While these administrative efficiencies help organizations shave costs from the expense management process, the most significant benefits typically come from exerting greater control over expenditure itself. Non-PO purchases have long been a source of friction within finance departments, yet few organizations could claim to exercise the kind of control over expense that they exert over other areas of expenditure. During the Internet boom years of the late 1990s, a number of initiatives were launched in an effort to reduce and control indirect procurement in areas such as office supplies, including online marketplaces – but systems to control expense-based procurement have enjoyed a far lower profile. Yet many organizations that have embarked on expense automation projects report significant savings through better compliance, with research from independent organizations showing average savings of around 10 per cent.

The control that these systems offer comes in two expense forms: reactive and preventative. While some organizations centralise larger purchases or mandate specific suppliers for travel or hotel bookings, in practice most preventative control generally consists of little more than a set of guidelines about the kinds of expenditure that are authorized and the financial parameters. The rest of the approval activity comes after the event, when funds have already been spent. Whether it’s on a corporate credit card or personal expenditure, post-event disputes can be stressful for individual employees and frustrating for line managers and finance, particularly where poor decisions have been made on the basis of misunderstandings. More important, in a compliance-intensive global regulatory environment, this lack of upfront control and poor visibility into expenditure may be a liability.

Expense management systems allow organizations to improve both their reactive and preventative control. At the simplest level, they provide automated monitoring to ensure that claims comply with corporate policy. Using pre-configured rules, systems can be set up to reject or query claims that breach price or quantity thresholds, based either on the category of expense, employee seniority or role. Conversely, they can be configured to accept all expenses below a certain level, freeing managers and administrators from the burden of overseeing small purchases. The expense software systems can also be set up to monitor possible duplicate claims – whether made deliberately or in error – and give warning of late filing.

Expense On Demand Ltd
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