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How to choose and implement an expenses management system

The way we’re able to manage our employee expenses has been transformed. Organisations are no longer reliant on the old paper-based management processes – slow, costly and inefficient. We now have a new generation of digital tools which allow our finance teams to easily process, manage and control employee expenses.

By moving to an Expense Management Systems (EMS), companies are able to significantly reduce costs, improve efficiency and enhance compliance. An effective system can be expected to cut processing costs by around 25% and to provide T&E savings of 10%. It’s for these reasons that organisations are increasingly making the switch from their old ways of handling expenses and over to an EMS.

The purpose of this guide is to tackle this challenge – to give you a simple and no-nonsense guide on how to make that move. We will focus on two key areas:

  • Choosing the right system
  • Implementing the system

The way we’re able to manage employee expenses has been transformed.

Companies are no longer reliant on the old paper-based management processes – slow, costly and inefficient. We now have a new generation of digital tools which allow our finance teams to easily process, manage and control employee expenses. By moving to an Expense Management System (EMS), organisations are able to significantly reduce costs, improve efficiency and enhance compliance.

An effective system can save you up to 30% in T&E processing costs. It’s for these reasons that organisations are increasingly making the switch from their old ways of handling expenses and over to digital. But making this move can seem daunting.

Mastering the expense system maze

The real-world benefits experienced when moving to a digital system often find themselves weighed up against the perceived uncertainty and risk of switching to a new way of working. It’s not helped by the fact that searching online for details about expense management systems can lead you into a bewildering world of technical jargon and marketing blurb. So the purpose of this guide is to tackle this challenge – to give you a simple and no-nonsense guide to switching from a paper-based to a digital system. We will focus on two key areas: Choosing the right system and implementing the system.

You can follow the link for a detailed guide to how an expense management system works.

Part 1: Choosing and expense management system

The main challenge we face when looking for the right EMS solution is the fact that each and every business is different. Companies have different structures, scales and set-ups which create a specific set of expense management requirements.

The first step when choosing a system is, therefore, to identify what the exact operational requirements of your organisation are. How do you manage your expenses and which features are best suited to meeting your needs?

Here’s a checklist to help focus on those areas of your business which impact most on the way you will want to use an EMS service.

Requirements checklist

  • How many claimants and approvers do you have?
  • Is everyone based in one office or in multiple sites in one country?
  • Do you require the multi-entity capability to integrate with overseas offices?
  • Do you reimburse in different currencies around the world?
  • Do you want to integrate with existing accounting or ERP software?
  • Are users going to carry out expenses claim activity from an office?
  • Do users need to interact with the system on the move?
  • Do you have offices using petty cash systems?
  • Do you recharge expense items to clients or projects?
  • Do you want to reclaim UK or overseas VAT?
  • Does your business use corporate credit cards?
  • What MI (Management Information) reporting do you require?
  • Data storage and security needs?

Features checklist

There are a number of expenses management systems in the marketplace. Most systems will offer a similar set of core features to help the process, and manage and control employee expenses. The most popular features include:

  • Input expenses through a smartphone app
  • Record journey route and mileage via app
  • Manage and monitor expenses via app
  • Manage expenses via credit card integration
  • Input expenses in multiple locations and currencies
  • Customisable compliance alerts and checks
  • Pre-trip approval, to avoid out of policy claims
  • Attach digital receipts to expenses claims
  • Integrated petty cash management
  • Track your carbon footprint
  • API for easy integration
  • Real-time reporting on company spend
  • Duplication checking

By cross-referencing your organisation’s requirements against the features on offer you can get a good feel for which system is best aligned to your needs. While this can help guide your decision process, it’s wise not to make it a deciding factor. The advantages offered by any specific features need to be weighed against the software’s general robustness, usability and ease of use. Extra features are of limited value unless an EMS can be relied on for the basic tasks of managing and processing expenses.

Hands-on experience

An effective expenses management system is a business tool which will be used on a day-to-day basis throughout the organisation. It’s vital, therefore, to get as much first-hand experience as possible prior to making any commitment. The best way of doing this is with a ‘test run’ – most providers will allow you to use the software for a trial period. Demonstrations can also be arranged to see the software being used in a live situation.

Customer support and training

Customer support will help implement your system and look after you and your employees should any issues arise, or should you want to add new users or features. Contact customer support before you start with any pre-sales questions to see what responses you get and how quickly the support team responds. Can your users call the supplier directly or will your finance team need to manage these support needs? Inspect case studies and ask to speak to existing customers at referral sites.

You know your users better than any supplier – what method of training would work for your organisation? Typically the options available are face-to-face training, train the trainer, online webinars, training videos, users guides, support sites and forums. Make sure your supplier knows what training is required and find out what support and backup material they can provide to meet your needs.

