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. Expense management includes the policies and
procedures that govern such spending, as well as the technologies and services utilized to process and analyze the data associated
with it.

Software to manage the expense claim, authorization, audit and repayment processes can be obtained from organizations that provide
a licensed software, implementation and support service, or alternatively, from software as a service (SaaS) providers. SaaS providers
offer on-demand web-based applicationsmanaged by a third party to improve the productivity of expense management.

Contents
Steps
Expense reports
Types of expense management
Telecom expense management
Travel expense management
Technology expense management
Inventory management
Choosing an Expense Management Solution
See also
References

Steps
Expense management automation has two equally important aspects: the process an employee follows in order to complete an
expense claim (for example, logging a hotel receipt or submitting mobile phone records) and the activity accounts or finance staff
undertake to process the claim within thefinance system.

Typically, a manual process will involve an employee completing a paper, spreadsheet, or Graphical User Interface-based expense
report that they then forward, along with the relevant tax invoices (receipts), to a manager or other controller for approval. Once the
manager has approved the claim, they forward it on to the accounts department for processing. The accounts staff then key each
expense item into the company's finance system before filing the claim and receipts away. In a Software as a Service implementation,
these processes are largely automated and the submission and approvals processes are transacted electronically
.

Expense Management automation is the means by which an organization can significantly reduce transaction costs and improve
management control when logging, calculating and processing corporate expenses. Independent research evaluating the use of
automated expense management systems has confirmed that the cost of processing an expense claim is reduced as the level of
automation increases.

As found in an Aberdeen study on expense management automation in April 2015,[1] there are four main factors that drive an
organization to automate their expense management processes:

Compliance focus: 57% have poor visibility into spend & compliance so they don't know how much they're spending
and they cannot ensure that all of those costs remain within the boundaries of the company's handbook or policies
regarding expense reporting
Cost reduction: 38% need to reduce expense processing costs
 More control: 35% have no control over T&E spending
Employee productivity: 20% need to eliminate manual & paper processes to improve employee productivity and
satisfaction
An automated solution typically provides the ability to code, approve, and report on expenses.

Expense reports
Expense reports are the required reports that employees or travelers need to submit in order to account for their expenses and/or get a
reimbursement. Specifically, expense reports are made up of individual line items for reasonable charges while performing a
particular job or traveling for a specific job-related requirement. These charges can include meals, hotels, company supplies, printing
materials, or flights. The employee then provides proof of the purchase with a receipt and all related expenses (from a particular trip
or a particular project, for example) will go into the expense report.

Once submitted, the expense report is approved or denied by the employee's supervisor or HR representative, who will check to make
sure that receipts match expenses and ask for additional documentation if needed.

In general, employees prefer not to file expense reports because the process can be long and tedious, especially if many expenses
need to be filed at the same time (or if the employee has waited to do all expense reports at the same time). Reports can ask for
information like:

Date & time of purchase

Purpose of the purchase
Amount
To whom or to which department (within the company) it should be charged
The subtotal of each different kind of expense
Grand total
[2]
How much the employee has been paid previously (in the form of an advance) subtracted from the grand total

Types of expense management

Business strategies are tailored to various types of expense management:

Spreadsheets: Spreadsheets can be an easy , cheap way to keep track of expenses, but they still have paper
receipts that go along with them that can be lost or damaged. This can also be a labor-intensive method and it can
be confusing if employees are not good at using spreadsheets.
Paper forms: Paper forms work well with paper receipts. This is also an inexpensive way to manage expense
reports. However, this can amount to a lot ofmanual work of logging and tracking these reports for both employees,
approvers, and the people who need to pay the bills in the accounting department.
Software: Software reduces the workload, but it also can cost more in the beginning to implement. According to the
Aberdeen Group's report, "Best-In-Classs T&E Expense Management: How They Do It," [3] software can solve the
major problems of compliance, manual labor , approval time, and the cost of expense reporting overall.

Telecom expense management

The management of wireless and wireline service and asset expenses is labeled as Telecom expense management. Historically,
Telecom expenses were managed as general services. In recent years, more and more organizations associate telecom expense to IT
[4]
services. This change in management is due to a shift in global business strategies towards evolving technologies.

Travel expense management

Travel expense management (often referred to as "T+E") is defined as the means to organize and manage travel arrangements and
costs for traveling employee.[5]

Technology expense management

Technology expense management or IT expense management is the management of technology costs such as software licenses,
computer equipment, applications, etc. Technology expense management also include the management of services related to
technology (SaaS, PaaS, etc.). Technology expense management activities are often performed through the use of various technology
tools (bill of IT, management software, workflows, etc.)[6]

Inventory management
Inventory management consist in all the activities a company does to manage what it owns and uses to function. Inventory
[7]
management can also referred to the management of the quantity and quality of product for sale.

Choosing an Expense Management Solution

While enterprise-level corporations have accounting departments capable of selecting an expense management solution appropriate
for the business, many small-to-medium business owners have a difficult time knowing which SaaS solution to choose. Many
accounting advisory partners are available to help the decision-making process,[8] and will usually make recommendations based on
the following criteria:

Direct integration with accounting system: Can the expense data flow directly into the accounting system, coded
appropriately, without the need for any manual data entry?
Ease of employee use: Will the software be adopted by employees? Is there a mobile app? Does the automation
component cut down on the need for employee data entry (via technologies such as Optical Character Recognition
scanning)?
Compliance & customization: Can the software be configured to evaluate expenses against company expense
policies? Can approval processes be adjusted based on project, department or spend?
Fraud prevention: Does the software have expense fraud detection capabilities, such a duplicate identification?

See also
Corporate travel management
Traklogg

References
1. http://www.aberdeen.com/research/10158/10158-rr-effortless-te-reporting/content.aspx
2. http://blog.data-basics.com/the-ultimate-expense-reporting-cheat-sheet
3. http://www.aberdeen.com/research/10255/10255-rr-travel-expense-procurement-cpo/content.aspx
4. Basso, Luiz Augusto Carvalho & Claudio (2014-01-01).Telecom Expense Management for Large Organizations (htt
ps://books.google.com/books?id=DmrAAgAAQBAJ) . iUniverse. ISBN 9781491720028.
5. Enoch, Marcus (2016-04-01).Sustainable Transport, Mobility Managementand Travel Plans (https://books.google.c
om/books?id=joXeCwAAQBAJ). Routledge. ISBN 9781317047650.
6. Lebrun. Caroline. Working Towards the Gold Medal: Telecom Expense Management vs Technology Expense
Management. http://blog.cimpl.com/working-towards-the-gold-medal-telecom-expense-management-vs-technology-
expense-management (8/26/2016)
7. Investopedia. Inventory management.http://www.investopedia.com/terms/i/inventory-management.asp (8/26/2016)
8. https://www.gartner.com/doc/3873624/market-guide-telecom-expense-management

Retrieved from "https://en.wikipedia.org/w/index.php?title=Expense_management&oldid=862642427

"
This page was last edited on 5 October 2018, at 18:22(UTC).

Text is available under theCreative Commons Attribution-ShareAlike License ; additional terms may apply. By using this
site, you agree to the Terms of Use and Privacy Policy. Wikipedia® is a registered trademark of theWikimedia
Foundation, Inc., a non-profit organization.