Finding The Right Expense Management Solution For Your Company
Below is a MRR and PLR article in category Business -> subcategory Management.
Finding the Right Expense Management Solution for Your Company
Introduction
In recent years, corporate compliance has taken center stage, especially with initiatives like the Sarbanes-Oxley Act in the US. A crucial part of this compliance is effective expense management. An Expense Management Solution (EMS) is vital for any business focused on corporate compliance. But what exactly is an EMS? Does your company need one, and how do you find and implement the best option? This article offers valuable insights into these considerations.
Understanding Expense Management Solutions (EMS)
An Expense Management Solution is a technology-based system designed to process:
1. Transaction Records: From credit card issuers detailing employee usage of corporate cards.
2. Cash Reimbursements: Claims submitted by employees.
These systems mainly target Travel and Entertainment expenditures and can also support procurement activities.
Key Steps in Expense Management:
1. Input of validated data.
2. Application of predetermined expense rules.
3. Posting transactions to a corporate repository like an ERP system.
Purpose of an EMS
The goals of implementing an EMS include:
- Automating the preparation, submission, approval, and auditing of claims to enhance productivity and reduce costs.
- Supporting a standardized method of handling high-volume expenses through corporate cards.
- Increasing transparency and strengthening governance over financial transactions.
Choosing an Expense Management Solution
Organizations have several options for sourcing an EMS:
1. ERP Systems: Fully integrated, but may require significant customization and can be costly in terms of time and budget if license fees aren’t comprehensive.
2. Card Issuer Systems: Often bundled with card deals, but might limit flexibility and customization to meet internal requirements.
3. Best-of-Breed Solutions: Independent systems that offer fast implementation and extensive customization. These can be hosted as an ASP (Application Service Provider) or self-hosted, depending on the enterprise's preference and size.
Considerations for Selection:
When choosing an EMS, consider whether you seek independence from a card issuer, the need for fast deployment, or customized rules and policies.
Overcoming Resistance to Corporate Credit Cards
Finance Directors often resist corporate credit cards out of concern for uncontrolled spending. However, an EMS can ease oversight challenges by automating processes like policy enforcement, tax implications, accounting, and auditing.
Financial Impact and Fraud Prevention
For example, a company with significant annual expenses can greatly enhance its bottom line with a modest reduction in costs through automation. An EMS also plays a crucial role in preventing fraud by minimizing mischaracterized and fictitious expenses, exaggerated payments, and multiple reimbursements.
Conclusion
In the last 18 months, the focus on expense management has shifted from merely cutting administrative costs to enhancing governance. With the Sarbanes-Oxley Act prompting enterprises to tighten financial controls, many corporate executives are increasingly open to EMS projects. Implementing a robust EMS not only ensures compliance but also strengthens the financial integrity of a company.
You can find the original non-AI version of this article here: Finding The Right Expense Management Solution For Your Company.
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