New developments

Technology is a fast-changing world with new formats and features constantly appearing. It’s important, therefore, to make sure your provider has a clear development road map and is enhancing and updating the product you will be using. A good provider will make sure you don’t get left behind.

Mobile working

To maximise the benefits of technology, a supplier should provide effective ways for employees to manage their expenses via handheld devices. A smartphone app allows users to instantly convert paper receipts into a digital form, fundamentally changing the way an organisation is able to handle costs. Carbon footprint An important feature provided by some suppliers is real-time carbon tracking, this allows users to input claims and see their carbon footprint from each journey. This creates awareness and delivers data to measure and reduce your organisation’s carbon footprint. With carbon reduction milestones looming, why pay more tax than you have to?

Compliance tools

Some systems are better for compliance purposes, for example, point of entry reminders to prompt employers to comply with laws such as the Anti-Bribery Act and corporate manslaughter legislation. You can also use some systems to help get a dispensation from HMRC for form P11D.

Petty cash control

An effective system will allow the management and monitoring of any petty cash funds that are operating within an organisation. By integrating these into the main expenses system, finance teams have the power to keep costs under control and to maintain effective compliance.

Flexible advantage

Business agility is an important attribute for businesses looking to adapt and respond to rapidly changing market conditions. It is important that the systems that support our businesses are flexible. Your expenses system needs to be able to accommodate your changing business needs. Importantly, your supplier will need to be able and willing to support changes to the system. Find out if there are any costs associated with this.

Summary

As you work through these points and decide on the features that are important to your organisation, you should be able to develop some selection criteria against which you can evaluate the potential of product and service offerings in the marketplace.

Part 2: Implementing an expense management solution

Now you’ve got a grip on the selection criteria, there are a number of elements that you need to be aware of when planning the implementation of an expenses management software project. Some of them are related to the pure mechanics of integration – the system set-up processes that need to be carried out by the supplier.

However, successful implementation is not just a matter of process and mechanics. There are other elements, somewhat less tangible elements, that may be termed cultural. Taken together these factors will help you assess the likely speed and gain a realistic appreciation of the time, effort and changes required to complete implementation successfully.

Data set-up

Getting an expenses management system up and running should be a pain-free process. But it’s important to choose a supplier who can provide the kind of support that closely matches your needs. Many service providers request system set-up data from the customer in a spreadsheet format. You will need to provide user details, ledger codes, mileage rates and so forth.

Company administrators receive full training in all functions and in system maintenance and modification. Users should be provided with appropriate training and user guides. It also provides a group of employees who can act as system ‘champions’. Their experiences can help in the training and support of colleagues and help alleviate any concerns.

Support network

Once the initial set-up is completed, you need to make sure that you have the expertise and knowledge available to maintain its effective use. Company administrators receive full training in all functions and in system maintenance and modification. Users should be provided with appropriate training and user guides.

Pilot group A great way to test the system and identify any issues before a company-wide rollout is to pilot the system. By trialling it with a small group of employees, you can get invaluable feedback on any technical issues and training requirements.

Roll out

Once set-up is complete, a date can be set for the system to ‘go live’. Users are added to the system, they receive a user login and password by email and are fully briefed on how to use the software.

Quite often systems will have features and settings that can be switched on and off. Over time you might want to start to increase the feature set users have access to, but for the initial roll out it’s often best to keep these switched off until the core processes are firmly embedded.

Part 3: Expense management system next steps

Now you’ve got your new expenses management software solution in place, what’s next?

There are some cultural aspects that should be considered. It’s important that the system is not seen as ‘forced’ on users and that it becomes a wedge between finance and claimants. Remember the system is just the tool, it’s only when people use it that the business benefits are realised so it is important to gain ‘buy in’.

Revise and update policy

To support the introduction of your expenses management system, it’s advised that you also update and refresh your Expenses Policy. Rules and guides designed for a paper-based system are unlikely to be getting the best out of a new digital system. With a revised policy in place, all claimants and administrators clearly understand the limits of allowable expenses and the processes involved in making a claim. Sometimes this step can be overlooked, reviewing what employees can and can’t claim can often form the largest proportion of the project.

Resistance to change

We are all in some way resistant to change. The introduction of an EMS, new working processes and a refreshed Expenses Policy are likely to invite some criticism initially. It may be useful to appoint one of the finance team as a system champion, or ‘go to’ person that is the first port of call for every query.

The champion’s role

Part of this role should include advocacy for the benefits, reinforcing that this change will make everyone’s life easier, and investing a little time up front will pay dividends very soon.

Behaviour modification and acceptance

The statistical 40% that may have been able to abuse the paper system will find it more difficult to continue any fraudulent activity. Over time, as the system beds in and users experience the benefits of cultural change, behaviour modification will lead to acceptance and cultural issues will effectively fade from prominence. An expenses management system’s purpose is to provide a fair and simple way to manage expenses.