by Niamh Lynch
Published on 5 June 2014
Nothing flows easier than other people's money. That's why you, as a boss, need to keep an eye on what your employees are doing with company funds. Many business practices have evolved to become slicker and easier. When it comes to expenses management, however, there's a notable difference - it's also become significantly more effective. Managing expenses by saving up bits of paper and handing them over to a flustered finance department representative was riddled with opportunities for mistakes, fraud, and lost time. No more.
Like many business tools, expense management software is ubiquitous. There are many variants, all with their own pros, cons and features. Finding one won't be hard. Finding the right one, however, needs careful planning and consideration. If you rush into a decision, down the line you're likely to find that you desperately miss features that you hadn't even considered. To help you avoid this pitfall, take a look at the points below. Consider each one carefully, note down your company's specific needs, and be sure to check them off when it's time to make the call.
This is of primary importance. You can have the most advanced expense management system money can buy, but if you're left with fat Excel file and a teed-off accountant at the end of the month, it will be next to useless. Some accounting software has a built-in expense management module - like FreshBooks - but if you're opting for a stand-alone app, make sure it's compatible with whatever your existing accounting department uses.
If you just can't find the perfect compatible app, just make sure the tool you do opt for provides easily exportable data. As Joris Brabants of Xpenditure reminded me recently, manual input is a time-waster that's best avoided:
"Thanks to integration with accounting software, expenses can be exported so there's no manual data input."
Expenses management apps really come into their own when tax time comes around. Different jurisdictions have different sticking points, so whether it's the Internal Revenue Service's seven years of records, or the UK's super-careful approach to what can be written off as a business expense, make sure the app you're looking at can provide you with the specificity you need.
That your expenses management app should be easy to use seems like a no-brainer, but if you pick a tool on the basis of technical data alone, you could be missing an essential part of the package. If your expenses software is complex, unintuitive and generally lacking in the user-friendliness stakes, employees will be more likely to resent the tool and seek to avoid it, or to use it incorrectly. A few minutes of use, whether in the form of a software demo or a look at a friend or acquaintance's package, should tell you everything you need to know.
When it comes to costly software, expenses management apps are generally a breath of fresh air. That said, don't let yourself be fooled by the lowest absolute price. As Michael Hourigan of Shoeboxed told us, the average $30 a month that his app costs isn't the cheapest on the market, but
"when you compare this to the $20/hour you would pay for a bookkeeper and the potential $1000's you could miss in tax deductions, the service is more than worth the price."
If you're purchasing business expense management software for a larger company, you might want to check if it includes any features that prevent fraud. These features typically include duplicate detection, the submission of claims without receipts, or notification of unusual spending behavior.
Again, this is a feature that will probably be of more use for larger enterprises. A standard expenses workflow might be submit > raise with checker > approve > pass to Accounts, but some apps will also allow you to create rules to be enacted when certain flags are triggered. For instance, managers can be alerted when employees make a claim, large claims can automatically notify a senior manager, or claims in a certain category, client entertainment, for example, can be flagged for extra monitoring.
Once your expenses management system is in place, a nice - although optional - feature is the ability to create and share reports on a given employee or department's spending. These reports can be used simply to inform employees (some managers say it's helpful in encouraging moderation!), or to raise questions at evaluations or debriefings.
These six points are just a suggestion as to what aspects of a tool you may need to consider. Also of relevance are the availability of mobile apps (pretty much essential in most modern businesses), automatic currency conversion, and the ability to configure rules for expenses in accordance with your company's own rules. If an in-house directive prohibits spending more than $50 per employee on client entertainment, for example, make sure your app stops illegal claims from the get-go.
If you'd like to see some more time and expenses apps, check out our expense management category
To see a review of five of the most popular expenses management apps on GetApp, read The Five Best Expenses Management Apps.