Expense management concerns the effort to control business costs incurred by individuals rather than corporate purchasing departments or other company-wide purchasing functions.
The majority of such expenses fall into the business travel category, but general expense management (as opposed to travel expense management) covers all kinds of expenditures, including office supplies, telephone bills, subscriptions to professional organizations or publications for example.
Key to expense management is the expense policy, which is normally written by the function responsible for purchasing and is typically overseen by the CFO. It defines who can spend how much on what, with what levels of approval required. The primary goal of the expense management policy is to control costs, but expense management also seeks to realize productivity benefits by smoothing the processes related to submitting, approving and reimbursing expenses, financial reporting, and auditing. To this end, expense management software is increasingly being linked to corporate travel software to provide a unified environment for submitting, managing, and reimbursing business travel expenses.
An important function of a travel expense management tool is the ability to configure the “per diem” allowance which is a (heavily state-regulated) flat rate allowance offered to business travelers, by their organization, to cover travel expenses. The per diem allowances vary from country to country, some tools have per diems pre-configured or they may need to be configured in the expense management software for each country.
Learn about expense management solutions from KDS.