Taking care of corporate expense tracking

Before COVID-19, employee discretionary spend was often the second largest operating expense after wages for many organisations.

Corporate expense tracking can be immensely time-consuming and challenging in terms of real-time visibility. Here’s what you need to know about automated expense management systems that do the job for you.

For far too long, tracking corporate expenses has been a painful exercise for everyone involved.

or the employees, there is the manual entering of receipts and filling out of forms. For the accountants, there is the cross-checking of the claims and compiling reports.

Automated expense management systems [EMS], which draw on artificial intelligence technology, are making expense tracking a much more seamless process.

Before COVID-19, employee discretionary spend was often the second largest operating expense after wages for many organisations, says Matt Goss, managing director of SAP Concur Australia/New Zealand.

That spending declined dramatically last year, as lockdowns ensured there was no spending on hotel rooms, airfares or meals, as business travel and client entertaining were put on hold. 

Instead, many organisations moved quickly to update their expense policies to help employees cover the cost of setting up their home workstations.

While the vast majority of ASX 200 companies are already using an expense management system, the number falls away sharply for small- and medium-sized companies, where it stands at about 30 per cent, according to Goss.

“For those smaller businesses, in a lot of cases, the reality is they are still using an Excel spreadsheet. The employees of the company are spending their cash on out-of-pocket expenses. They don't have a corporate card program in place.”

Tracking and monitoring real-time spending

One of the major difficulties with tracking and managing expenses is in gaining real-time visibility over spending, because manual processes mean the finance department has to wait for employees to submit their expense reports.

With automated expense systems, the spending is visible as soon as the expenditure occurs because credit card data is immediately imported into the expense system, says Goss.

If an employee books a flight for a business trip in two weeks’ time, the finance team has immediate data on the spend – not after the trip is over, when an expense claim is filed.

Automated systems also play an important role in capturing duplicate receipts, which generally comprise 3 to 4 per cent of total employee spend in an organisation, Goss says.

“When you automate a solution, all of a sudden it becomes far easier to capture that non-compliance spend.”

Expense management systems allow employees to photograph their receipts, which are then “read” by the system using optical character recognition technology and, in most cases, automatically match the receipt to the expense.

Go pre-paid

Automation can also help with compliance for complex items such as GST and fringe benefits tax – something that employees often don’t fully understand.

Andrew Bond, chief executive of Singapore’s 8common, the maker of corporate spend management software expense8, is aware of the problem.

“We know the date, we know the amount, we even know the employee’s delegations and default cost centre. 

“The only thing a person spending money on behalf of the organization needs to tell the system and therefore tell the business is why did you spend that money,” Bond says.

Expense management systems also work with corporate credit cards to prevent non-compliant or fraudulent spending. Many organisations are moving away from traditional credit cards to pre-paid cards, which require money to be loaded before a purchase can be made.

The EMSs have the organisation’s spending policies built into them and won’t allocate money to a card unless the spending is compliant. 

For instance, if an employee needs a new laptop, they won’t just be able to buy one from just any store if their organisation has a preferred supplier.

For Bond, a major goal of automated expense tracking is to make the process as painless as it can be for the employee.

December/January 2022
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