Expense management. It’s a necessary evil that can dishevel even the most seasoned road warrior in seconds with the misplacement of a critical travel receipt. For accounting professionals, it can spell countless hours of unproductive data entry, receipt chasing, and murky, outdated views of client spending records.

“Every client of every accounting firm out there deals with expenses,” said David Barrett, founder and CEO of Expensify, an automated receipt and expense management solution. “Expense management, I would say, is the most universal accounting problem of all.”

Research indicates that many small and midsized businesses continue to use spreadsheets to manage expenses, but the tide is turning. The rise and evolution of dedicated expense management solutions is increasingly automating the traditionally manual process. “Managing expenses with a solution like Excel requires finance managers to spend more time completing administrative functions, such as aggregating and updating data, and less time completing strategic business functions, such as analyzing spend to draw insights,” said A.G. Lambert, vice president of global products at Concur, a provider of travel and expense management services and solutions. Lambert noted that a recent Concur survey commissioned by Wakefield Research found that well over 60 percent of small and midsized businesses currently use spreadsheets to manage expenses.

Added Lambert, “A dedicated expense reporting solution can automatically populate expense line items based on purchase data to streamline the reporting process and eliminate human error. This allows for faster submission and reimbursement, while also providing finance managers a more timely, accurate view of employee-initiated spend so they can spot trends and negotiate savings with suppliers.”

Dave Terry, co-founder and chief operating officer of expense report and invoice automation software provider Chrome River, agreed: “Surprisingly, there’s still some 50 percent of organizations out there that still use spreadsheets. So, for those organizations, just automating the process itself is still something that they need to attack and move to, generating a lot of internal efficiency in their own organization. But then, beyond that, the cost control that can come with it with a technology tool that can support the policies and the compliance rules that are needed in an organization. As soon as they apply that automation, though, the next big thing you see is the need for companies that are currently using a system, to move toward mobility.”

Terry outlined five key benefits of an expense management solution:

  • Efficiency gains;
  • Data accuracy;
  • Policy enforcement;
  • Visibility; and,
  • Analytics.

For accounting professionals whose clients use expense management solutions, the integration with major accounting and ERP systems and access to dashboards and customized reports breathes new life into data in a way that speadsheets cannot.

“When I first started doing this particular type of work, [an expense management solution] really just seemed like a no-brainer right from the start,” said Vanessa Kruze, who founded San Francisco-based Kruze Consulting about five years ago. Today, the firm provides accounting, finance, tax and human resource services to more than 150 startups.

She recalled the days when clients would “proudly” come to her with their expense reports laid out into well-organized spreadsheets and receipts filed away in a Dropbox folder, only to learn that they would be charged additional fees for having that data manually entered into QuickBooks. Kruze estimated she would spend, at minimum, one minute per transaction. For a 40-person business, that easily translated into an extra $450 monthly fee for the manual input of expense reports. “I truly believe we are not short-cutting our own revenues when we use Expensify. If anything, we are saving ourselves because it means that our employees are happier, which means they stick around longer, and that means lower recruiting costs for us,” said Kruze. “And it is better for the clients as well. A lower bill for them is always great and we don’t have to spend nearly as much time trying to defend or validate the time it took to do some of this manual work.”

Top 100 Firm Wipfli is working to help small businesses gain greater efficiencies by migrating to the cloud and leveraging applications such as Expensify for expense management. “We’ve made a big push to go to QuickBooks Online, to get our customers in the cloud and learning about a lot of the applications that help business owners be more efficient. We started talking to them about things they are struggling with and expense reports seems to be a common thing,” said Mark Stricker, a partner in small business technology solutions for Wipfli in Palatine, Ill. “If you come in and help a business owner and their accounting team save hours of time that they can use to work on their business, that’s huge. If you don’t tell them about these things, then someone else will.”

Seeing the benefits of an expense management solution firsthand is Bill Kiernan, director of accounting for Cloudera, a data-software company in Palo Alto, Calif., which has experienced tremendous growth in recent years and, in April, launched its initial public offering. To manage its travel expense worldwide, it began using Concur about three years ago — a marked change from the company’s prior system of filling out spreadsheets and submitting paper receipts.

“Despite our rapid growth in headcount and transactions in the accounts payable department, we are essentially where we were three years ago in terms of the number of people it is taking to handle the vendor growth and the employee expense growth,” Kiernan said. “So, it has provided a good service to allow us to control our headcount [in the AP department] but also has provided an automated method to get the data into NetSuite. It has allowed integration into our systems.”


Say ‘Aye’ to AI

Expense management solutions are no doubt changing the game, but vendors are not resting on their laurels. Enhanced integration, artificial intelligence and machine learning are bringing about even more change.

