This article relies largely or entirely on a single source. (May 2012)
Expense management refers to the systems deployed by a business to process, pay, and audit employee-initiated expenses. These costs include, but are not limited to, expenses incurred for travel and entertainment. Expense management includes the policies and procedures that govern such spending, as well as the technologies and services utilized to process and analyze the data associated with it.
Software to manage the expense claim, authorization, audit and repayment processes can be obtained from organizations that provide a licensed software, implementation and support service, or alternatively, from software as a service (SaaS) providers. SaaS providers offer on-demand web-based applications managed by a third party to improve the productivity of expense management.
Expense management automation has two equally important aspects: the process an employee follows in order to complete an expense claim (for example, logging a hotel receipt or submitting mobile phone records) and the activity accounts or finance staff undertake to process the claim within the finance system.
Typically, a manual process will involve an employee completing a paper, spreadsheet, or Graphical User Interface-based expense report that they then forward, along with the relevant tax invoices (receipts), to a manager or other controller for approval. Once the manager has approved the claim, they forward it on to the accounts department for processing. The accounts staff then key each expense item into the company's finance system before filing the claim and receipts away. In a Software as a Service implementation, these processes are largely automated and the submission and approvals processes are transacted electronically.
Expense Management automation is the means by which an organization can significantly reduce transaction costs and improve management control when logging, calculating and processing corporate expenses. Independent research evaluating the use of automated expense management systems has confirmed that the cost of processing an expense claim is reduced as the level of automation increases.
As found in an Aberdeen study on expense management automation in April 2015, there are four main factors that drive an organization to automate their expense management processes:
- Compliance focus: 57% have poor visibility into spend & compliance so they don't know how much they're spending and they cannot ensure that all of those costs remain within the boundaries of the company's handbook or policies regarding expense reporting
- Cost reduction: 38% need to reduce expense processing costs
- More control: 35% have no control over T&E spending
- Employee productivity: 20% need to eliminate manual & paper processes to improve employee productivity and satisfaction
An automated solution typically provides the ability to code, approve, and report on expenses.
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Expense reports are the required reports that employees or travelers need to submit in order to account for their expenses and/or get a reimbursement. Specifically, expense reports are made up of individual line items for reasonable charges while performing a particular job or traveling for a specific job-related requirement. These charges can include meals, hotels, company supplies, printing materials, or flights. The employee then provides proof of the purchase with a receipt and all related expenses (from a particular trip or a particular project, for example) will go into the expense report.
Once submitted, the expense report is approved or denied by the employee's supervisor or HR representative, who will check to make sure that receipts match expenses and ask for additional documentation if needed.
In general, employees prefer not to file expense reports because the process can be long and tedious, especially if many expenses need to be filed at the same time (or if the employee has waited to do all expense reports at the same time). Reports can ask for information like:
- Date & time of purchase
- Purpose of the purchase
- To whom or to which department (within the company) it should be charged
- The subtotal of each different kind of expense
- Grand total
- How much the employee has been paid previously (in the form of an advance) subtracted from the grand total 
Types of expense management
Business strategies are tailored to various types of expense management:
- Spreadsheets: Spreadsheets can be an easy, cheap way to keep track of expenses, but they still have paper receipts that go along with them that can be lost or damaged. This can also be a labor-intensive method and it can be confusing if employees are not good at using spreadsheets.
- Paper forms: Paper forms work well with paper receipts. This is also an inexpensive way to manage expense reports. However, this can amount to a lot of manual work of logging and tracking these reports for both employees, approvers, and the people who need to pay the bills in the accounting department.
- Software: Software reduces the workload, but it also can cost more in the beginning to implement. According to the Aberdeen Group's report, "Best-In-Classs T&E Expense Management: How They Do It," software can solve the major problems of compliance, manual labor, approval time, and the cost of expense reporting overall.
Telecom expense management
The management of wireless and wireline service and asset expenses is labeled as Telecom expense management. Historically, Telecom expenses were managed as general services. In recent years, more and more organizations associate telecom expense to IT services. This change in management is due to a shift in global business strategies towards evolving technologies.
Travel expense management
Travel expense management (often referred to as "T+E") is defined as the means to organize and manage travel arrangements and costs for traveling employee.
Technology expense management
Technology expense management or IT expense management is the management of technology costs such as software licenses, computer equipment, applications, etc. Technology expense management also include the management of services related to technology (SaaS, PaaS, etc.). Technology expense management activities are often performed through the use of various technology tools (bill of IT, management software, workflows, etc.)
Inventory management consist in all the activities a company does to manage what it owns and uses to function. Inventory management can also referred to the management of the quantity and quality of product for sale.
Choosing an Expense Management Solution
While enterprise-level corporations have accounting departments capable of selecting an expense management solution appropriate for the business, many small-to-medium business owners have a difficult time knowing which SaaS solution to choose. Many accounting advisory partners are available to help the decision-making process, and will usually make recommendations based on the following criteria:
- Direct integration with accounting system: Can the expense data flow directly into the accounting system, coded appropriately, without the need for any manual data entry?
- Ease of employee use: Will the software be adopted by employees? Is there a mobile app? Does the automation component cut down on the need for employee data entry (via technologies such as Optical Character Recognition scanning)?
- Compliance & customization: Can the software be configured to evaluate expenses against company expense policies? Can approval processes be adjusted based on project, department or spend?
- Fraud prevention: Does the software have expense fraud detection capabilities, such a duplicate identification?
- Basso, Luiz Augusto Carvalho & Claudio (2014-01-01). Telecom Expense Management for Large Organizations. iUniverse. ISBN 9781491720028.
- Enoch, Marcus (2016-04-01). Sustainable Transport, Mobility Management and Travel Plans. Routledge. ISBN 9781317047650.
- Lebrun. Caroline. Working Towards the Gold Medal: Telecom Expense Management vs Technology Expense Management. http://blog.cimpl.com/working-towards-the-gold-medal-telecom-expense-management-vs-technology-expense-management (8/26/2016)
- Investopedia. Inventory management. http://www.investopedia.com/terms/i/inventory-management.asp (8/26/2016)