In today’s competitive markets, companies are always looking for ways to save time and make their processes more efficient. Many tasks that were traditionally done in-person or manually are now done online to minimize time and effort. Managing employee expenses is one such manual task that is undergoing a major transition. This is where an online expense management software comes into play.
An online expense management software helps streamline expense reporting, processing, and reimbursing through automation. If used appropriately, it can help companies meet their business goals more efficiently. At the same time, it entails a few risks that need your attention. To help you make the best pick, in this article, we discuss the pros and cons of using an online expense management software.
Benefits of an online expense management software
- Higher accessibility
With cloud storage, saving and accessing of receipts gets easier than ever. Finance teams can access receipts and expense reports on any device at any time. Most online expense management softwares are compatible with smartphones and offer seamless expense reporting and approval options via mobile apps.
- Less manual work
Traditional expense management methods involve lots of manual effort in individually collecting and verifying receipts. By using an online expense management software, most of the work happens without manual intervention. This saves time and effort. It also decreases the chances of human error.
- Online expense management software is cheaper
With most of the work happening online, administrative costs reduce.This allows managers and finance teams to save time for other productive tasks. This also leads to higher productivity across the company with minimal expense management costs.
- Reduced turnaround time and faster reimbursements
While processing and verifying expenses online, finance teams and managers no longer have to go back and forth between expense reports and receipts. The receipts and the reports are available to them on a single platform for quick verification. The software also does policy violation checks on its own to ensure that expense reports are processed and reimbursed as soon as possible.
- Ease of expense reporting
Employees often delay reporting their expenses simply because the process of maintaining receipts and filling out expense forms manually is very tedious. On the other hand, reporting expenses on an online expense management software is extremely quick and straightforward.
Receipts can be submitted by clicking a picture or attaching e-receipts directly to the online expense report form. The software automatically extracts data from the receipts and fills up the appropriate fields. Some softwares also have a Gmail add-on to report expenses directly from your email account. Such ease would tend more employees to report their expenses on time.
Due to the conversion of physical receipts to e-receipts, you can save a large quantity of paper. Additionally, since all expense reports and bank statements are virtual, the need for paper is completely discarded.
- Automated expense approval workflows
An online expense management software gives employers the freedom to customize their policies and approval workflows as desired. Due to a defined automated approval workflow, expense reports are approved and processed like clockwork. Reimbursements become faster and more legitimate as a result of this.
- Custom notifications and reminders
Most softwares provide the option to set up custom reminders and notifications to remind employees and approvers of any pending tasks. The software sends out reminder emails automatically to ensure that all stakeholders are aware of their liabilities.
- Compliance reinforcement in real-time
As soon as an expense report is submitted, the software checks it for policy violations in real-time. It flags suspicious reports and notifies the approvers about the breach immediately. This ensures that all reports are compliant and acceptable for approval.
- Audit trail for faster verifications
Every expense report on an online software has an audit trail that contains the information of every action on that report. This simplifies audits and helps employers keep track of all reported expenses.
- Ability to analyze trends and patterns
Online expense management softwares feature expense analytics to provide insight into the spending trends in an organization. Employers can view the turnaround time at every stage to know how much time is spent on every task. They can also know the most violated policies and the most frequent violators to identify and address bottlenecks.
- Integration with corporate credit cards
By linking employees’ corporate credit cards to the software, employers can receive direct bank feeds from every bank and card program. By doing so, they would no longer have to depend on employees to provide card statements themselves. The software automatically reconciles and matches expense report entries with card statements and prompts in case of mismatches or duplicates.
- Integration with accounting software
Expense management softwares also provide integration options with accounting softwares like Quickbooks, NetSuite, and Zapier to ease the job of accountants. Due to their compatibility, accountants can directly feed the processed expense reports to their software comfortably.
Risks in an online expense management software
- Negligence during approval
Due to the ease of being able to approve expense reports instantly at the click of a button, managers and approvers may sometimes be negligent. Although the software checks the reports for policy violations automatically, any violation that the software misses could be ignored by the approvers. Thus, some expense management softwares like Fyle offer multi-level approval workflow options.
- Negligence during auditing
Although softwares simplify the work of auditors, there is less scope for auditors to investigate suspicious activities. External verification can become minimal or redundant since all expense reports are already internally verified by the software. Due to this, auditors may choose to trust the software’s discretion and neglect uncertainties. For avoiding such a situation, audit trails come very handy. It helps keep every report audit-ready and traceable.
- Risks of reviewing multiple reports at once
Traditional expense management requires reviewers to manually check every expense report. On an online expense management software, reviewers can wait for all expense reports to pile up and then review them all at once. When multiple reports from multiple employers and projects are reviewed simultaneously, it is often not possible to review every case individually. Hence, reviewers are likely to make mistakes. A simple way to prevent such negligence is to set policies to promote a culture of weekly reviews and approvals.
- Poor customer support
When you are using an online expense management software, you often require the assistance of the software’s customer support team. It is normal to experience glitches or technical setbacks in an online application. Poor customer supper can be a blocker for your operations during such situations. It is, therefore, crucial to consider a software's customer service reputation while choosing it.
- Online service outage
System crashes and service outages are frequent while working online. Online expense management can be highly risky if the software is prone to random outages. In case the customer service is poor, the entire process can be vulnerable to technical issues. Hence, you should read reviews regarding the software’s usability and customer service before selecting an online expense management software for your company.
An efficient online expense management software can prove to be a catalyst for modern businesses. It is an essential tool for the needs of today’s marketplace. Each software has its unique strengths and weaknesses. Although the benefits outweigh the risks considerably, you should always re-evaluate any expense management software that you use or plan to use.