Expense management software is becoming popular among business owners, and for good reasons. These systems help streamline expense tracking, automate reporting, and simplify reimbursement processes.
However, with so many options available, selecting the best one can be a daunting task.
In this guide, we'll walk you through the key considerations and steps to follow when choosing an expense management system that meets your business needs.
What and why is expense management important?
Expense management is crucial for any organization because it involves keeping track of and controlling how much employees spend on various items. Good expense management helps prevent employee overspending, which can lead to serious financial problems such as debt accumulation, reduced profit margins, and business insolvency.
Research shows that 82% of businesses fail due to cash flow issues, often caused by unchecked expenses. By setting clear budgets and spending rules, companies can encourage employees to stick to limits and be responsible with their spending. Using technology such as expense management software to track expenses can make the process easier, reduce mistakes, and ensure that employees get reimbursed quickly, which keeps them happy.
In short, robust expense management protects a company's money and promotes responsible spending, helping the business thrive in the long run.
Read next: HR Guide to Expense Management
What are the common types of expense management systems?
When it comes to managing employee expenses, businesses commonly make use of these three types of systems, which include:
Paper tracking
Paper tracking is an old method of managing expenses. It involves the use of paper to record expenses. This method is time-consuming and prone to errors. For instance, employees would have to fill out forms by hand, collect receipts, and submit them for approval, which can slow down the reimbursement process. Paper records can easily have mistakes, like unreadable writing or entry of wrong numbers, leading to errors in financial reports.
Spreadsheet
The use of spreadsheets can also be considered a traditional method of expense management. This is because it involves manual processes, such as entering data into spreadsheets and handling physical receipts, which is also slow and prone to human error. Spreadsheets are a common choice for businesses that want to reduce the use of paper but aren’t ready to switch to an automated expense management system.
Expense management software
Expense management software is a digital tool designed to help organizations track, manage, and control employee expenses in real-time. Many businesses invest in this technology because it offers a more efficient, accurate, and scalable solution compared to traditional methods like paper tracking and spreadsheets.
Learn more: 5 Reasons to Switch to an All-in-One HR Software
What is expense management software?
Expense management software streamlines the process of tracking, reporting, and reimbursing employee expenses through automation and integration. Here’s how it works:
- Expense reporting
Employees submit their expenses to their leaders or HR managers through the company's preferred expense management platform. It is done either by uploading receipts, scanning documents, or manually entering expense details.
- Policy compliance
Your expense management policy should determine what expenses are allowable and what expenses are not. The software ensures that all submitted expenses follow company policies by flagging expenses that exceed set limits.
- Workflow automation
It handles the approval process automatically, so expenses are reviewed and approved faster.
- Receipt capture
Employees can capture receipts using their mobile devices, and the software pulls the needed details from them.
- Real-time tracking
As expenses are incurred, it can be monitored through the software. Businesses can observe what and how much they spend for each employee.
- Integration with accounting systems
The software should be able to integrate with existing accounting, ERP systems, and Human Resources Information Systems (HRIS). This allows for a seamless and automated transfer of expense data, eliminating the need for manual entry and reducing errors.
Read more: HR Software Integration: A Guide
What are the benefits of using expense management systems?
Here's a detailed overview of what an expense management system can do for your business:
Improved efficiency
Expense management systems help increase efficiency by automating manual processes, streamlining approval workflows, and improving expense tracking and monitoring. This enables finance and HR teams to reduce manual labor, improve productivity, and focus on higher-value tasks.
Enhanced reporting accuracy
Compared to traditional tools, expense management software provides enhanced reporting accuracy and efficiency, enabling finance teams to make informed decisions, optimize expense policies, and improve overall financial management.
Increased compliance
When it comes to tracking and managing employee spending, compliance matters because it ensures that financial processes align with company policies, industry standards, and legal regulations. For tax and legal adherence, companies are to ensure that expense records are accurate, complete, and readily available for audit and tax preparation.
With expense management software, you can generate audit-ready reports and provide detailed and accurate expense data for auditors and tax authorities.
Better visibility
According to the IDC, companies can lose up to 30% of their revenue annually due to inefficient expense management practices, emphasizing the need for better oversight. With an expense management software, employees can easily submit expenses as they occur, providing real-time visibility into company spending.
Quicker reimbursements
Employees might incur out-of-pocket expenses for various work-related activities that the company may reimburse later. Travel costs are common, including transportation fares such as taxis, rideshares, buses, or trains, as well as mileage expenses for employees using their personal vehicles for work purposes.
In some cases, employees may need to purchase office supplies like stationery or minor equipment that the company doesn’t immediately provide. Investing in a streamlined expense management system can help to simplify this process, ensuring timely and accurate reimbursements.
Reduced costs
Tracking expenses helps organizations control costs more effectively. By monitoring travel-related costs, companies can identify excessive spending on airfare, accommodations, and meals, allowing for better budgeting and negotiation with vendors.
