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Spend Management
June 9, 2022

Don’t fall behind. Know the difference between expense management and spend management.

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Don’t fall behind. Know the difference between expense management and spend management.Don’t fall behind. Know the difference between expense management and spend management.

“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. 

The distinction between expense management vs spend management is a good example of this kind of evolution in terms of both language and technology. 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 not room for improvement. (Remember Microsoft Vista?) It’s widely acknowledged that everyone hates expense reports, which form the backbone of expense management systems, 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. 

Spend management is more than expense management. 

Spend management is a totally modern approach to company spending. It incorporates the three central functions of non-payroll spend: corporate cards, employee expense reimbursements, and bill payments. But spend management doesn’t just include expense management. Instead, spend management represents the evolution of expense management into a more modern, holistic approach. 

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 ... better quality photos. 

Modern spend management is supported by three central pillars: 

  • Accounting automation.
  • Approval workflows.
  • Real-time reporting.

These pillars help Airbase’s spend management platform outperform popular point solutions for expense management. While expense management products like Expensify represent a step up from paper expense reports by digitizing the process, Airbase’s employee reimbursements have evolved past the need to fill out an expense report. Instead, an employee simply takes a photo of a receipt on their mobile app as they make purchases, then submits a request for reimbursement. Upon approval, funds go directly to the employee’s bank account. 

This changes the whole experience. With a spend management platform, employees can submit expenses as they happen without having to wait until they return from their trip or complete their project. Because payment is made automatically upon approval, they don’t have to wait for an accounting review cycle to get paid back. Expense management requires employees to fully grasp their company’s spending policies, but the rules-based approach of spend management means they know right away if their spending is compliant. 

The consolidation of multiple functions in a spend management platform further separates it from 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 enables control over company funds and protects the finance team and employees spending money from compliance violations.

Despite the vast differences between expense management and spend management, many people continue to refer to “expense management” when referring to spend management. Old habits die hard. And, hey, lots of people still use archaic expressions like “the bee’s knees.” But do you really want to be one of them? To truly embrace this new revolution (and to look, like, totally cool), we suggest sticking to spend management, in terms of language and technology. 


About Airbase

Airbase offers a one platform solution to manage all non-payroll spend. It provides oversight and control over spending with real-time reporting and automatic syncing directly to your general ledger. Control all paymentsphysical cards, virtual cards, ACH, and checks – from one place. Close faster. Empower employees. Control spend.

To learn more about Airbase, contact us for a product demo.
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