The expense management maze: Seven spend management challenges for scaleups and their solutions

Securing funding, building a team, hitting seven figures — these are common business growth challenges. But what about the ones we don’t hear as much about? Like mastering expense management for scaling companies, even though it's key to their success.

Put it this way. If your company is a tree, proper expense management is the rich soil that helps your business grow and thrive. So, optimizing this area can give your company a huge competitive advantage. Especially when you consider external spending makes up 40% to 80% of a typical company's costs.

In this guide, we'll highlight the most common expense management issues scaleups encounter on their growth journey and share tips, tricks, and tools for overcoming them.

Scaleup challenge #1: Manual expense reconciliation

It’s 3 pm on a Wednesday. Your team has to submit accounts by 5 pm on Friday for month-end close. But there’s a huge problem. You’re all knee-deep in reviewing receipts and transferring data into Excel by hand. It’ll be at least 20 hours of this painstaking admin, so another late night is inevitable. That’s only the beginning. You’ve then got to upload the data to your accounting system. And that's before you can even begin calculating spend, assessing budgets, and drafting the reports. Worse, it takes a few taps in the wrong cell, and your figures go haywire.

It's an expense management nightmare, but stressful month-end closes are a reality for many relying on manual account reconciliation. In fact, 45% of companies still see their “preparation of the reporting package” as manual or lean more toward the manual than the automated side.

A manual setup (apart from being time-consuming) is also costly and unsustainable, especially as your company grows. So, it's unsurprising that 40% of businesses want to build more automation in their accounting processes.

The solution: Embrace automation and innovative technology for expense management bliss

Going digital and adopting automation is critical to beating the dreaded month-end mayhem. So:

• Reclaim time with user-friendly tools that make expense reports easy. With the right solution, employees can simply take a photo of their receipts, fill in a few details for coding, and job done
• Reconcile in real-time rather than at the end of the month. Leverage a solution that integrates directly with an ERP so you know where you stand with no delays and enjoy real-time reconciliation to support a continuous close
• Utilize card linking and real-time card feeds for seamless expense tracking. Implement card linking technology that allows real-time transaction notifications on your existing credit cards. This eliminates the need to keep physical receipts and enables on-the-spot expense submission. Automatic categorization of expenses through OCR reduces manual effort and speeds up the reconciliation process, ensuring that every transaction is captured and categorized correctly without delay.
• Streamline purchasing, control spending, and automate policy compliance with a solution that supports automated, adjustable approval workflows, Procure-to-Pay processes, customizable card controls, and complete transparency over spending. Use tools that allow you to block non-compliant transactions and have alerts for suspicious activity
• Standardise processes and tools with a comprehensive spend management solution to free your team to focus on strategic tasks. This method could look like adopting corporate Visa cards with spend limits. OCR technology on an AI camera-enabled mobile app is also valuable. It’ll extract relevant receipt or invoice data so your staff can submit expenses quickly and easily
• Integrate your financial systems to synchronize data. Use a spend management solution that connects to the rest of your tech stack so you can sync your ERP (as above) and other tools to ensure you stay up-to-date on the company’s current monetary position on things like cash reserves, liabilities, and due accounts

Scaleup challenge #2: A lack of real-time visibility and control

Your staff likely has to make decisions quickly to stay ahead of the competition. So, the last thing they need is searching for mission-critical data in spreadsheets, emails, and filing cabinets.

The lack of visibility into who’s spending what and where leaves your business vulnerable. You could have a situation where staff is lending cards to one another without authorization. But you’re unaware because you can’t link them to your accounting system. You also can’t stop questionable transactions. As a result, it's impossible to catch overspending until the transaction hits the statement. By this time, it's often too late.

Then there’s the hassle of using traditional bank cards, which often come with delays in spend visibility. This lack of real-time oversight can hide potential expense fraud and make it harder to spot out-of-policy spending. Without instant insights, you’re less able to adjust budgets quickly, putting your company at greater risk and leaving insight gaps around cash flow.

Take the arts fabrication company MDM Props, for example, and their experience of using traditional bank cards.

We used two different credit card systems, one from Barclays and one from AMEX. With the Barclays card, you would get a monthly statement, and you had to pay it in seven days. But sometimes, when we’d log into the system to retrieve the statement, it wasn’t even available. So, we didn’t know what we were paying, which was bad for cash flow. We had to download a PDF statement, then physically get the receipts and attach them to the statement, and it would take days or even weeks to reconcile.

Experiencing something similar? You’re not the first. Businesses spend 80% of their time in analytics projects on repetitive tasks like preparing data. Also, just 10% believe they’ve got this problem under control.

