Expense management: The ultimate guide for 2024

The only guide you need to get expense management right.
Author
Ken Boyd
Updated:
February 21, 2024
Writer
Reviewed by
Updated:
February 21, 2024

Managing expenses is time-consuming, particularly if your finance team uses spreadsheets or paper-based, manual expense processes to get it done. More are turning to expense management platforms to help them quickly control and track cash outflows to overcome this challenge. 

However, there are a lot of options on the market. This guide is designed to help busy finance teams implement best practices and select the right expense management platform for their business.  

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What is expense management?

Expense management is an accounting process for monitoring spending, controlling expenses, and processing payments. Businesses must have policies to approve spending, including employee travel, food, and entertainment expenses (T&E).

Employees need to know how to submit receipts and other documentation for approval. Some payments reimburse employees for out-of-pocket expense claims, while others reduce corporate credit card balances. 

Expenses must be posted to the general ledger, and all transaction details and supporting documents must be filed for future reference.

PwC’s 2023 CFO survey points out that technical modernization is a top priority for CFOs, and expense management is an area that can be optimized using automation.

What's the difference between expense management vs. spend management?

Expense management is a systematic approach businesses employ to track, analyze, and control employee-initiated spending related to day-to-day company operations. 

Spend management encompasses organization-wide spending, accounting for invoice (accounts payable) and non-invoice (T&E) spend. Spend management gives businesses a more comprehensive overview of cash flow and expenses.

For example, a corporate card provider may offer a connected expense management platform that can be beneficial but requires you to work with a different point solution to automate and control AP spending.

Note: At Rho, these systems work better together, so our platform integrates corporate cards, expense management, AP automation, and banking in one place.

Why is expense management important? 

Expense management helps prevent misuse of company funds, ensures fair treatment of all team members when they spend company money, and establishes transparency over how money is expected to move out of a business.

A recent survey by Softjourn explains that: “Corporate expense and travel (T&E) is the second-largest controllable expense for companies, following only behind the actual cost of labor.” 

In part, expense management costs are driven by the number of sales representatives in the workforce. In May of ‘22, the Department of Labor noted that over 1 million individuals worked as sales representatives for service companies, and that category excluded some service industries.

Effective expense management controls costs and provides several other benefits: 

  • It reduces the chances of overspending. Your finance team prevents excessive spending that can impact your profitability. All spending is approved and budgeted.
  • Financial reporting is a smooth process. Every expense transaction and paid invoice has been accounted for in the general ledger, and it wasn’t an overly manual, time-intensive process. 
  • Regulatory compliance. Accounting can use expense data to generate accurate federal and state tax reporting reports.
  • You uncover opportunities for savings. Management can quickly identify spending trends and consider ways to reduce spending or obtain more competitive pricing from vendors. 

How to do expense management 

Here are the steps required to complete the expense management process. Keep in mind that companies may issue corporate credit cards, reimburse employees for business expenses purchases using personal credit cards, or manage both types of tasks:

  • Create a company-wide budget and expense policy: Businesses need a formal process to create a budget for every type of expense and an expense policy that clearly outlines procedures. Department managers should collaborate with the accounting staff to create budgets, which should be approved before the fiscal year begins.
  • Employee corporate card management: Managers can generate corporate cards and configure spend rules and approval workflows that help enforce expense policy. 
  • Expense data collection: Collect receipts, transaction data, associated budgets, and other helpful information for bookkeeping purposes.
  • Approval workflows: Gather the proper approvals for processing per the spending policy and organizational guidelines. 
  • Employee reimbursements: If applicable, handle intake of reimbursement requests, ensure proper documentation, and process payments back to employees.
  • Corporate credit card payments: Facilitate payment for expenses and invoices using corporate cards centrally managed or assigned to employees.
  • Reconciliation: Enter transaction data in the general ledger of your accounting software or ERP and ensure accuracy on an ongoing basis in support of close and financial statement generation.
  • Recordkeeping: Adequately store receipts, invoices, purchase orders, and other documentation for future reference.
  • Spend analysis: Performing cost and expense analyses to identify cost savings areas, keep spending within budget, and support accurate forecasting. 

Expense management SaaS can help you save time, increase productivity, and speed up the monthly closing process.

What are employee expense reimbursements?

Employee expense reimbursements occur when employees pay for business-related expenses using their own money, and their employer then refunds them the amount within a reasonable time.

Types of reimbursement can vary, but common reimbursement-related expenses include travel costs, and, in some cases, employer-specific benefits like moving expense coverage.

Reimbursements are handled differently depending on the organization. Companies often require employees to submit an expense report detailing their expenditures manually. The report's information could include the expense's business purpose, receipts, dates, attendees, and other necessary details per the company's expense reimbursement policy.

