Beyond Spreadsheets: A Finance Leader's Guide to Modern Expense Management

Key Takeaways

• Expense management can be tedious when executed manually with endless spreadsheets and emails.
• Effective expense management helps reduce costs quickly and identify areas to boost cash flow.
• Automating your expense policy with expense management software gives you more time to spot needless expenses and fine-tune spend policies.
• Automation reduces employee friction, providing a hassle-free solution for streamlining expense management.
  
  

Managing business expenses efficiently is a cornerstone of financial success, yet many companies still struggle with outdated methods. A well-defined expense management process delivers value beyond basic cost tracking—it empowers your finance team to identify cost-saving opportunities and optimize spending patterns quickly.

Through systematic expense management, accounting teams gain real-time visibility into spending trends, while CFOs can spot areas for immediate cost reduction. This visibility is critical as businesses deal with fluctuating economic conditions.  

In this guide, we'll break down what expense management is, explore how to build efficiency into your processes, and examine how automation solves common challenges.

What is expense management?

Expense management is a set of automated and manual processes companies use to track and reimburse employee spending on business activities. Common processes include collecting expense proof, issuing corporate cards, and verifying expenses against policies.

The finance department typically handles expense management, while in smaller companies, HR manages receipt tracking and policy compliance.

The importance of expense management

Good expense management delivers critical benefits that impact your financial health and operational efficiency:

• Accurate books: Document and categorize every transaction, giving you a true picture of company spending.
• Visibility into employee spending: Gain real-time insight into spending patterns to address issues early.
• Measure of financial efficiency: Track spending against budgets to identify waste and understand ROI.
• Regulatory compliance: Keep documentation complete and reporting consistent for smoother audits.
  
  

Beyond these internal benefits, effective expense management strengthens vendor relationships through timely payments and improves employee satisfaction with clear policies and quick reimbursements.

Types of employee expenses

T&E expenses form the bulk of employee spending in larger companies. As remote work increases, managing these expenses has become more complex, and companies now need clearer policies to differentiate between personal and business spending.

The IRS qualifies these expenses as T&E:

• Hotels and stay: Accommodation costs during business trips
• Travel expenses: Transportation costs, including flights and mileage
• Business meals: Food expenses during business travel or client meetings
• Licensing costs: Professional certifications and software licenses
• Supplies: Essential business materials and equipment
  

The old versus new way of managing expenses

Modern expense management solutions are transforming how businesses handle employee spending. Here's a brief breakdown of common expense management tasks:

5 best practices that transform expense management

Adopting the right expense management practices can significantly improve your company's financial efficiency, reducing manual work and employee frustration.

Here are five proven practices that help you build a more effective expense management system.

1. Define a clear expense management policy

Your expense management policy should be a comprehensive guide that helps your team make confident spending decisions and save time during approvals.

Start by clearly defining what expenses your company will and won't cover. For instance, specify meal allowances for business travel, clarify when premium travel options are acceptable, and outline how to handle client entertainment expenses.

Include real examples that reflect common situations your employees face.

Next, create a list of approved vendors and expense categories. To simplify categorization, group expenses logically, such as separating travel costs from office supplies.

The reimbursement section of your policy should proactively answer common questions before they arise:

• How soon after purchase should expenses be submitted?
• What documentation is required?
• How long will reimbursement take?
  
  

When providing these details, use simple language and avoid technical jargon.

Make your policy easily accessible to all employees. Instead of burying it in a shared drive, consider hosting it on your company intranet or building it directly into your expense management software.

The easier your policy is for employees to find and understand, the more likely they will follow it. As your business grows and your working methods change, your expense policy should evolve, too. Communicate changes and explain their reasoning to all employees when making them.

2. Automate expense approvals

Instead of chasing email threads and paper trails, automate your approval process to ensure expenses move smoothly through your system.

Start by mapping your approval workflows to your expense policy. For instance, expenses under a certain threshold might need only manager approval, while larger amounts require additional sign-off. Then, set up automated routing that matches these rules.