The solution: Pool insights, connect your tech, and streamline reporting

The good news is that mastering data collection and management can be simple. It’s profitable, too, as 80% of businesses that use real-time data analytics and processes see a boost in revenue.

Unfortunately, not all businesses have reached this stage yet. In The CFO Agenda report, we completed in partnership with Raconter, we discovered that 63% of all CFOs and 70% of CIOs find centralising control and visibility "extremely challenging." Meanwhile, 96% of UK respondents said that gaining visibility of the rest of the business to understand how other departments operate was a 'very significant' challenge.

Clearly, centralizing insights and streamlining is vital, but how should you go about them?

• Establish a clear policy and process for expense management. Include how to process data, deadlines, and spend control best practices. Make everyone aware of what's involved and the consequences of non-compliance
• Link corporate cards to expense management software for real-time visibility and alerts. Ensure the solution has in-built spend controls to ensure compliance. It should also have features that allow your staff to interpret and manage expenses quickly and easily. For example, our spend management solution acts as a control tower, allowing you to monitor spend live and set card spending limits. It can also be configured to replicate your spend policies, for example a rule that autoblocks specific transactions like ATM withdrawals. Use features like our custom expense categories for fuss-free processing
• Switch to cloud-based financial management software and digital processes. Stop relying on personal cards and Excel sheets and help your team get access to financial insights anywhere, at any time. Your team can also continuously track critical metrics like economic performance and cash flow. This flexibility aids decision-making, helping your business respond to market events faster
• Integrate dashboards and analytics to supercharge your spend management solution’s insights. Your spend management solution should have the ability to visualize your spend data in an easily understandable way so you can gain insights quickly
• Use Artificial Intelligence (AI) and Machine Learning (ML) for predictive analytics. These solutions conduct trend analysis, solve problems proactively and automate manual data entry. They can also suggest actions and execute corrective measures to mitigate risk. The plus? AI and ML will execute these without your team’s manual effort

Scaleup challenge #3: Inefficient travel expense management

Travel expenses are still rising. In 2024, average airfare costs could increase by 1.8% to $780. So, whether it’s going to tradeshows or visiting manufacturers, making your cross-border expansion goals a reality can get expensive fast. Managing fuel, hotels, flights, and catering costs in various countries and currencies can also be complex.

Then there’s the hassle of manually keeping up with receipts and generating Excel reports. Sure, you could outsource these tasks to an accounting agency. But the agency can only work with what you’ve got, which means a lot of back and forth to make sense of the data. Not fun.

The kicker? Inefficient travel expense management hurts your profits. Budget control and spend optimization go out of the window as you grapple with unexpected costs.

The solution: Build solid vendor relationships and support them with travel expense management tools

Spend management for scaleups can take many forms when it comes to travel. The key is to understand your company's travel schedule and needs. Then, gather resources to support it. For example, you could:

• Onboard an expense management software equipped with automated travel spend management features. These solutions will streamline and accelerate your travel expense tracking, reporting, and reimbursement processes. Specifically, look for tools to track mileage, per diems, and out-of-pocket reimbursements
• Use corporate travel cards with automated spend controls. The right corporate card solution will reduce your expense processing time by categorizing and recording transactions. It’ll also facilitate automated enforcement of travel policies to prevent excessive spending and expense fraud
• Negotiate corporate travel rates to get the best bang for your buck. Build strong relationships with travel agencies, hotels, airlines, and car rental companies. Finally, lock in deals for frequent trips and use order volume to secure discounts

Scaleup challenge #4: Approval bottlenecks

Have you ever had an urgent report held up by busy staff schedules, vacations, or sick leave? Bottlenecks like inadequate audit trails and manual approval processes are common momentum killers. They can delay critical decisions and responses, which are big no-nos in smart expense management for growing companies.

Key culprits of such bottlenecks are a lack of flexibility and customization in approval workflows. When you can't tweak tools to fit your company’s needs, sluggish and inefficient processes follow.

The solution: Structure, streamline and automate expense approvals

Good news! With the correct setup, spend management for growing companies doesn’t have to be a pain. To get started:

• Enforce expense policy compliance through automation and customizable workflows. This way, you'll keep your spending on track efficiently, no matter what’s happening in the office. For example, you can automatically send approval requests to the right person using our expense management solution. At Payhawk, we allow you to set automatic, customized, and multi-level approval workflows for specific expense types and amounts with our Workflow Designer
• Set clear approval hierarchies and communicate them company-wide. Assigning multiple approvers, delegating responsibilities to trusted staff when required, and informing staff of the process will help reduce confusion and delays from misrouting. Better yet, automate that delegation and avoid human error or loopholes!
• Onboard a mobile app with expense approval functionality and real-time updates. This way, managers and trusted personnel can approve or decline expenses on the go. It’ll also reduce the risk of staff forgetting to approve requests, especially during busy periods

Scaleup challenge #5: Subscription and payment management

“I just saw that Hannah signed up for an invoicing tool. Don’t we already have a subscription for this?”

