Expense management: A guide for businesses

Managing expenses is an important part of running a successful business. By properly tracking, approving and analyzing business expenses, you can help ensure your employees are reimbursed correctly while keeping your company budget on track and your spending in compliance with your policies. 

Here’s what you need to know about how an efficient expense management process can help streamline your company’s finances.

Expense management is the process of tracking, reviewing, approving and analyzing your business expenses. An expense management system can help you properly manage spending and reimburse your employees for eligible company-related purchases, such as:

• Travel, hotels, meals and entertainment 
• Office supplies or equipment
• Software subscriptions

The expense management process is important because it covers more than just tracking your business’s expenses. It can provide greater control over your company’s spending by establishing spending guidelines, streamlining approvals and helping ensure expenses are properly recorded.

Expense management works by following a step-by-step process from the initial purchase through reimbursement or payment. A typical workflow might include the following key components: 

1. An expense is incurred. An employee makes a purchase on behalf of the company or incurs costs while traveling or meeting clients. 
2. The receipt is captured. The employee uploads the receipt and any necessary details to the business’s expense management system.
3. The expense report is submitted. The employee submits the expense report after confirming that all information is correct and complete.
4. The expense is reviewed and approved. A manager reviews the expense to ensure it complies with company policy. The expense may also need to be verified by the accounting or finance team.
5. Reimbursement is provided. The employee is reimbursed for the expense if it was paid out of pocket. If the expense was charged to a corporate card, it may be reconciled through the card account.
6. The expense is recorded. Once the expense is approved and paid, the expense is recorded in the business’s accounting system.

Effective expense management can help businesses improve visibility into spending, streamline processes and maintain greater control over expenses. Some key benefits include:

• Saves time: An efficient expense management process can reduce the need for manual paperwork, helping your employees and finance team spend less time creating expense reports and processing reimbursements.
• Reduces fraud and errors: An automated expense management process can help reduce some errors associated with manual data entry. Some systems can flag unusual transactions, like duplicate entries, to help lower the risk of fraud.
• Improves visibility into spending: Depending on the system, you may be able to view and categorize business spending in one place. This improved visibility can help your finance team identify spending trends and stay on top of your budget. 
• Supports compliance with company policies: Expense management systems can often help check purchases against your current company spending policies, which can help reduce unauthorized purchases outside approved categories.

Expense management can create challenges for businesses when policies are unclear, processes are time consuming and spending is difficult to track. Some common challenges include:

• Unclear company policies: If your expense policy isn’t clearly communicated, consistently implemented and easy to understand, it may lead to confusion about what types of purchases will be approved.
• Lost time: Manually entering receipts, reconciling expense reports and searching for missing documentation can take up a lot of your team’s time—time that could be spent on other tasks that support your business’s growth. 
• Increased data errors: Human data-entry errors, like duplicate entries, duplicate submissions or typos, can bog down the process and delay reimbursements.
• Budgeting concerns: If you don’t have full visibility into your company’s spending, you might have difficulty managing cash flow and creating and maintaining an accurate budget.

The main difference between manual and automated expense management is how much of the process is handled by your team versus technology. Manual expense management may involve compiling paper receipts, entering information into spreadsheets and sending expense reports through email. Manual processes can take more time, potentially causing employees to wait longer for reimbursements. 

Automated expense management can help streamline the process with features like digital receipt capture and automated workflows for submission and approval. By reducing manual steps, automation may help employees and finance teams spend less time processing expenses.

According to research from the Capital One Insights Team, automating financial processes, including expense management, may offer businesses several benefits. One Florida-based manufacturer shared: “The most impactful improvement would be enhanced real-time insights and greater automation in our financial systems. This would streamline processes to minimize manual work and enable quicker, more informed decision-making.”

Eligible Capital One Business cardholders can access the free Capital One Expense Management feature to help streamline expense tracking, reporting and approvals. The feature allows you and your employees to:

• Capture and submit business expenses
• Automatically submit expense reports
• Keep track of expenses in your account dashboard
• Review expense reports and approval requests
• Connect to accounting software, including QuickBooks, Sage Intacct and Xero

Expense Management can be accessed directly within your Capital One Business account. Once you enroll your account and accept the terms and conditions, you can provide access to any account managers or authorized users on your team.

Already an eligible Capital One Business cardholder? Here’s a demonstration of how to add employees, capture expenses, set spending policies and approve expense reports.

Still have questions about expense management? Here are answers to a few common questions.

Effective expense management can help your business save time, improve visibility into spending and keep expenses aligned with your company policies. Whether you’re managing expenses manually or using automation, having the right processes and tools in place can make it easier to stay organized as your business grows.

Using a Capital One Business credit card can be a great option to help you manage your company’s expenses. And the Capital One Expense Management tool helps streamline the process, with automation and simple approvals so you can focus on growing your business.