“We’re beginning to see [artificial intelligence]/machine learning emerging to simplify travel and expense management and deliver personalized experiences. At Concur, we already employ machine learning to correctly input expense report line items based on receipt images,” Lambert said.

Added Lambert, “We’re also testing machine learning for use in environments where travelers are already spending their time. For example, Concur and Slack recently collaborated to create the Concur bot for [messaging tool] Slack, a private beta that will help employees using Slack tackle select travel and expense tasks directly within Slack. With the bot, users can interact with the Concur platform through a conversational interface, allowing them to request information about their business travel plans and submit expenses without interrupting their workflow.”

In addition, Concur is beta-testing integration with Microsoft Outlook 365 so users can book travel directly from the Outlook calendar and submit expenses right from the Outlook inbox, said Lambert. The beta suggests travel options when a user adds business travel plans to their Outlook calendar and extracts details from e-mail receipts to auto-populate expense reports.

Claire Milligan, director of user experience and director of product engineering across Tallie and Nexonia, pointed to the importance of machine learning and noted that Tallie has been leveraging machine learning for several years to address such areas as coding expenses to the general ledger and duplicate detection.

“Using machine learning to be able to establish trends and understand what data is the same, and what data is different, and what data continuously behaves the same, that is where the true value is in expense management,” Milligan said.

In December, Tallie merged with Nexonia, a provider of Web and mobile business financial management solutions, to form an expense management powerhouse.

Meanwhile, Sage, a provider of cloud-based accounting software, is striving to make business, including expense management, as easy as sending a text with its accounting bot Pegg. Unveiled a year ago, Pegg acts as a smart assistant that allows users to track expenses and manage finances through messaging apps such as Facebook messenger. Users simply message Pegg with their expenses and it automatically accounts for it in Sage One, providing users with an up-to-date financial view.

“The reason Pegg is revolutionary is because it makes it so simple to move away from that shoebox [of receipts]. So, the issue is not just of matching all those receipts, and it is complicated when you are processing all of that information, but is also the problem of never really knowing where you are financially,” said Alex Fawcett, principal architect of mobile and bots for Sage.


Virtual Cards: A Reality

Corporate cards, central travel accounts (CTAs) and employees’ personal cards remain the most popular payment methods, according to the Global Business Travel Association, but alternatives like virtual payments are gaining momentum.

According to GBTA Foundation 2016 survey data, sponsored by U.S. Bank, only 6 percent of respondents said that their companies applied single-use virtual accounts for travel, but another 20 percent are expected to do so by the end of 2018. Single-use virtual payments are unique account numbers that are generated for a specific supplier, transaction amount and/or time period. In most cases, once the transaction is processed, the account number is no longer active.

“However, it is estimated that, by 2021, 90 percent of all corporate card programs will incorporate some virtual card component or element, and 60 percent of corporate card payments will be made with virtual cards,” said Terry of Chrome River, referring to the data. “The whole industry needs to be aware of that, and start being prepared and make sure they are taking advantage of it for their users. I think what we see is that there might be a tipping point as larger organizations begin to adopt virtual card technology, maybe sometime in the next two to three years.”

Said Lambert of Concur, “Virtual cards offer a wealth of benefits for travel managers and finance departments. They can be configured for spending limits, department codes, merchant category controls and date specifications. They deliver this information to back-end accounting systems in real-time, making it easier to spot unusual activity and prevent fraud. Additionally, travel managers can control how much is spent and what it’s spent on, so it’s easier to ensure compliance with company travel policies.”

Meanwhile, Everlance is looking to ease the burden of mileage tracking with its GPS-based mileage tracking app. Launched in 2015, the set-it and forget-it app is not only easy for travelers to use while they are on the road, but it can also save accountants a great deal of time and energy. Everlance, which currently has more than 100,000 active users, now offers bank and credit card integration and is beta-testing a Web portal for accounting professionals.

“We are bringing all that [data] into a responsive Web page, so you can sort by total miles driven, you can tag specific users, which employees, which divisions and things like that. We are also giving a way for the bookkeeper to really easily communicate with the end user in the app,” said Alex Marlantes, co-founder and CEO of Everlance. “Basically, I think we are just trying to close the loop and make it much closer to real-time.”

Clearly, the tide is turning as the rise and evolution of dedicated expense management solutions transforms the landscape for both business clients and for their accountants.

“I think the history of accounting has really just been just about digitizing the paper processes. I think the future of accounting is more about creating truly digital processes, which is really different,” said Barrett of Expensify. “The idea of real-time expense management where you have an artificial intelligence that is basically doing [the input] for you — this is something very new and radical stuff.”

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Antoinette Alexander

Antoinette Alexander is a veteran journalist and editor
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