Mastering all concepts on expense management can be a hassle, even the most fundamental ones. But when working with finance there are some terms you need to know about, so we’re here to help you go over them — from the basics to the most complex ones.
Starting from the bottom of the pyramid, we’ll go over the fundamentals of spending management, its relevance for organisations, and its logical connection to business travel. Last but not least, we’ll talk about the return on investment (ROI) of adopting a SaaS platform to automate your cost management operations.
What is expense management?
Expense management refers to the systems deployed by a business to process, pay, and audit employee-initiated expenses. These costs include, but are not limited to, expenses incurred for travel and entertainment.
In the globalised world that we live in, together with the ease of transport brought by modern technology, business travel is continuously on the rise. In order to process all the expenditures generated by corporate trips, expense management is necessary.
When business travellers are on the road for a commercial reason on behalf of their company, they may incur extra costs such as lodging, transportation, meals, etc that are usually borne by the employer. That employer can do so by providing per diem or daily allowances or by having an effective expense reimbursement process.
Having a good and clear T&E policy that will govern such spending is mandatory. Employees need to be aware of what can be reimbursed or not – basically the “do’s and don’t” when it comes to incurring expenses on behalf of their company.
Can technology be helpful?
Keeping track of business expenses can be an exhausting task both for business travellers and finance teams, but more than that, it is unnecessary. If you have a smartphone and the right tool, for example, you can simply snap a picture of your receipt, let digital scanning technology (aka OCR) extract the data, and generate a line of expense.
Easy as that, expenditures are claimed and approved on the go and in real-time, reducing the length of the reimbursement cycle.
The finance department, on the other hand, gets more control, less heavy workload, and constantly updated analytics. Modern technology can process and analyse the data associated with corporate spendings and make sure that out of all the expenditures being incurred, only the ones that fit the company’s T&E policy will be approved – this means less fraud, less manual heavy workload, and a faster reimbursement cycle.
A software to manage the expense claim, authorisation, audit, and reimbursement processes (or in short: “Expense Management Software”) can be obtained from organisations that provide licensed software implementation and support service, or alternatively from SaaS companies.
Is SaaS the answer?
SaaS stands for “Software as a Service”. It refers to a cloud-based service that can be anything from communication software to a travel and expense management solution.
Not surprisingly, SaaS companies have been a growing business since the modern technology revolution. One major advantage of using the Software as a Service is its efficient operational management with constant updates and real-time data analytics.
The ease of access is another benefit that is decisive when people choose to migrate to a cloud-based solution. You can access your software from every computer or smartphone, from anywhere, as long as you have an internet connection.
In addition to that, another key advantage is the lower upfront costs compared to traditional download and installation software.
Why would you need it?
Nowadays, what is expense management without the right tool? With a cloud-based solution to managing your corporate expenditures, you can boost your productivity and save time and costs at the same time.
Sounds like a dream, right? It’s actually real, and we can give you an example to illustrate it.
Have you thought about the potential return on investment (ROI) for your business and finance team? Automating the expense management process is a change that around 63% of companies in the world have already made. The finance department realised that this is not a choice anymore, it is a necessity if you want to stay on par with your competitors.
How Rydoo can help
We hope that next time someone asks you “what is expense management?” you’ll answer with no hesitation that you not only know what it is but also you know what’s the best way to do it.
If you want to understand more about the ROI of automating your expense management, book a demo with one of our specialists and master the tech wave in your company.