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“I paid for six floppy disks by check, so I’ll fill out the expense report and fax it to you.”
What would be your first response if your co-worker said this to you? Speculation that you’ve fallen into a time warp? Both language and technology constantly evolve, and today’s hot topic can quickly become tomorrow’s Blackberry.
And while nothing says “I’m a dweeb” quite like using a dated term (like dweeb), the prices of old technology can be steeper. One study estimates that U.S. businesses lose $1.3 trillion annually because of dated technology.
Traditional expense management is a good example of this type of dated technology. The laborious process of filling out an expense report went the way of the 8-track when expense management became part of spend management — a new, more intuitive way to manage spend powered by automation and generative AI.
What is expense management?
Expense management is the systematic tracking and control of employee spending for the things that they need to be productive. Travel, software, marketing spend, consulting services, etc. A central component for many companies is expense management software that employees use to submit expense reports.
Expense management software worked OK in its day — but so did the Walkman. For years, the process of managing employees’ expenses, particularly around T&E spending, relied on employees paying for something up front, then begrudgingly filling out a reimbursement request and attaching a receipt.
But, just because something is widely used doesn’t mean there’s no room for improvement (remember Microsoft Vista?). It’s widely acknowledged that everyone hates traditional expense reports because:
- They’re a drag to fill out.
- It’s easy to space out and forget receipts.
- There’s usually a delay between submitting the report and receiving the reimbursement.
- Mistakes happen and it falls to finance teams to fix them.
- Sometimes purchases aren’t approved but you don’t know until after you spend the money.
- It’s hard to get a handle on real-time financial status until employees submit their requests.
But when expense management became a subset of spend management, that all changed.
Expense Management Tour
What is spend management?
Spend management is a totally modern approach to company spending. It incorporates the four central functions of non-payroll spend: procurement, accounts payable, expense management, and corporate cards.
But spend management doesn’t just include expense management. Instead, spend management represents the evolution of expense management into a more modern, holistic approach, driven by automation and AI.
Think of it like the evolution of photography. Old technology means a special device (a camera) and film that needed to be developed. But now, you can take world-class photos with your (ever-handy) phone, and then easily share, edit, and store them — one location for all parts of the process, and with better quality photos.
Modern spend management is supported by four central pillars:
- Accounting automation.
- Approval workflows.
- Real-time reporting.
- Generative AI.
These pillars help Airbase’s spend management platform outperform popular point solutions for expense management.
The impact of spend management on expense management.
Stakeholders.
The automated approval workflows in Airbase ensure that no stakeholder is left out of the loop for approvals. With old-school expense management platforms, it often wasn’t clear who needed to see what.
Methods and techniques involved.
While expense management products like Expensify represent a step up from paper expense reports by digitizing the process, the Airbase spend management platform has evolved past the need to fill out a tedious expense report.
Instead, an employee simply takes a photo of a receipt on their mobile app as they make purchases, and then the system takes it from there for a touchless experience.
OCR extracts the details from the invoice, and generative AI takes the extracted details and compiles an expense report, effortlessly populating fields such as expense GL coding and memo descriptions.
This smart capability sets Airbase apart from other expense management solutions. And the best part? It’s lightning-fast, handling multiple expenses in parallel.
Upon approval, funds go directly to the employee’s bank account and the transaction is automatically booked in the GL.
Scope.
The consolidation of multiple functions in a spend management platform further separates it from traditional expense management. When multiple platforms are housed together, their value exceeds the sum of each part.
With software-enabled corporate cards, employees can make online purchases and not have to worry about being reimbursed at all.
And because the approval workflow is built into the card’s creation, all expenses are approved up front. This workflow ensures control over company funds and protects the finance team and employees who spend money from compliance violations.
Impact on company expenses.
Airbase provides full visibility into company expenses, which in turn increases control. Airbase captures expense details in real time and organizes them into a readily accessible audit trail, which includes receipts, notes, and other relevant documentation. An automated sync to the GL ensures that financials are always up to date, so stakeholders can base decisions on accurate data.
How AP automation benefits expense and spend management.
Automating accounts payable (AP) processes bring significant benefits to both expense and spend management.
Faster invoice processing.
Thanks to automated workflows, AP automation streamlines invoice processing, reducing manual errors and speeding up payment cycles.
Real-time visibility.
AP automation gives organizations gain real-time visibility into spending for more accurate tracking of expenses and better forecasting.
Better visibility supports better budget adherence and decision-making, which ultimately leads to cost savings and efficiency.
Stronger compliance and control.
AP automation also improves compliance and control over spending by enforcing consistent approval workflows and policy compliance.
With automated controls and customizable approval hierarchies, it’s easier to ensure that spending aligns with company policies and budgets. Automated alerts and notifications also help identify potential discrepancies or fraudulent activities early on.
A new era.
Clearly, expense management has entered a new era. Thanks to the innovations in spend management, the old way of filling out expense reports and reading through expense policy manuals feels as archaic as sending a telegraph instead of a text.
