Expense management software in a nutshell
Expense management software will help you track the purchases you make on behalf of your company, manage employee reimbursements, and submit expense reports. The most innovative expense management software can also create spend policies, set card controls, and generate reports.
Modern expense management software is cloud-based and typically allows you to manage company expenses from one place (even across multiple entities). This includes tracking new expenses, setting policies, approving payments, paying invoices, monitoring subscriptions, reimbursing mileage, and more.
The importance of ERP integrations with expense management software
Integration between ERP systems and expense management software is essential. The data gathered by the expense management software is a vital piece of the puzzle for the ERP. Together they can show a complete picture of company performance, operations, and cash flow.
Some of the other main benefits include:
When integrated, the data collected from different sources will be more accurate and easier to manage. This connected view will help organizations make better decisions based on accurate information.
Ease of use
Employees prefer using one system for all their tasks instead of having multiple tools for different tasks. Asking cardholders and non-finance employees to use only the expense management software as a card and an app reduces the manual admin involved in expensing: no more collecting receipts and spreadsheets.
Meanwhile, integrating the expense management software and the ERP removes massive data entry and reconciliation burdens from the finance team. And they can operate safely knowing that their colleagues are spending with the company's chosen expense management solution (likely with in-built controls, approvals, and limits).
When data from two sources are integrated and combined, it becomes faster for employees to process and turn it into information that can help them make better decisions quickly.
Automation of the expense management process
ERP integrations enable automation of the expense management process by eliminating manual data entry into multiple systems. This automation helps eliminate manual errors while improving the accuracy and speed of data entry.
Real-time visibility into expense data
Integrating your expense management solution with your ERP system gives you real-time visibility into all expenses across departments, including approvals, payments, reimbursements, etc., so that you can make informed financial decisions.
Improved accuracy of expense tracking
Integrating expense management software with ERPs lets businesses track expenses more accurately and reduces the risk of fraud by providing real-time visibility into all transactions across all departments. This also helps organizations identify trends in spending and overspending by individuals or teams to take corrective action early on.
Integration with accounting software
Integrating your ERP solution with expense management software ensures all expenses are accounted for and recorded, reducing the chances of any discrepancy in the accounts.
The challenges facing organizations without ERP integrations
When used correctly, expense management software x ERP integrations can help mid-size, large, and growing businesses to reduce costs, improve efficiency, and support growth. However, despite the apparent benefits, many organizations still don't have this setup.
What's behind this reluctance? And what can be done about it? Companies that don't have expense management software x ERP integration face many challenges, including:
Inefficient approval workflows
Without expense management software with in-built, customizable approval workflows, employees must wait for someone else to approve their expense reports manually.
Waiting for expense approvals can cause delays and frustration for employees, cause delays in spend visibility for the finance team, and even increase costs for the business.
Inability to track expenses in real-time
If finance teams can see spend data in real-time, they can make instant decisions.
Art fabrication business MDM Props shared their experience of using separate cards, expense management, and accounting software.
"With the old system, we had to wait two to three days for payments to show up," explained Finance Manager Uchenna. "But with Payhawk, we get to see our spending in real-time. And, we can categorize the spend by projects with custom fields, so it's super easy to see what's being spent and why."
Delays in data mean finance teams can't react quickly enough to respond to the current business situation, budget needs, or even macroeconomic factors. They don't know where to reroute cash flow and when.
Lack of compliance with company policies
Companies can't easily enforce compliance with company spend policies without expense management software. And in the best-case scenario, finance teams can build the policies into the same tool that employees use to make payments for work.
Take your Sales Manager Peter for example. He's recently purchased some new materials for a stand he's manning at an upcoming expo. In this example, Peter used Payhawk. Meaning he paid using a Payhawk card which is already assigned to Events. He categorized the spend from a drop-down menu, including Event materials, and that did the job.
Later, he couldn't take money from the ATM for a coffee using the same card. This is because it's blocked for withdrawals. So instead, he used his personal Payhawk card (which includes in-built per diems) to get his caffeine hit.
Difficulty in auditing expenses
Expense management software and ERP integrations mean that your business' spend data should flow directly into your accounting (including receipt data, categorization/coding, and more). This smooth data flow means all your accounting data is audit-ready in real-time.
On the flip side, an inability to audit business expenses can lead to financial losses, which may be difficult to recover. The main reason why this happens is that there's no clear documentation or evidence of what was purchased and who authorized it. This could also lead to increased fraud as it becomes difficult to track down who incurred the expenses and whether they were legitimate or fraudulent.
Key considerations for ERP and expense management software integrations
Compatibility with existing systems
If you're looking to integrate an expense management system with your ERP, they must be compatible.
Both software systems should be able to talk to each other through a standard protocol format. With Payhawk, for example, many of our integrations are direct. Our data flows following the accruals concept and date-matching, so there's no reconciliation effort for finance and accounting teams.
Data security and privacy
When integrating multiple systems, all data must remain secure and private. Otherwise, you could run into compliance issues that could cost you money if not handled properly.
Many companies are concerned about data security and privacy when considering ERP integrations with expense management software — especially when sharing sensitive financial information such as credit card numbers or bank account information. Ensure the vendor provides sufficient security measures (e.g., strong encryption, etc.).
Implementation and training
Once you've found a solution that works for both your needs and those of your employees' needs, it's time to implement the solution in your business processes. And if necessary, train employees on how best to use it.
If your business is particularly complex, you may want to consider an implementation specialist and, particularly, an expense management provider who offers this.
Ongoing maintenance and support
This is an essential factor when looking at ERP integration. You want any vendor you choose for this type of integration to have ongoing maintenance contracts so that they can keep up with any changes in their software. These upgrades may include new features, bug fixes, and more.
The bottom line
Ultimately, ERP integrations with expense automation software makes a lot of sense. There's no complicated procedure to implement, and it can save you valuable time that could be spent elsewhere.
Our easy-to-use expense management software eliminates the need for manual, error-prone processes and allows teams to focus more on core business strategies.
Want to improve the way your business spends? Let's talk integrations, expense management benefits, and more. Let's talk.