Our Guide to the Best Expense Management Software Tools
We understand that for many business owners their admin to-do list is sky-high. Where possible we encourage you to rely on tech to simplify your life! We want to ensure that the processes related to what your employees spend (whether it’s travel costs or client lunches) are as smooth as possible.
Traditionally, managing employee expenses involves a mountain of paper receipts, making it a time-consuming task for a businesses finance team to monitor, verify and approve expense claims and reimburse employees.
While bigger agencies with deeper pockets could throw lots of resource power at the problem, that wasn’t an option for many smaller firms and start-ups. But, not anymore.
Technology has once again come to the rescue with a range of solutions designed to simplify and streamline the employee expense claim process – but if you’re new to these types of systems, how can you know what works for you?
Our team is well versed in knowing what technology works for every type of agency and team. They can support you and your colleagues with advice about the best expense management software tools that will reduce your agency’s costs while increasing transparency and efficiency.
What is expense management?
Expenses management is not just a process but a set of business rules. This includes having policies over what employees can claim and ensuring you effectively monitor these claims. This process also includes getting those claims in the accounting system and then making sure the expense claims are paid. Your process could also include a way of avoiding expense claims altogether, e.g. a company credit card or using apps like Soldo and Air Wallex.
We want to ensure your agency doesn’t spend unnecessary time on this process.
Employee expenses are traditionally managed in one of three ways:
The petty cash tin used to be the go to way of managing employee expenses. Cash would be taken out of the bank and put into the petty cash tin. Then everytime someone needed reimbursing they’d put the receipt in the tin in exchange for cash. Periodically the accountant would tot up all the receipts and add them to the accounting software and double check that the cash balance left in the tin added up to what it was supposed to
Nowadays, businesses are more likely to go straight to a digital solution to manage expenses or for the owner to be in charge of spending and pay for everything through the business.The problem with leaving the business owner in charge of all company spending is that it’s not usually the best use of their time! And also what about those things that need to be paid in person by the person using them, like taxi fares for example? When a business owner is ready to start delegating expense management to their staff then digital solutions can offer a great solution.
A simple digital expense management solution is the hypothetical ‘petty cash’ pot which is used for day-to-day operational spending and is replaced as and when money is taken out. Paper files, simple spreadsheets or even Xero can be used to monitor and track petty cash going out and coming in.
Company credit card
This is a common method of managing expenses. Credit cards are linked to the company’s business and are most often used by senior executives or C-suite staff, to maximise transparency and make life easier for everyone involved.
In this circumstance, employees who need money to travel or buy supplies can either be given a cash advance or pay out of their own pocket and are later reimbursed by the company.
Traditional expense claim process
Proof of purchase, such as travel tickets or receipts must be handed in when reporting expenses. From start to finish, the multi-stage expense management process should be along the following lines:
- An employee records and submits an expense claim
- Line or department Managers verify and validate expense reports
- The reports are accepted or rejected
- Finance teams audit expense reports to ensure compliance
- Reimbursement payment to employees is scheduled
- Records of expenses and receipts need to be kept for 7 years to comply with rules around maintaining proper books and records.
Employee expense claims for agencies typically include claims for reimbursement of entertaining, travel or subsistence costs. But it can also include buying office supplies or gifts.
Each transaction requires a written record, accompanied by proof of purchase, such as a paper or electronic receipt, so an agency’s accounts department can track all expenses and staff are repaid accordingly.
The importance of expense reporting
Having traceable and trackable employee expenses is crucial to minimising time-consuming errors, whether accidental or deliberate.
Ineffective expense management can result in fraud, duplications, inaccurate reviews or missing information, with the knock-on effect of delayed approvals and reimbursements.
That can lead to disgruntled staff, who may still be accruing expenses while their earlier claims are being processed.
At the same time, your agency’s finance team may be lacking transparent data but face increasing pressure to keep the whole process moving.
It’s a far from ideal situation.