Regular reporting plays a critical role in detecting and preventing fraudulent or abusive expense behavior. It encourages employees to remain transparent about their spending patterns and provides an opportunity to identify any suspicious activity promptly. By doing so, companies can take corrective actions swiftly, minimizing financial losses and maintaining operational integrity.
Improved data security
Through the process of tracking, recording, and reimbursing funds, sensitive data can risk getting exposed, leading to phishing attacks. Non-compliance with data regulations can lead to penalties and legal issues. You can mitigate these risks by investing in a secure system such as an expenses software.
Learn more: Employee Data Management: How HRIS Can Help Achieve Accuracy and Security
How to choose expense management software?
Choosing an expense management software requires careful consideration of your organization’s needs, operational requirements, and the software's capabilities. By answering these questions, you can easily determine the right fit for your business.
1. What features and functionalities does the software have?
Different expense management software comes with different features and functionality. Once you've identified your organization’s expense management challenges, such as manual processes, reporting inaccuracies, or compliance issues, look for software that offers features that address those specific challenges.
For instance, if your employees often submit expenses that don’t comply with company policies or regulatory requirements, opt for software that has a policy compliance feature, which automatically checks expenses against company policies and flags non-compliant expenses.
Similarly, if you're in a situation where your finance or HR team lacks real-time visibility into employee spending, consider software with real-time expense analytics features, which provide instant insights into employee spending and expense trends.
2. Is it user friendly?
Ensure the software is user-friendly and intuitive, minimizing the learning curve for employees. Look for customizable interfaces that align with your team's preferences.
3. Is the software secure and compliant with data privacy regulations?
Security and compliance are critical considerations in expense management software because they protect sensitive financial and personal information while ensuring adherence to legal and regulatory requirements. Verify that the software complies with data protection regulations. Look for features like encrypted data storage and secure payment methods.
4. How much does the software cost versus your budget?
When choosing the right expense software for your business, it's necessary to assess your budget and determine whether the software aligns with your financial constraints. Compare the potential savings, like reduced errors and improved efficiency, against the software cost to evaluate its value. Also look for additional expenses, such as setup fees, customization, or integration costs. This prevents you from paying for unexpected costs down the line.
5. Does the vendor provide support and training?
Adequate support and training are crucial to maximizing the benefits of expense management software.
Training empowers employees to use the software efficiently, reducing errors and support requests. Check if the vendor provides resources such as live or recorded training sessions and user guides and FAQs.
Furthermore, ongoing support is essential for addressing technical issues or updates. Look for providers that offer robust customer services like multiple support channels (e.g., live chat, email, phone) and also responsive service level agreements (SLAs).
Top 5 Expense Management Software for 2025
Omni HR
For small and medium-sized businesses seeking an efficient, integrated, and scalable solution, Omni provides the tools to streamline multi-country expense management while supporting broader HR objectives. With Omni, businesses can manage all employee-related data in one place, including expense records. The software also connects expense management with other HR functions like payroll, benefits, and employee records. This integration ensures that approved expenses are automatically reflected in payroll, making reimbursements timely and accurate.
Expensify
Expensify is an expense management software that helps businesses track and manage expenses easily. It lets users scan receipts, automate expense reports, and manage approvals. The platform also integrates with accounting tools like QuickBooks and Xero. Expensify is great for businesses wanting to simplify expense reporting, automate reimbursements, and get better insights into their spending.
Zoho Expense
Zoho Expense is an expense management system that helps businesses automate and streamline their expense reporting. Key features include receipt scanning, automatic expense categorization, approval workflows, and integration with accounting tools like Zoho Books.
Airbase
This expense management platform offers real-time tracking, automated approvals, and spend controls for businesses. It also integrates with accounting systems to streamline financial workflows and provides tools for managing corporate cards, receipts, and reports. Airbase is ideal for growing companies, particularly mid-market and larger businesses, looking for robust expense management with greater control, visibility, and scalability.
Workday
Workday expenses is known for its user-friendly features that make expense reporting a breeze for employees. Employees can simply scan receipts in any currency using their phones, and Workday Expenses will automatically create expense items. The software also uses AI to populate price and expense type, add missing details, and more.
Automate Your Expense Management with Omni
Expense management doesn’t have to be complicated, as long as you have the right expense management software by your side.
Omni brings clarity and control to your expense management for HR, providing a single source of truth for tracking employee expenses. With our flexible expense policies set up, customize your policies and approval flows based on your unique needs. Tailor expense forms to collect information as per your policies and requirements.
Our employee self-service portal empowers employees to swiftly submit their expense claims, automatically routing them to the appropriate managers with customizable approval workflows. And our user-friendly mobile application allows for on-the-go approvals and communication, so you can manage expenses from anywhere.
If you’d like to learn more about how Omni’s all-in-one HR software automates the entire end-to-end employee lifecycle, saving People leaders from administrative tasks and increasing organizational innovation, book a demo with our team!
