Writing an expense policy is a great way to set the ground rules for employee spending in your business. But, as a standalone document, it will only get you so far.
Fortunately, with expense automation you can give your policy a fighting chance. There are products out there that will enforce rules, provide insights into spending behaviour, reduce admin, and much more.
Not only will automation help you get more out of your policy, but it has the potential revolutionise expense management in your business.
In this article, you will learn about the three main types of expense automation tools currently available, and their pros and cons.
What is expense automation?
Expense automation is the process of using software or other products to replace repeatable or manual expense processes.
With the recent fintech boom, there are now countless products available to you, but you can bucket them into three core groups:
- purchasing cards
- expense tracking software
- expense management platforms
Purchasing cards (also known as p-cards, purchase cards or procurement cards) are payment cards employees can use to buy items for work without dipping into their own pockets. Give each of your colleagues a card, add some funds, and they’re good to go.
Spending controls, such as limits and vendor restrictions are one of the main benefits of p-cards, helping to improve expense policy compliance. However, the controls are generally basic, and setting them up can be hard without speaking to an account manager.
You can also view employee transactions to a degree. But spend visibility is limited in comparison to other options, making it hard to assess whether employees are sticking to your policy.
Typically, as a p-card customer, you load funds as-you-go which prevents your colleagues from overspending.
Because these cards are generally offered by the big banks, many of them offer credit plans so you don’t need to deposit lump sums into your account upfront. HSBC is one such provider.
It's worth noting that you can't use invoices from purchasing card suppliers for VAT reclaims. So, your team will need to keep their receipts with every purchase. Consequently, many businesses pair purchase cards with expense tracking software.
Expense tracking software
Expense tracking software (also known as expense trackers or receipt tracker apps) help businesses to monitor employee spending.
Your staff are required to pay for their expenses with a purchase card, something similar, or their own money, and then log it into a mobile app.
Tools like Dext and SAP Concur have useful features, designed to increase accountability, and simplify expense management for the whole team.
For example, manager approvals ensure that all transactions are visible to line managers. Meaning that employees are more likely to follow your expense policy.
OCR technology is another good feature that scrapes transaction information from receipts. Similarly, open banking connections automatically pull the data from a card account into the software. The real-time data these tools provide means that finance professionals can create up-to-date projections and reduce waste, which is useful for refining your expense policy.
Expense tracking software doesn’t include an integrated payment card, so you will need to pair it with another payment method. Often, businesses couple the software with purchase cards, getting the control they need at the cost of having to juggle two systems and subscriptions.
Expense management platforms
Expense management platforms (also referred to as 'end-to-end') combine the best of both worlds. Smart payment cards connected to expense management software, all in one system. Notable providers include Expensemate, Pleo, and Spendesk.
Card controls are generally superior to the p-cards you can get from the banks. They also include manager approvals, so staff are more likely to follow your expense policy.
Because the cards and software are integrated, transaction data flows seamlessly into the software. Using a mobile app, cardholders are prompted to photograph receipts as soon as they make a purchase, increasing receipt capture. In comparison, staff using tracker software must remember to manually log their expenses which they can fail to do.
Most solutions require funds to be uploaded first, which can put a strain on cash flow. But some providers like Expensemate offer credit.
Expense management solutions are the best way to prevent inappropriate spending and increase policy compliance. But they’re not perfect. For example, staff may need support getting to grips with the system. Fortunately, many providers provide training and account management support.
To get the most of any expense solution, check out our article on why expense management systems fail.
Regardless of what tool or combination of tools you choose, expense automation will help you get the most of your policy.
Spending controls, manager approvals and receipt capture keep your employees accountable for their spending. Expense automation also makes everything much easier to process and manage.
We think the best way to compliment your policy is with an end-to-end expense management solution like Expensemate. It allows you to simplify expense processes and implement sophisticated spend controls with a single subscription.
Plus, it is likely to save you some major cash. For example, Allenby Commercial managed to reduce their bookkeeping administration costs by 80%.
See for yourself and get the most out of your policy with a 30-day Expensemate free trial.