For many years, expense management was a challenging and labour-intensive process for smaller companies that didn’t have the same resources as bigger agencies.
That changed with the introduction of digital technology and the creation of expense management software.
Our recommended expense management software tools
The digital age has revolutionised and facilitated every aspect of the world of work, and accounting is no exception.
Today, every start-up that has big and bold ambitions or each small business owner dreaming of the day their agency runs super smoothly, can access technology that brings them one step closer to their vision.
In the grand scheme of things, expense management software is a small cog in a much bigger machine. Yet the benefits to small and mid-sized businesses mean this management solution punches well above its weight. Let’s take a closer look at the expense-tracking software we recommend:
Xero expense management solution
As Chartered Xero accountants and winner of the 2022 Xero Small Firm of the Year award, we love Xero because it connects everything you need to effectively run your business, including expense claims, reporting and tracking. Its client portal enables:
- Paperless expenses claims on the go
- Fast approval and reimbursement
- Business expenses monitoring
- Reports and analytics to track expenses
A simple smartphone photo of a restaurant receipt or automated mileage recording can be included in a claim using Xero. As a fully digital expense management solution, it details every expense as they happen – no need for frantic rifling through wallets of paper receipts.
Every stage of the claims process is automated: accounts staff who manage expenses are notified immediately when a claim is submitted.
They can review it, before approving or declining with a single click, which means employees aren’t kept waiting around for weeks to have their money paid back.
Xero’s software also enables firms to monitor their spending, and automatically create reports, enhancing their financial management.
Real-time data and insights help Directors to make informed decisions about cash flow and identify where expenses could be trimmed back and the money reallocated, enabling better budgeting.
Manage expenses with Xero’s mobile apps
All that sounds great, but Xero’s accounting software has even more to offer when it comes to expense tracking. One of our favourite things about its ecosystem is the almost endless array of features and apps that make life just that bit easier.
Xero’s receipt scanner app to submit expenses is a perfect example. Use it and all the details from expense receipts are automatically scanned into Xero, reducing the time taken by manual data entry.
As well as speeding up the reporting and expense approvals processes, it’s another way to track who is spending what and where. For other expenses or specific project expenses, it can be vital for small business owners looking to keep close track of their project accounting.
Xero also offers a mileage tracker. No more mental arithmetic gymnastics trying to work out how far your employees have travelled.
Instead, just input the start location and destination on the map and Xero’s software will automatically and accurately calculate the distance. It puts an end to laborious manual reporting and the reconciliation process takes a fraction of the time. It’s another win-win.
Xero’s expense management software enables companies to tap into lots of analytics and data for their financial reports. It also allows informed decisions to be made about travel expenses, identifying trends as well as potential savings via resource scheduling.
Another great organisational feature of Xero’s expense management solution is the ability to label spending so it can be grouped and charged to the correct client, enhancing project management.
The app also allows the tracking and recharging of expenses, automatically adding them to a customer’s next invoice, and facilitating reimbursement. For small businesses depending on timely payment, it can be a lifesaver.
Finally, Xero’s user-friendly dashboard allows companies to visualise all their expenses in real-time, putting data about each employee and their spending in one, easy-to-use space.
Benefiting staff and firms: Soldo
The Soldo platform claims to be the only one built for both employee and company spend, and it’s got some seriously smart features, including Xero integration. We currently use this and recommend this solution to our clients for managing employee expenses. As Soldo is a prepaid debit card it means that employees are not out of pocket and can manage their expenses independently.
Soldo offers a range of payment cards, both virtual and physical Mastercards, for in-store and online spending, as well as specialised fuel cards assigned to particular users or vehicles.
Ideal for travel and expenses, these can be issued to individual staff members or occasional workers, such as contractors or volunteers.
Corporate prepaid debit cards
Often used for subscriptions, online advertising or other kinds of company spend, these physical and virtual prepaid cards can be allocated to particular projects or departments. More good news for small businesses seeking to enhance their expense management: they can also be shared among teams.
