Expense management is a systematic process that organizations use to track, analyze, and maintain control over their employees' expenses efficiently.
Effective expense management can reduce costs and enhance financial management. It's a critical component of business strategy and helps organizations (of all sizes) make informed decisions on allocating resources.
Systematically tracking and categorizing expenses to gain insights into spending patterns. This helps identify overspending and explore cost-saving options.
Establishing clear procedures for expense approval to ensure financial control and alignment with company policies. The number of approval layers may vary depending on the organization's hierarchy.
Effective expense management involves setting spending limits and goals through budgeting. Realistic budgets enable businesses to monitor and control expenses, fostering financial discipline and preventing overspending.
Analyzing expense data gives businesses insights into spending patterns, trends and informed decision-making. Reporting tools uncover opportunities for cost optimization and facilitate better financial decisions.
Timely processing of employee reimbursements, adherence to policies, and efficient vendor payment processes are key to effective expense management and maintaining strong business relationships.
The expense management process generally involves the following steps:
Employees log their expenses and submit them for reimbursement. They can do this directly to their manager, the accounting department, or via an expense management system.
Managers or approvers review and either approve or deny the expense claims.
The finance team audits expense reports, ensuring compliance whenever necessary.
The finance team processes reimbursement payments if an expense claim is accepted.
The finance team maintains records of expenses and keeps receipts readily available for future external audits.
Implementing expense management gives your business control over employee spending, ensuring accurate financial records and enabling data-driven decisions. It tracks expenses by category, validates authorized purchases, optimizes spending, curbs duplicate or fraudulent payments and more.
Effective expense management helps identify and eliminate unnecessary or extravagant spending, ensuring your business operates efficiently and within its means.
By staying on top of your expenses, you can prevent budget overruns, ensuring that your financial plans remain intact and achievable.
Accurate expense tracking provides valuable insights into your spending patterns, enabling better financial planning and forecasting.
Reducing wasteful spending directly impacts profitability, allowing you to reinvest saved funds in growth initiatives or improve your bottom line.
Compliance with financial regulations and company policies is crucial to avoid legal issues and maintain the trust of stakeholders.
Streamlined expense management processes free up resources and time, allowing your team to focus on core business activities.
The OVHcloud group adopted the Expensya solution to implement flexible, 100% cloud-based report management. The group now saves 80% of its professional expense management time by automating every step in the process.
While both are related to financial tracking, expense management specifically focuses on recording, approving, and reimbursing employee-initiated expenses. Traditional accounting, on the other hand, encompasses a broader range of financial activities, including balance sheets, income statements, and financial forecasting.
Typical business expense and employee spending categories include travel expenses, meals and entertainment, office supplies, advertising costs, research costs, salaries and benefits. Knowing which categories to track can help you accurately analyze your company’s spending and budget accordingly.
Expenses typically eligible for reimbursement in corporate business and travel expense management often include:
An expense management policy specifies which company expenses can be reimbursed. It provides guidelines for authorizing, approving and monitoring expenses. Policies vary but typically cover reimbursement rates, acceptable purchases, per diem limits, approval flows for extra expenses, and more. Implementing an effective expense management policy is one of the best ways to control employee spending.
Expense management is important for any company, but how it's done can differ from one organization to another.
The traditional, outdated way to track expenses is through paper tracking. This method is cheaper but comes with the hassle of manually logging reports and keeping track of paper receipts.
More sophisticated than paper, spreadsheets allow you to import financial data from your bank for easier reconciliation. However, they still require paper receipts, and they can confuse employees who aren't used to using them. There is also great potential for human error with manual data entry.
Expense management software simplifies and automates the entire expense management process. Most expense management systems can import receipts and expenses electronically, eliminating the need for paper – while generating accurate reports from expense and other financial data. Employees typically prefer it because it's easy to submit expenses for reimbursement without the hassle of mailing paper forms or maintaining spreadsheets.
Expensya, now part of Medius, redefines the way you manage expenses.
From its advanced OCR+ technology to its user-friendly mobile app, Expensya provides you the tools you need to manage your expenses efficiently.
Whether you're a small business looking for basic expense management tools or a large enterprise needing a comprehensive expense management system, Expensya has got you covered. With its robust features and intuitive interface, it's no wonder that over 6,000 companies worldwide trust Expensya for their expense management needs.
Effortlessly extract all relevant data from receipts – including amount, multiple VAT, tourist tax, expense category, date, means of payment, currency, and merchant name – in dozens of languages and formats.
The native mobile application for Android and iOS lets you snap receipts anywhere, even in flight mode, and manage expenses in real-time.
Employees can simply enter the start and end points, and Expensya will calculate distances using Google Maps.
Set payment limits, define pre-approved budgets, and automatically reconcile transactions. Gain real-time visibility into your cash flow with virtual or physical direct debit Mastercard.