“There’s going to be a delay on our stationery order. Our payment failed.”

“Why is Procurement using bank transfers and cheques? I thought we switched to credit cards.”

These are just a few of the headaches you can encounter in expense management for scaleups without the right tools and streamlined processes. As the complexity of managing subscriptions and recurring payments increases, so do challenges in controlling costs.

Worse, gaining insight into your payment management isn’t just tough; it can be costly, too. Then, there’s the challenge of staying compliant with the rules in all your territories. Get this:

• Payment operations gobble up 2% of the average business's annual revenue, and payment processing takes 0.8%
• 49% of SMBs cite navigating international payments as a barrier to growth
• 49% of companies say broken or failed payments have a severe impact on their costs
• 64% of businesses say broken or failed payments have an impact on staff workloads

Solution: Use integrated solutions to streamline your tech stack

Taking control of your subscriptions and payments and fighting obscurity are essential for effective spend management. The weapon of choice? Comprehensive technology. Here’s what you need:

• Subscription management software. Such solutions will help you find and track subscriptions to gain visibility on spending. Your chosen solution should automate billing. It should also handle renewals to ensure timely payments and services tick along. For example, you can ensure staff have enough funds to cover recurring charges with our subscription management solution.

At Payhawk, our software also predicts billing amounts for each subscription. Then, our solution notifies your staff how much of their card’s available funds will go towards the bill. Plus, you can set up auto-top-up, and your team can request funds for over-budget expenses with just a few clicks on our mobile app

• Global payment platform, invoice management, and recurring payment automation. Centralising these solutions into one system will simplify your expense management, freeing up more of your team’s time. You’ll also enhance transparency, optimizing spending for more liquidity. Pick a solution that allows your team to schedule payments and pay staff and vendors quickly and affordably around the globe.

Plus, embrace easy and consistent data collection across your entities — and dodge manual errors — with 3-way matching across receipt notes, purchase orders, and invoices, plus automated data capture and categorization alongside our Accounts Payable solution.

Nadia Vanuytrecht, HR and Operations Manager at Explose Agency, says:

Payhawk frees up my time to focus on tasks that create company value. It makes accounting activities easier; the OCR identifies duplicate invoices and populates the fields… it's the four eyes principle in action, a real time-saver.

• Compliance and tax management solutions. Whether it’s observing per diem rates or submitting mandatory documents, staying on the right side of the law is critical for successful spend management for scaleups.

Choose a spend management tool with amortization scheduling and VAT recovery features for best results. Spread the cost of business expenses and optimize your tax deductions.

Scaleup challenge #6: Disconnected systems and tools

Make no mistake about it: Disjointed tools and processes hold businesses back. In The CFO Agenda, CFOs agreed that the biggest challenges when managing multiple tools were: Visibility (85%) and transparency and Data quality and consistency (73%).

Yet, scale-ups often mix and match tools and processes as they grow, resulting in a disconnected ecosystem. This operational mosaic means valuable insights tucked away in various solutions stay hidden. Employees go on a not-so-fun treasure hunt for precious data gems. But this search isn’t always fruitful, creating lost chances to spot growth opportunities and scale. No system and data integration also increases the odds of errors and inefficiencies.

The result? Frustrated staff, a huge opportunity cost, expense management inaccuracy, and an inability to adapt to the demands of rapid growth.

The solution: Consolidate and Integrate, integrate, integrate

The good news is that overcoming disconnected solutions is simple, and you can see results quickly. Take these steps to make integration valuable for spend management:

• Avoid implementing multiple payments and expensing tools that don’t speak to each other. Choosing a single platform for all your spend means data is collected, categorized and reconciled the same way for every cent that leaves your business.

As Carolina Einarsson, Finance Director at Essentia Analytics, says:

Before Payhawk, we used a couple of point solutions, excel, and a few different credit cards, but we didn't have an all-in-one centralised solution. For us, spend management was a quick win, and in choosing Payhawk, we saw a future where we could have expense data entry, credit cards, approvals, spend requests, paying invoices, and reimbursements, all in one!