Soldo also provides wallets with limited balances and defined purposes, enabling a company to organise and control funds in multiple currencies across employees or departments, bolstering project management.
Soldo enables pre-approved spending while also ensuring no unauthorised payments can be made. It also generates real-time reports into company expenses and spending. Like Xero, Soldo can be connected to other apps, further enhancing automation.
Soldo also offers you a ‘bigger picture’ view of everything. You can drill down to see who has spent what, and when and where they spent it. And you can also see how much money is left on each user account so you know whether you need to top their account up.
AirWallet streamlines the expense report
This fintech solution also integrates with Xero, and enables small and medium-sized businesses to make and receive payments in over 50 currencies across more than 130 countries.
AirWallex is a business-only approved payment and financial service provider in the UK and several other nations. It aims to compete with traditional banks by managing local and international payments.
An end-to-end expense management service was recently added to the platform, a move which caught our team’s attention.
We’re excited to learn that their developers will be adding features such as custom expense thresholds and bulk approvals that will save money and time. This could be particularly valuable for clients that need to make overseas payments.
As with Xero and Soldo, AirWallex eliminates manual processing, helps streamline approvals and accelerates the entire expense reporting process.
Like Soldo, it also enables card limits to be imposed across the board, depending on the business needs, while live transaction feeds offer real-time expense tracking insights.
AirWallex aims to reduce admin hours dedicated to the manual data entry of expense claims and ensure companies keep control of their payments and project management with reliable document storage.
Monitor everyone’s expenses with Pleo
Denmark’s Pleo expense management software also integrates with Xero (and is one of the market leaders!). It has physical and virtual cards at the centre of its offering, while lots of automation seeks to make payment systems and expense reporting effortless.
Companies signing up for a card get all their invoice data sent to a single, easy-to-read dashboard. Real-time insights enable a company to schedule and automate online payments when it suits them.
Interestingly, Pleo bundles cash spending, mileage and other expenses, including per-diem travel (also known as a scale rate payment), together under its Pocket product, which is also available to company staff that don’t have a Pleo card.
Pleo facilitates expense tracking and reimbursement and eliminates the need for staff to fill out paper expense reports or hang on to lots of receipts (while ensuring transparency for the accounts department).
Pleo’s software can also pair up the receipt in a Gmail, Outlook or Microsoft 365 inbox with the relevant expense using mobile app Fetch. It will search for up to 3 days before a purchase and up to 10 days after.
Dext Prepeare management solution
We have long been fans of this online accounting software as it covers every step of a company’s expenses workflow and, of course, integrates with Xero. Dext provides agencies with an up-to-date, real-time view of their business spending.
The Dext Prepare solution extracts the required data from receipts with 99% accuracy, digitises the expense report data and sends it to the agency’s accounting software. It is automatically sorted by tax, supplier and region.
The receipts and bills are all securely stored in one place, enabling companies to easily create and approve each expense report, as well as delegate tasks to employees within Dext itself.
Agencies can also automatically categorise regular expenses in real-time, while Bank Fetch will collect bills and invoices from supplier websites.
Other great features from Dext’s online accounting software include its pocket receipt scanner, which uses Optical Character Recognition (OCR) technology to analyse, understand and organise data in 30 seconds. In case you’re not familiar, OCR technology is the process that converts an image of text into a machine-readable text format. For example, if you scan a form or a receipt, your computer saves the scan as an image file. Agencies can also create expense reports in minutes, using Advanced Expense Reports.
The advantages of tech-based expense management solutions
Many of the expense reporting solutions we’ve explored offer lots of advantages for agencies. Let’s drill down a little deeper into some of the major benefits and how they could apply to you.
Staff can independently manage their expenses (and not be out of pocket)
One of the main advantages of Soldo, Pleo and AirWallex is that your employees can independently manage their own expenses without the faff and burden of hours of admin. The use of these great apps also means that employees are not left out of pocket.
