Spend Management • 8 min read
Classic Expense Management vs Automation
By Aftab Manzoor
Published November 17, 2019
Two decades back expense management was simple. The number of expense categories was lesser in comparison to what it is today. Management knew where all they were spending and could track to good levels of satisfaction.

Then, globalisation happened. Businesses started scaling, people started travelling, businesses started using need based applications on a subscription basis. Needless to say, expense categories grew and so did the complexity.

As always is with mankind, change was (is) not welcome by many and their expense management became cumbersome.

With the amount of transactions done by businesses these days, those who employ manual expense management systems, manual data entry and spreadsheet, they risk missing of key information. For them errors are routine and expense management a pain. Human intervention is required at any step making the whole process redundant.

In addition to this, there are hidden costs tied to paperwork related to expense management.

Needless to say, organisations, which resist automation of expense management, bring home higher frequency of errors, redundant processes and overall reduced morale of the workforce.
Classic Expense Management

They say, old is gold, but it may not hold good at all times.

Expense management still in businesses means, hoards of paper receipts, messy excel sheets, lengthy and tedious and validation procedures. Needless to say it's an archaic way of handling spends and expenses.

Before we get into the headaches involved in the old school way, let us understand how it works on a fundamental level.
Issues with the above workflow are as follows:

Time, productivity and efficiency wastage – Lengthy hours spent on coming up with detailed and mundane expense reports could be spent on important work.

Lack of visibility of spending trends – As there is no aggregation of data at any level, spending trends of any sorts is impossible, to gather which leads to minimal or nil reduction of avoidable expenses

Increased chance of fraudulent claims – This can be accomplished with duplicate bills, exaggerated claims, false receipts etc

It is obvious that we need technology aided platforms to deal with the above headaches caused by classic spend management systems.
It's time for automation

Let's face it; it is difficult to continue into the future with a manual process.

The best solution is to onboard a platform where in the policies are built which leaves employees no option but to follow them.

The expense management software domain is not an empty one. From excel cost tracker to receipt scanning to integrated account tools, market is flooded with applications and software.

Before we get into the nitty gritty of automation let's see how the system works.
Now who are the key stakeholders who benefit the most from automation.

Finance

Their need is to simplify processes and save money.

When manual processes are underway, valuable data like who is spending on what is often overlooked and leads to hidden costs. Through automation, finance can track on real time basis where each cent is going, if bills and reimbursements are paid on time, if any fraudulent activity is on the rise and so on.

Business decisions can be taken on real time spend data with full view into cash flows

IT Managers

Their need is to ensure influence of IT and to reduce the burden on tech support.

If poor alignment of IT and finance teams up with outdated expense management systems it can drain the business a good amount of money. When IT and finance work together to automate expense, travel, and invoice management, it can lead to greater employee satisfaction and compliance.

This ensures that IT heads get a seat at the table to help plan for the future of the organisation. Automation aided by cloud-based tools will lessen the burden on the internal IT support systems and therefore can support the employees with other matters.

Employees (in general)

They need latest tech tools to reduce their frustration to most minimum levels possible.

When cloud based tools are deployed at employee levels, it results in alleviating the pain of making of tedious expense reports. This enables them to focus on the jobs they were hired to do in the first place.

CXOs and Business Leaders

They want to run the best business possible and maximise profit.

This one is easy. And it comes down to three big points:

  • Business leaders want what's best for their people
  • Business leaders want to keep costs low and profits high
  • Automated expense management can take care of these simultaneously
Now when a business is considering spend or expense management automation, it is prudent to keep the following under consideration:

Ease of automation – Primary motive of automation is reduce is time consumption. For example if a solution allows receipt scanning to be matched with claims a lot work is saved for many

Ease of integration – It would be fairy tale if a company decides to simply adopt an expense automation system and do away with all the existing tools and subscriptions. Hence integration with key SaaS subscriptions like Xero, SAP etc are very important as it helps with a smooth transitioning

Security – When spending is happening at so many levels, security of company funds is very important. An expense management tool with instant spend verification or one-time-use-virtual-credit-cards help the management rest in peace

Flexibility – This means managing the spending the way an employee wants to. For example some tools give customisable cards to set monthly thresholds for certain spend categories

Convenience – Spend management softwares help employees manage their expenses conveniently. For instance, one can just spend from the offline credit card with pre approved limit on an impromptu client dinner without having to spend from his/her pocket

Device agnostic solution – The solution should be configured for PC/Mobile/Tablet etc so that anything from budget setting to approvals to reimbursement requests can be done by anyone from anywhere

Real time policy checks – This is to ensure that spending is in limits and no fraudulent activities are being conducted

Digital audit trails – The solution should be sacrosanct to capture all the transactions so that all the data is centrally located and upper management can view all kinds of spends aided by data analytics
Before good byes are exchanged!

No matter how big the company is, it is wise to get on top of company spending for further reduction of costs and for improving the spending structure. There is no better way to do this than through automation.

Unfortunately, lack of vision in this direction results in many businesses losing out in terms of time and productivity.

The best solution is to have an all - in - one platform like Volopay, where all the transactions are stored centrally giving management at any level to have real time access to spending reports and trends. This invariably leads to better utilisation of budgets and boosting of employee morale by letting them do their jobs for which they were hired in the first place.
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