The term digital expense management or automated expense reporting regularly flies around finance departments, but what exactly is meant by it and what falls outside the term? In this article, we will delve deeper into the subject and answer questions such as:
What is digital expense management?
Digital expense management is the complete digitisation of the process of compiling, submitting, and approving expense reports, versus doing it all manually on paper. When we talk about expense management, we mean the set of processes and systems that a company uses to process, pay, and track business expenses. This includes costs associated with business travel, daily allowances, business lunches and so on. In principle, digital expense reporting replaces the traditional paper process of keeping receipts, preparing expense reports in Excel, printing them, stapling receipts to them, entering data manually, and so on.
The main purpose of expense management is to track expenses paid for by employees on behalf of the organisation they work for, and how the organisation reimburses those expenses. Expense management also includes the guidelines and procedures surrounding these expenses as well as the technology and services organisation use to process and analyse the data associated with them.
Different approaches to digital reporting
Many types of software make it possible today to digitally report expenses rather than using a costly and outdated paper process. These software players generally approach expense management and digitalisation in different ways. Most of them emphasise functionalities to enforce internal policies, perform expense analyses and drastically reduce the time it takes users to submit, approve and reimburse expenses. There are, however, some nuances:
- T&E or "Travel & Expense Management" - T&E encompasses the entire process of booking and managing travel arrangements and expenses for business travellers. It often allows employees to submit both travel requests and expense claims via a mobile app.
- Corporate payment cards - Some players are opting for an emphasis on physical and/or virtual payment cards linked to their smart software. Employees who travel frequently are offered a physical credit card and those who need to make an online purchase are given a one-time virtual card. In both cases, receipts are immediately linked to the correct transactions.
- Line-by-line expense management - Another nuance in digital expense reporting software is that some players choose to do away with expense reports altogether and have employees submit, approve and/or check expenses on a line-by-line basis. Here, the "real time" aspect is central, as it theoretically becomes possible to reimburse employees' expenses at a moment's notice.
The main challenges in expense management
Before the COVID-19 crisis, corporate travel expenses in particular were on the rise. Today, the situation has hybridised, with costs related to working from home overtaking the rest. The biggest challenges remain more or less unchanged and can be summarised as follows:
- Vague travel policies - When the rules around business travel are unclear to employees, it is a logical consequence that spending limits will sometimes be crossed. Common travel expenses such as accommodation and food should be specifically regulated in every organisation.
- Too little insight - Expenses advanced by employees all too often remain a proverbial "black box" for the finance department. Without an efficient system, it proves very difficult to gain insight into how much still needs to be repaid at the end of the month and where the company money ultimately goes.
- Inefficient processes - Manual processes such as entering information into a spreadsheet not only cost a lot of time, but also often lead to errors, especially in larger organisations with less direct oversight.
How do I choose the right digital expense app?
As we mentioned earlier, there are several approaches to digital declaration. Different players have developed different types of software to deal with these challenges. For the finance department, it is therefore not always easy to see the wood for the trees and find the right solution for their business. Below is a list of criteria that may help you find the right solution for your company.
- Mobile app - Employees who are often on the move find it the hardest to keep track of all their paper receipts and keep them in order. Moreover, there is a high risk of losing receipts, attaching them to the wrong expense report, or simply of the receipts becoming unreadable. With a mobile app, your employees can claim their expenses digitally in almost real time, and fraudulent or erroneous claims are barred even before they can be submitted. Both you and the traveller can retrieve all expenses and receipts at any time within the app. This is very important if you are serious about sparking a change in behaviour within your company.
- Configurable, multi-level approval flows - The best digital expense reporting app should be flexible and customisable to your needs. This means it should support multiple approval levels to perfectly mimic your company's hierarchy.
- Integration with an online booking tool - Many business travellers find it convenient to be able to find their travel tickets, hotel reservations and expenses all in one place. This is exactly what some players are trying to offer by integrating an online booking tool with their digital expense app. Such a combined solution often also offers approval flows at the booking level and ensures that travel policies are properly adhered to.
Conclusion
Digital reporting and digital expensing are two different things. What does your company need? Which view on digital reporting best fits your company’s organisational structure and hierarchy? Companies that choose Mobilexpense are satisfied with the user-friendly mobile app, the ease with which company policies can be enforced and the compliance in over 70 countries.