Plus, expenses admin is done away with almost entirely – no expense claims are needed at all.
Faster reimbursements for employees
Technology such as Xero Dext can speed up the process of reimbursing staff for expenses. This has two major advantages: first, high levels of automation mean finance teams and expense managers aren’t bogged down in reams of paper every time a claim is made.
Second, a streamlined accounting system that repays employees quickly means they’re out of pocket for less time. That can have a positive impact on staff morale, enhancing trust and potentially increasing productivity.
Improved expense visibility and financial management
Without integrated expense management systems, agencies only had sight of their total company expenditure after expense receipts were processed. That opacity sometimes led to unpleasant surprises regarding business expenses.
Now, almost every configurable expense management solution provides real-time data about every single transaction, including when and where they took place and who made them.
As well as greatly streamlining the entire expense management process, digital and cloud-based technology has put control of a company’s finances firmly back into the hands of the agency owner. Expense tracking enables informed decision-making about cash outflows and future budgets.
User-friendly expense solutions
Small businesses often don’t have the time or money to train staff about the complexities of accounting systems and expense tracking.
That’s why many cloud-based expense solutions have developed user-friendly dashboards, maximising agencies’ resource management.
Expenses management systems that have an intuitive interface, such as Pleo, are growing in popularity because of their simplicity. It’s the definition of superior customer service.
Reduce errors and cut delays
Manual processes are fraught with the risk of error, and the impact of these errors can be significant when you are dealing with your employee’s own money.
Expense management technology has reduced that risk, thanks to automated recording and instant synching with an agency’s accounting system.
As well as boosting trust in finance teams, tech-based expense management can also minimise payment delays saving even more of your precious time.
Create a tailored expense policy and ensure tax compliance
Start-ups focused on scaling their agency may not have a policy in place to manage expenses, or even know where to start when it comes to creating one.
Should all travel expenses be covered?
Do you need an expense policy that covers even a quick coffee?
Can all employees claim expenses or just senior staff?
Implementing a tech-based expense management solution will offer guides to employee expense policies, enabling growing agencies to develop rules that suit their brand ethos and protect cash resources.
Likewise, automated expense management software can also automatically categorise expenses and create an audit trail for tax purposes.
Minimise or prevent fraudulent employee expenses claims
Even the most robust expense policies can’t prevent the worst from happening if a member of staff loses their company debit card or has it stolen.
Cloud-based expense management software can identify fraud, often long before the expense receipts are submitted and the problem comes to light.
Many management solutions are equipped with detection systems to identify activity that isn’t in line with your agency’s usual spending patterns.
Whether it’s purchases made at an unusual location cropping up in an expense report, or spending that breaches your expenses policy, a tech-based expense management solution could flag up such incidents, allowing finance teams to take immediate action.
How can we help manage your expenses management
We understand that enterprise resource planning and accounting systems can contribute to the successful running of every company.
It doesn’t matter whether you’re a small business looking to ditch paper expense reports, or the CEO of an established firm that wants everything, including expense reporting, to run like clockwork.
Our list of preferred technology offering streamlined expense reports is a great place to start. However, it’s important to remember there are lots of ways to track expenses and automate expense claims.
For small businesses and bigger agencies, it can be an expense management minefield. How can they be sure any expense management software can genuinely provide all the tools they need to automate expense claims and eliminate paper expense reports?
They come to us.
Training and support
As Xero accounting experts, we are dedicated to helping our clients grow sustainably by demonstrating and implementing technology we know will benefit them.
Our finance team supports agencies at every stage of the business journey, helping large and small businesses find a cloud-based expense solution that’s right for them.
We’ll put in place systems that will streamline and automate expense reporting, alongside other Xero processes that we know will enhance your agency’s financial efficiency.
Our team will support your accounts department during the move to Xero, and we’re only ever a phone call away if you need help or advice.