Expense management is a critical process for businesses that helps them to track expenses and manage reimbursements effectively. It ensures that employees get reimbursed for business expenses they incur while working for the company. An expense management solution can simplify this process by automating tasks like receipt collection, expense tracking, and reimbursement processing.
In this blog post, we will discuss the factors that businesses should consider when choosing an expense management solution. We will also explore some of the capabilities that a good expense management solution should have.
Choosing the right capabilities
When choosing an expense management solution, it is essential to consider the capabilities it offers. The following are some of the key capabilities that businesses should look for.
Can the solution incorporate local regulations?
Different countries have different regulations and requirements regarding expenses and reimbursements. It is to ensure that the expense management solution you choose can handle the local regulations in the countries where your business operates. This includes compliance with tax laws and other regulations related to expenses and reimbursements.
Value Added Tax (VAT) is a tax that is added to the price of goods and services in many countries. If your business operates in a country where VAT is applicable, choosing an expense management solution that can handle VAT recovery will simplify your processes. This will help you to reclaim the VAT that you have paid on business expenses.
If your business requires employees to travel for work, it is crucial to have an expense management solution that can handle mileage rates. This means that the system should be able to calculate the distance travelled and the appropriate reimbursement rate for that distance.
Per diem rates
Per diem rates are daily allowances that companies provide to employees for expenses like meals and accommodation when they are traveling for work. It is vital to have an expense management solution that can accurately handle local per diem rates and ensure that employees are reimbursed properly.
In today's digital age, it goes without saying that you should be looking only at expense management solutions that offer paperless processing. This means that the system should be able to handle electronic receipts and invoices and eliminate the need for paper-based expense reporting.
A good expense management solution should be able to handle your company's expense policies. This means that the system should be able to enforce company policies related to expense claims and reimbursement, but also tax reporting. It should furthermore be able to flag expenses that do not comply with company policies.
Considerations for expense management solutions
In addition to the capabilities mentioned above, there are some other factors that businesses should consider when choosing an expense management solution. These include:
Can the solution handle local language and currency?
If your business operates in multiple countries, you will benefit from having an expense management solution that can handle different languages and currencies. This will ensure that all employees can use the system effectively and that reimbursements are processed in the correct currency.
Can the solution manage company complexity?
If your company has complex expense reporting requirements, it is important that you select an expense management solution that can handle this complexity. This includes the ability to handle multiple cost centres, project codes, and other custom fields.
Can the solution handle your tech stack?
If your business uses other software tools like accounting software, you should aim to choose an expense management solution that can integrate with your existing tech stack. This will ensure that expenses and reimbursements are seamlessly integrated into your accounting processes.
Choosing the right expense management solution is critical for businesses that want to streamline their expense reporting and reimbursement processes. When choosing an expense management solution, it is essential to consider the capabilities it offers, as well as factors like local language and currency support, company complexity, and tech stack compatibility. By choosing the right expense management solution, businesses can save time, reduce costs, and improve the overall efficiency of their expense management processes.