Expense management

Expense Management is 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 expenditure including office supplies, telephone bills, subscriptions to professional organizations or publications.

The key expense management instrument is the expense policy, written by the function responsible for purchasing. It defines who can spend how much on what, with what levels of approval. It is typically overseen by an organization’s CFO. 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.

A common expense management tool is the “per diem” (“per day”) allowance which is a (heavily state-regulated) flat rate allowance offered to business travelers by their organization to cover their expenses.