However, more companies are increasingly adopting automation solutions that streamline the reimbursement and expense management process. Read how fitness equipment company Echelon accomplished this digitization using the Rho platform.

Types of expense management 

Our latest State of Expense Management Report found businesses use various methods to manage expenses. 

Paper- or mail-based expense tracking

Employees fill out paper expense reports and submit them to an office manager along with supporting documentation like expense receipts. Businesses that use this method (approximately 4% of respondents to our survey) experience several challenges. 

For example, written reports may be difficult to read or incorrectly filled out by employees, delaying the process. Paper-based reports are also prone to getting lost and taking up office space. Lastly, paper-based reporting is less useful for real-time budget reporting than other expense management methods. 

Spreadsheet expense tracking

A larger portion of respondents (31%) reported using Excel spreadsheets, a popular tool among finance professionals, to track organizational spending. 

Workings complete an expense report using a spreadsheet template and email a copy to the accounting department for review, along with an attachment or digital file of the supporting expense receipts. 

On top of potential errors due to manual data entry, spreadsheets can make it difficult for finance departments to assess how expenses impact budgets in real time accurately. In addition, spreadsheets can’t restrict certain spending before a card is swiped like expense management platforms like Rho can. 

Email expense tracking

Most businesses surveyed (37%) report using email as their central expense management system. Organizations using this method typically report similar issues raised with paper-based and spreadsheet-based expense management systems. 

Expense management software

A growing portion of companies (28%) use expense management software to automate the process for employees and the finance team. The first piece is especially critical. Manual processes like paper, spreadsheets, and emails are typically not seamless for employees, leading many to delay submitting their expenses. 

The right corporate credit card expense management software can help fix this issue, automating key processes like receipt capture, coding, GL posting, approvals, and payments. Stakeholders can view documents and all communications within a single platform. Records are kept electronically, and approval workflows are automated. 

However, as we wrote about in our side-by-side comparison of Rho and SAP Concur, some expense management software is better than others. 

How to choose the best expense management software

Expense management software helps finance teams automate many or all of the manual tasks that go into T&E employee spending. To choose the right expense management solution, refer to the common software features below. Ask industry peers about the software they use.

Perform research and request product demos to determine which software product fits your needs. Find out if the software provider has other customers in your industry.

Here are just a few questions you should consider as you evaluate different offerings:                                                  

  • How does the platform work, and does it meet my requirements? 
  • Does the platform’s workflow mesh well with my organization, or will some change management be required? 
  • What level of customizability does the platform offer for my organization? 
  • What positive (or negative) downstream effects could the platform have on my business’s other finance processes, like month-end close?
  • Does the platform integrate with my ERP?
  • What features does the platform offer? 
  • What are the drawbacks of the platform? 
  • How much does the software cost? 
  • Is there a mobile app for employees on the go?
  • Will my employees love the experience? 

Get answers to these questions during each demo, and create a spreadsheet that compares the answers across all providers. Use the comparisons to evaluate and select a software solution.

What are the common features of expense management software?

The best expense management platform has the following qualities: 

  • You can process expenses and reimbursements on the same platform to pay dozens of invoices. 
  • All transaction data is synced, preventing issues that cause headaches regarding month-end close. 
  • Automation streamlines traditionally manual processes like chasing approvals and expense receipts, transaction data entry in the general ledger, and payments. 
  • Clear expense reporting can help you analyze spending and identify opportunities for cost savings. 
  • It is an intuitive, easy-to-use user interface that is just as easy in the hands of an employee as it is with a member of finance. 
  • Strong controls that help prevent wasteful spending and expense policy violations. 
  • It saves your team time to focus on high-impact work. 

Consider these qualities as you evaluate the top expense management platforms on the market, which we cover in the next section.

The best expense management software for CFOs in 2024 

1. Rho

Rho is the most comprehensive finance platform thousands of American middle-market businesses use to automate their CFO suite: payables, expenses, treasury, banking services, accounting, and more.                                     

Features

With Rho, you can manage and automate employee expenses and vendor invoice payments in one platform that connects with your ERP. 

In the Rho platform, you can configure Rho Cards with customizable spend rules that help enforce your expense policy, track expenses, monitor budget spending, and collect documentation like receipts. When a Rho Card is used, employees receive notifications via SMS or the Rho mobile app to upload their receipts to the platform. 

You can just as easily pay vendors using Rho as opposed to multiple applications or providers. Rho allows you to automate your AP in a single workflow — from invoice to payment — with integrated accounting to eliminate manual tasks and speed up processing. All spend data then syncs live into Rho and can be sent to your ERP in seconds, thanks to our native integrations. 