• Select an expense management solution that integrates well with most solutions and offers other ways to share data if a native integration isn't possible. This approach lets your team experience streamlined workflows, increased data visibility and accuracy, and fewer errors. You’ll also drive more consistency in company systems and enhance decision-making.

For instance, you’ll get a 360-degree view of your company’s data and systems with our HR, ERP, and accounting integrations. Our expense management software also integrates with over 90% of systems. Additionally, our accounting template and builder support importing and exporting financial insights to Excel and CSV. So, even if you can’t get a direct link, you can export the data directly to our system

• Consider building your own custom integration. Our API provides a standardized and versatile approach to data exchange, while webhooks enhance real-time communication and automate event-driven processes.

Scaleup challenge #7: Multi-entity management

Are you running your business across many entities or regions with a scattergun approach? It’s time to reassess your spend management practices. You’ll struggle to consolidate financial data without a unified expense management process. Tracking multiple currencies also becomes a chore, not to mention struggles to maintain compliance in diverse regulatory frameworks. Soon, your operational efficiency and financial transparency take a hit.

The solution: Drive uniformity and cohesion with financial technology and automation

Smart expense management for growing businesses is a science. So, taking a strategic approach to multi-entity management is a must:

• Streamline and standardize processes with a spend management solution with a multi-entity management environment. The best solution will simplify cash flow and spend management across your group’s entities. It'll also make the month-end close go more efficiently. For instance, you can use dashboards to gain instant visibility into group-wide data via our multi-entity management solution. You can also view spending in one place and control cash across entities and currencies. Our customisable expense types and fields will standardise expense submissions globally so your team avoids chasing for information. Plus, you can even build company-wide workflows for specific requirements like assigned expense approvers
• Support entity management software with a robust accounting system. Your pick should provide consolidated, compliant, and easy-to-understand financial statements for each entity. From here, you can say “goodbye” to frustrating admin and “hello” to streamlined transactions with suppliers

As George Kutnerian, CEO and co-founder at Wellpointe Inc., describes:

With Payhawk, we have eliminated our manual, error-prone allocation processes. We can also track each subsidiary's expenses accurately and automatically, helping us reduce our workload, improve data accuracy, and regain control over our spending.

Scaleup spotlight: How Luxair exited the expense management maze as a winner

Luxair, an aviation company, once battled manual, cash-based processes, which are common issues in expense management for scaleups. Staff paid for expenses out of pocket and sent in handmade expense reports, leading to snail-paced reimbursements. The team also lacked visibility into their company’s spending, making tracking expenses by category or person harder. Additionally, approvals depended on physical signatures through emails and scanned documents, slowing workflow.

Ready for a change, the Luxair team partnered with Payhawk, particularly for our:

• Ability to issue and send corporate credit cards to staff within three days
• User-friendly expense management app enabled with receipt capture to allow staff to submit expenses easily, even without company cards
• Centralised budget management features to gain better control over tour guides’ budgets and overall spending

Since enlisting Payhawk as its expense management co-pilot, Luxair is flying high and ready to soar to new heights. The team now benefits from:

• Real-time and traceable insight into each expense in every company, thanks to our cashless spending tools and digitized authorization process
• Agility and convenience from the quick expense submissions on the Payhawk app. Staff can request more funds via the app, which managers can approve immediately
• Increased employee empowerment and trust from having their own monthly budgets and an efficient and transparent spending management process

Top lessons learned from Luxair’s journey

1. Drive cost and operational efficiency through expense management automation
2. Live data visibility and centralized expense management enable better financial control and governance
3. Implement agile solutions like cards with spending limits and mobile apps to ensure responsive and flexible operations
4. Equipping staff with innovative, self-service tools for expense management and adequate training can drive higher satisfaction and policy adherence

Watch Luxair’s inspiring journey here.

Curb the spend management mayhem

When your business is scaling fast with a less-than-stellar setup, it’s easy to get lost in the expense management maze. To escape, you’ll need to regroup. Smart expense management for scaling businesses combines comprehensive financial technology and streamlined processes.

First up on your escape plan, identify the tasks that have a grip on your team’s time and company funds. Then, onboard innovative and comprehensive solutions and protocols to support them. In particular, don’t be afraid to hand over the reins to automation so you can scale unhindered. Stop and assess your results, then adjust your approach based on data to sharpen spend management.

Finally, be patient and support your team with adequate training during the transition. Getting buy-in from staff and building better practices takes time but is worth the investment. So, don’t wait. Take your first steps toward spend management freedom today.

Want to ensure your expense numbers and stats always add up? Book a personalized demo to see the solution in action.