How do they work? The most effective expense management systems are either one software or a combination of different software that work effectively together. They are a combination of data capture tools, custom built approval flows, automation engines and integrations that enable documents to be located, processed, allocated, approved and pushed for payment from anywhere. Individuals are given appropriate access to the software, depending on their roles, which can be accessed from anywhere with an internet enabled device, and the software creates reminders via notifications where helpful. Starting with Purchase Orders, these can be created centrally via an app (potentially on a phone) using item lists pulled from the finance software. These are then sent via pre-built approval flows digitally and instantly to the relevant internal individuals, which once approved can be sent digitally to the supplier. When goods are received these can be matched against orders, both for volume and price, and allocated to a location. When an invoice is created this can be captured via a designated email address, photographed via a phone, or scanned or extracted from an invoice portal. At this point the invoice is scanned with all relevant information extracted automatically and pushed through for approval via the designated approval process. This can be a combination of automatic and manual approvals based on the nature and value of the expense, as well as the department. They can be digitally matched to Purchase Orders and
way to validate if what was ordered is correct. Generally volume can be estimated by an experienced team, but price is harder and trust is put on the supplier. This tends to allow for errors and over-pricing which hits the margin of the business. Payments Payment processes can be simple by idea but complex by operation. The focus here is in relation to payment in arrears, normally based on the due dates of invoices. Payments are run based on due dates of invoices, generally from the finance system. Information is manually re-keyed into the bank’s batch payment system from selected invoices or statements. A good system will have suppliers pre-stored with bank details restricted and authorisation only possible by designated individuals. A bad system will put full reliance on the finance team, with most somewhere between the two. Either way, the re-keying of information creates additional risks of fraud or error and adds time to the process. Is there a solution? Modern cloud-based expense management systems create the greatest efficiency savings whilst also improving data accuracy, speed of input and reducing risk of fraud. The best setups enable costs to appear in the system in less than 5 minutes from when they were dispatched by the supplier, including an approval process. The costs of the systems are far outweighed by the time savings they generate and can also enable a significant reduction in paper stored.
Delivery Notes to verify their accuracy, all the while being visible inside the same system and automatically pushed into the finance system ready for payment. Modern payment systems can extract invoice and bank information directly from the finance system (segregated by user level), enable easy selection for payment and approval and sync with traditional banks to enable payment directly, without the need to re-type anything. Reducing your administration burden Selecting a digital expense management system that works for the size and intricacies of the business can quickly deliver a significant reduction in the administrative burden on your team. Selecting the right system is key, with various ones designed to work with operations of different size and structures. With any system conversion comes the challenge of change management and the impact on the team. Processes will need to be adapted, training tailored, and support secured. Getting this right can transform how you and your team work for the better. Get in touch with one of our digital accounting team for a chat about taking the first steps towards cloud-based financial management.
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