Pros

  • End-to-end finance: Rho offers expense management and other capabilities like AP, banking services, treasury, and corporate cards – all in one platform. 
  • Holistic spend management: With T&E expenses and AP automation in one platform, organizations using Rho get a full picture of spending. 
  • Free service: The Rho platform has zero platform fees.
  • Robust multi-entity capabilities: Rho is designed for scale, from 10-person growth-stage startups and 200-plus employee, multi-entity businesses.
  • Live customer support: Available 24H Mon-Fri, 10-7pm ET on weekends to assist with implementation and questions.

Cons

  • Straight cashback vs. points: Some companies prefer legacy corporate card solutions like Amex or Capital One for the point rewards they offer, even if that impacts process speed. 

Integrations

Rho integrates with QuickBooks Online, Oracle NetSuite, Microsoft Dynamics 365 Business Central, and Sage Intacct

Rho also supports flat-file CSV exporting, so you can automatically tailor transaction categorization to your business needs. Read more about our accounting integrations here.

Pricing & Fees

The Rho platform is free, with no fees for users, payments, accounts, or the overall platform.  

2. SAP Concur

SAP Concur provides a travel & expense management platform companies use to manage travel booking and employee expenses. Concur Expense provides automated expense management with customized workflows, approvals, and reports. Concur ExpenseIt links in credit card activity.

Features

The Concur Expense platform can capture receipts and other documents from multiple sources, and users can monitor all expense data in one place. Users can configure workflows to meet their unique needs, enforce spending policies, and make necessary changes.

The ExpenseIt software matches uploaded receipts to card charges and reconciles credit card charges to posted expenses, speeding up account reconciliations and the month-end close. Users can use the desktop or mobile functionality.  

Managers can also review real-time reports, storing all data and communications in one place. SAP Concur provides integrations with ERPs, accounting systems, and payment providers.

Pros

  • Expense reports: Easy process to generate expense reports 
  • Compliance: Some finance teams use SAP Concur because of its capabilities to help enforce expense policy compliance
  • Brand recognition: SAP has been around for several decades as a brand that many Fortune 500 companies trust

Cons

  • UX: SAP Concur has a reputation for having a clunky user interface. According to reviews, the platform sometimes freezes, and the interface is difficult to navigate.
  • Expensive: SAP Concur is enterprise-grade expense reporting software that typically has expensive contract fees.
  • Receipt uploading: Some reviewers point out that uploading receipts is difficult, and users cannot upload receipts in batches

Integrations

SAP Concur integrates with SAP’s ERP SAP S/4HANA, Oracle NetSuite, QuickBooks, Xero, and other ERPs.           

Pricing & Fees 

SAP Concur requires you to book a sales call for a specific quote.

SAP Concur vs. Rho

SAP Concur has been a de facto travel & expense platform for decades but has limited expense management capabilities. The interface seems old and difficult to navigate. Uploading receipts is time-consuming, and users need help to upload receipts in batches.

Concur Expense has limitations that make it difficult to process more card transactions as the company scales. Rho provides a platform that allows businesses to scale.

Lastly, SAP Concur’s UX and expensive fees have led many companies to move to more modern solutions like Rho, which has the added benefit of having built-in AP, banking, and treasury. 

3. Expensify

Expensify offers a spend management tool for expense management, corporate cards, and bill payment. The company also offers payroll and travel management services.

Features

Expensify Bill Pay allows users to upload invoices and other expense data. The information is scanned and coded into the platform, and users can set up automated approvals. Customers can choose several payment options, and Bill Pay can manage recurring payments.

Pros

  • Reimbursement process: Straightforward process with the ability to reimburse using direct deposit.
  • Mobile app: Using the app is intuitive and easy to navigate.
  • Reports tool: Reports can be created and easily shared with other people.

Cons

  • Receipt processing: Users experience challenges with receipt scanning on mobile and desktop. OCR does not always work well, and incorrect details are often picked up from receipts.
  • Product promotions: Several reviewers received too many inquiries promoting additional products. Too many pop-ups and notifications.
  • Billing practices: Several reviewers noted that the billing process could be clearer. Some believed that they were charged incorrectly after canceling Expensify.
  • Customer support: Many reviewers pointed out a lack of support and that issues were left unresolved for weeks or months

Integrations

Expensify integrates with QuickBooks, NetSuite, Xero, Sage, and other accounting platforms.

Pricing

Expensify offers three pricing plans for businesses.  If less than 50% of company spend is on the Expensify card, businesses pay a fee based on the amount of card use.

Expensify requires you to book a sales call to get a specific quote based on your expected card use.

Expensify vs. Rho

Capturing receipt data can be difficult using Expensify. Rho’s expense management process lets you capture real-time receipts without glitches. 

