organizations manage travel costs effectively and ensure that travel policies are followed, contributing to overall expense optimization.
Why selecting Expense Management technology can be difficult
You have to weigh many factors when choosing any technological product. Here are some of the most important factors you should consider when starting your expense management selection:
- Approval layers:
Ensuring that solutions actually support the many layers of validations and approvals for expenses, including compliance, legal, company travel policies and sustainability. - Reconciliation methods:
Assessing which solutions best meet varying reimbursement and reconciliation methods for different types of employees (including contingent workers such as contractors). - Right fit:
Determining the right level of implementation, integration and investment of available solutions against the needs and size of your company.
How Spend Matters can help you select Expense Management technology
Spend matters specializes in procurement technology diligence. In addition to projects and advisory, Spend Matters offers Insider, the only membership community and technology comparison tool of its kind: access to Spend Matters SolutionMap vendor rankings dataset combined with independent, zero pay-to-play, brutally honest coverage of solution providers, market developments and trends affecting procurement, finance and supply chain.
We can help you find a solution that can:
- Effectively capture, digitize, code, categorize and submit expense receipts or invoices for processing.
- Ensure expenses are policy-compliant with business-rules-based facilitated expense validation and approvals.
- Provide business-user-friendly methods of expense report reimbursement and reconciliation, including card programs.
Discover Expense Management vendors
These are the vendors we are covering today (or very soon). Visit their vendor directory pages on Spend Matters for a quick vendor overview, demographic information and relevant articles, including vendor analyses.
| Solution Provider | What it does |
|---|---|
| Airbase | Airbase is an all-in-one spend management platform that has solutions for AP automation, expense management, corporate cards and guided procurement. Airbase is known for its strong support for card programs, including V- and P-cards, and offers global, multi-currency travel booking support. |
| Brex | Brex began in 2017 as a corporate card offering and has since expanded into an all-in-one spend platform. In addition to T&E, Brex can support spend management for group events (team offsites and conferences), procurement (vendor cards and bill pay) and employee benefits (stipends and perks). |
| Emburse | Emburse is a spend optimization, expense management and AP automation provider with multiple solutions for invoice processing, payments, T&E management, audit and insights. The expense management products are tailored to different business market sizes and geographies. |
| Fyle | Fyle’s expense management solution enables real-time expense management and reporting processes using AI. Rather than issuing cards natively, Fyle differentiates itself through its ability to connect to cards customers already have across all major card networks. By doing so, the vendor eliminates the reliance on issuing banks for transaction fees and streamlines data access. |
| Fraxion | Fraxion is a spend management platform that offers expense management as one of its solutions. Fraxion is an easy-to-use, quick-to-deploy and low-cost solution that provides fast ROI for its customers. Fraxion has core support for expense report creation and reconciliation. |
| Tipalti | Tipalti targets the mid-market segment primarily in the US and UK, offering an integrated finance automation solution with a global payment’s hub, invoice management, supplier management and recently added procurement and expense management solutions. Tipalti Expenses is Tipalti’s expense management solution that streamlines expense management and reimbursement. |
Glossary
| Term | Definition |
|---|---|
| Forensic validation | Applying advanced rules to check for potential fraud and policy violations in expense reports. This includes identifying duplicate receipts, verifying merchant existence and validating employee payment data. |
| Expense capture | Process of collecting and submitting business expenses. Methods include capturing receipts via mobile apps, emailing digital receipts or direct uploads into the system. |
| Expense digitization | Conversion of physical receipts and invoices into digital formats by using OCR, AI and other such technologies. |
| Policy guidance | Methods to ensure compliance with corporate expense policies. This includes automated reminders, validation rules and workflows that help users adhere to policies. |
| Expense report reimbursement and reconciliation | Matching expense reports with actual payments made, ensuring that all expenses are accurately reimbursed and recorded, preventing discrepancies. |
Expense Management in the Content Hub