When employees submit expenses, the system automatically sends them to the right approver based on the amount, expense type, or department.

Create exception paths for special cases that don't fit standard rules. This ensures that unusual but legitimate expenses are not delayed unnecessarily.

Once expenses are approved, streamline the final step with automated payments (whether B2B payments or otherwise). Your accounting team will spend less time on data entry and reimburse employees faster.

The best part? You'll have a complete audit trail of every expense's journey through your system—from submission to approval to payment—without hunting through email chains or paper files.

3. Review spending limits regularly

Setting spending limits isn't a one-and-done task. Review your expense data to spot trends and adjust limits to match your business's evolving needs.

Start by analyzing spending patterns across teams and roles. For example, you might find that your sales team consistently needs higher travel budgets during conference season, while your developers require increased software subscription limits at certain times. Use these insights to set realistic limits that work for different functions.

Real-world impact matters here. Take Copper, for example. By regularly reviewing and adjusting spending limits based on actual usage patterns, Copper's team saved $13,000 in out-of-policy expenses. They identified inappropriate limits and then fine-tuned them to match real business needs.

Monthly or quarterly reviews help you adjust limits before issues arise. Pay special attention to:

• Frequently requested exceptions
• Departments approaching their limits regularly
• Seasonal spending patterns
• New types of expenses emerging from changing business needs
  

When you adjust limits, clearly communicate the changes to your team and explain your reasoning. This transparency ensures everyone understands how to work within the new guidelines.

4. Enforce security through virtual cards

Virtual cards add a powerful layer of security to your expense management flows while simplifying vendor payments. Unlike traditional corporate cards, they prevent fraud in multiple ways.

If a virtual card number is compromised, the exposure is limited to just that card's spending limit and vendor. You can also set cards to expire after a single use or specific period, dramatically reducing the risk of unauthorized charges.

Virtual cards also excel at controlling subscription spending. Create dedicated virtual cards for each software subscription or recurring service, set spending limits, and specify approved merchants. This eliminates surprise charges and automatically flags any unusual billing patterns.

The benefits are significant:

• Stop zombie or long-forgotten subscriptions.
• Prevent overcharging with preset spending limits.
• Simplify reconciliation with vendor-specific cards.
• Track departmental spending automatically through card assignments.
• Block unauthorized spending categories
  

Best of all, employees can create virtual cards instantly when needed, eliminating the delays and paperwork associated with traditional corporate cards while maintaining complete spending control.

5. Integrate with accounting systems

Connecting expense management to your accounting system does more than eliminate data entry—it transforms your financial data into actionable insights for strategic planning.

When expenses flow automatically into your accounting system, you eliminate manual coding errors and gain real-time visibility into spending patterns. This integration creates a single source of truth, letting your finance team spend less time reconciling accounts and more time analyzing trends to support business decisions.

The impact on financial planning is significant. You can:

• Track actuals against budgets in real-time.
• Forecast cash flow accurately using up-to-date expense data.
• Identify cost-saving opportunities across departments.
• Model different spending scenarios for growth planning.
• Generate instant reports for stakeholder meetings.
  

The benefits extend to your vendor relationships too. When expense data feeds directly into your accounting system, you can pay your suppliers on time, maintain accurate accruals, and better manage your working capital. 

This systematic approach strengthens your digital payment workflow in the supply chain, from employee purchases to vendor payments.

Why you need an expense management system

Innovative, next-generation expense management is changing how companies handle business spending, from defining clear policies to automating approvals and leveraging virtual cards.

Teampay's expense management platform helps you make this transformation seamless. You can:

• Get instant visibility into spend across your organization.
• Control expenses before they happen with automated policy enforcement.
• Streamline approvals with intelligent routing and mobile access.
• Eliminate reimbursements through virtual cards and direct payments.
  

Don't let manual expense management hold your business back. Modernize your approach today and give your finance team the tools to drive growth and efficiency.