Several Expensify reviewers noted a need for more follow-up on customer support issues, and Rho customer support is available 24H Mon-Fri, 10-7pm ET on weekends. Expensify has a confusing price structure that some believe is too expensive. Rho does not charge platform fees.

4. Navan

Navan provides a popular travel expense management and expense platform alternative to SAP Concur, thanks to its strong, user-friendly UI, ability to adapt to your corporate card solution, and built-in travel booking capabilities. Navan does not offer AP automation, so it may make sense to pair Navan with another platform like Rho to establish complete spend management. 

Features

Navan’s platform automates transactions processed with Visa and Mastercard or using a Navan corporate card or your corporate card. Transactions are categorized and reconciled automatically. Employees are reimbursed within days across 45 countries and 25 currencies.

Users can set controls for employee spend and have access to real-time analytics.

  • Receipt submission: Users can take a photo of a receipt after making a payment, and the software automatically posts the related expense.
  • Notifications: Cardholders receive a notice to upload a receipt immediately after each purchase.
  • Spending controls: Once management sets spending controls, cardholders are kept aware of the limits in place.

Integrations

Navan offers accounting integrations with QuickBooks, NetSuite, Xero, and more.

Pricing

Expense management is free for a company’s first 50 monthly active users. Navan requires you to book a sales call to get a specific quote for businesses with more than 50 monthly active users. 

Why Navan + Rho

Did you know that Rho and Navan work well together? Pair Rho’s corporate card, banking, AP automation, and treasury with Navan’s best-in-class expense management and travel booking platform. Learn more today

5. Zoho Expense

Zoho Expense provides travel and expense management software. The platform combines travel booking with expense reporting capabilities and cost control.

Features

Zoho Expense offers a single platform to manage travel, expense reporting, purchasing, reimbursements, and payments. Employees can submit expense reports using a mobile app, and approvals are automated. Add company cards and get automated reconciliations.

Pros

  • Receipt management: Simple process to scan and upload receipts.
  • Duplicate expense alerts: Several users liked the platform’s ability to alert users regarding duplicate expenses.
  • GPS mileage tracking: A mileage reimbursement feature makes it much easier to calculate and submit mileage expenses.

Cons

  • Report customization: Several users commented that they wanted more report customization in order to perform detailed analysis.
  • Integration issues: Some users reported problems with some integrations and that additional work was required to move data into the accounting system.
  • Access to customer support: Accessing support can be difficult at times, making it difficult to resolve open issues.

Integrations

Zoho Expense integrates with QuickBooks Desktop, QuickBooks Online, Xero, and Sage.

Pricing

Zoho Expense has four pricing levels: Free, Standard, Premium, and Enterprise. Pricing varies from free to $8 per user per month, and each pricing level controls the number of users. 

Zoho Expense requires you to book a sales call to get specific details on each pricing level.

Zoho Expense vs. Rho

Zoho Expense has limitations regarding expense reporting, and there are issues with some integrations. The platform becomes more expensive as customers add more users and features.

Rho offers a seamless expense management platform that can create customized reports. Rho’s provides reliable ERP integrations, and there are no fees to use the software.

Expense management FAQs

How does effective expense management make cost analysis easier?

A well-designed expense management system generates accurate spending data promptly. When the accounting department analyzes actual vs. budgeting spending, management can rely on the analysis to make informed decisions.

How can an expense management process help a business identify areas for cost savings?

Expenses are posted to the correct general ledger accounts when management is done accurately. An effective process also identifies unapproved spending quickly. If costs are properly categorized, managers can make accurate decisions about cost savings.

What is the financial impact of expense approval delays?

Timely approvals help the accounting team to identify unapproved expenses quickly. If approvals are timely, unapproved expenses may be addressed. A fast approval process also ensures that employees quickly submit receipts and expense reports.

Wrap-Up: Choose the best expense management software

After reviewing the different expense management software solutions on the market, think about the features and tools that are most important for your business.

And if you still need help choosing the best expense management software, let's make this easy.

If:

  • End-to-end functionality to capture, record, approve, and pay expenses
  • Full integration with corporate cards for easier expense management
  • A scalable platform that grows as you grow

All wrapped up in unbeatable pricing and live customer support available 24H Mon-Fri, 10-7pm ET on weekends sounds nice to you, so you should consider Rho.

Schedule time with a Rho payments expert today!

Competitive data was collected as of November 30, 2023, and is subject to change or update.

*This potential savings rate is based on estimated cost savings – and efficiencies gained from using the full extent of Rho’s corporate cards, accounts payable, expense management, banking, and treasury capabilities – as a percentage of a hypothetical customer’s card spending and cash balance. Actual savings will depend on your unique circumstances and may vary from our estimates. The savings illustrated here are not a guarantee.

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