Several studies suggest a steady increase in the number of enterprises adopting hybrid work models after the pandemic. In addition to making employees return to offices, major companies still support work-from-home and work-with-remote employees.
At the same time, most companies and startups make employees engage in domestic and international business travel regularly. That is why; employees these days make purchases and incur expenses for various authorized business purposes.
Employers control employee-initiated expenses by implementing well-crafted expense policies. But the increase in the number of expense claims submitted by employees makes it challenging for them to track expenses, ensure policy compliance, and prevent expense fraud.
Your organization can overcome these expense management challenges through automation. The built-in features provided by expense management software will help your company streamline this complex process without escalating human resource costs.
While automating the crucial business process, your company has the option to implement on-premise or cloud-based expense management software for small businesses. But you must use a slew of features or functionalities as key criteria to choose and implement the right expense management software.
12 Features You Must Consider While Selecting Expense Management Software
- Expense Policy Communication and Compliance
Well-defined expense policies help your company control ongoing costs. But you can ensure policy compliance only when employees access and understand rules and guidelines seamlessly. It becomes easier for you to prevent policy violations when the expense management software allows you to add and update expense policies effortlessly. Also, you should prioritize software that sends automated notifications each time it detects expense policy violations.
- Quick Expense Approval Process
Your policy must make it mandatory for employees to incur expenses of specific types and amounts only after getting approval from the designated manager. Hence, you need an expense management system that allows you to define a multilevel approval workflow. However, you should check if employees can use the software to send approval requests directly to the relevant approver. Also, the approver can review and approve the expense request using the same software.
- Expense Report Digitization
Your organization cannot modernize and streamline expense management without replacing paper-based expense reports with digital expense reports. Hence, you need software that enables your employees to generate digital expense reports in minutes. You should prioritize expense management solutions that generate automated expense reports by capturing information from invoices scanned by employees.
- Mobile User Experience
It becomes easier for employees to submit expense reports on the go when they can access expense management software using smartphones or tablets. Also, they can produce automated expense reports when they can scan invoices using mobile devices. That is why; you should check if employees can access the expense management software seamlessly as a mobile app.
- Automated Tax Calculation
Certain types of employee-initiated expenses are taxable while others are tax deductible. It becomes easier for employees to differentiate taxable expenses from tax deductible expenses when the software allows you to divide expenses into categories like travel, mileage, and office. Also, you should choose software that calculates indirect taxes like GST and VAT automatically based on preset rates.
- Spend Visibility
Expense management software for small business facilitates real-time spend visibility by featuring a dashboard. You can use the dashboard to track and review expenses based on specific statuses like paid, unpaid, scheduled, and pending for review. The dashboard will help you monitor expenses incurred by various employees without asking additional questions. However, you must ensure that the dashboard depicts the real-time status of expenses clearly and accurately.
- Custom Report Generation
You have to analyze employee expense data using multiple parameters while making budgets and forecasting costs. It becomes easier for you to make financial decisions when the expense management software supports custom report generation and scheduling. The feature will help you complete spend analysis in minutes by generating the required report.
- Digital Audit Trails
Your company has to audit employee-initiated expenses regularly to meet legal requirements. It becomes easier for you to complete expense audits when the software creates digital audit trails automatically. You should opt for software that forms audit trails by capturing comments made by approvers while reviewing expense claims submitted by individual employees.
- Expense Fraud Detection
Every year, companies lose millions of dollars due to expense fraud committed by employees. Employees often commit expense fraud by overstating, duplicating, and miscategorizing expenses. Also, some employees defraud employers by claiming fictitious expenses.
Your company needs software that detects expense fraud and sends notifications automatically. Also, you should prioritize expense management solutions that detect expense fraud using intelligence technologies.
- Currency and Payment Method Support
Many companies these days work with remote and offsite freelancers. Also, they make employees travel to international destinations for business purposes. Hence, your organization needs expense management software that supports multiple currencies. At the same time, you should check if the software supports cards as well as digital wallets.
- API Integration
This feature enables you to extend the expense management software’s native features by integrating with accounting software, travel management software, and other enterprise systems. While comparing expense management solutions, you should check if they can be integrated seamlessly with existing financial tools using application programming interfaces (APIs).
- Data Analytics
Most expense management solutions unify and store employee expense data in a central location. But your business can leverage the real-time data fully only when the software analyzes the data using advanced data analytics.
You should implement expense management software that provides actionable insights gained by analyzing expense data regularly. The actionable insights will make it easier for you to detect expense trends, prevent policy violations, eliminate expense fraud, and find cost-saving opportunities.
Expense management software helps your organization to track, reimburse, and audit employee-initiated expenses without putting in extra time and effort. But you must remember that widely-used expense management software for small businesses primarily differs from each other in the category of features or functionality.
You must use their built-in features as the key parameter while evaluating and shortlisting expense management solutions for your business. However, you must prioritize the software that helps to make informed decisions and control costs by leveraging real-time employee expense data.