How automated expense management saves finance teams hours each week

Tracking expenses manually usually doesn’t start off as a major inconvenience. Perhaps you’re documenting receipts and handling reimbursements here and there. However, as your business grows, you might find yourself spending hours chasing down receipts, double-checking transactions, correcting coding errors, and reconciling expenses at the month’s end. But before you know it, you could be spending more time on expense management than business strategy. That’s the real hidden cost of doing things manually.

 Instead of losing precious time to administrative tasks, founders and finance teams can turn to expense management automation. In this article, we’ll dive into the ins and outs of automated expense management and look at everything from benefits to best practices. By the end, you’ll know how to build a more scalable financial operation with stronger controls, clearer visibility, and fewer administrative headaches.

Expense management automation is the use of digital tools to capture, track, review, approve, and record business expenses. This reduces manual and repetitive work.

Using automated expense management software can take a number of tasks off your plate, including:

• Capturing expenses from corporate cards, bank accounts, and other tools
• Collecting documentation (such as receipts)
• Categorizing spending by account, project, department, or cost center
• Flagging missing information, duplicate claims, or out-of-policy purchases
• Routing approvals to the right team member for review
• Syncing records with accounting or enterprise resource planning (ERP) systems for reconciliation and reporting

By automating expense management, founders and finance teams can gain better visibility into their spending, maintain more effective expense controls, and work from more accurate financial records.

One of the major advantages of automated vs. manual expense management systems is that it saves founders and finance teams a lot of time. Streamlining repetitive tasks frees up more time for higher value work.

For instance, using expense management software saves times in these areas:

• Receipt collection: When using tools that automatically capture receipts digitally and match them to transactions, you won’t need to hound employees for missing documentation.
• Expense categorization: With predefined rules or artificial intelligence, expense management software categorizes expenses, which reduces the need to perform time-consuming manual entry.
• Approval workflows: To cut down on manual follow-ups and delays, tools can automatically route expenses to the approver and send reminders.
• Reconciliation: Expense management software can match transactions with receipts and accounting records, as well as find and resolve discrepancies.
• Reporting: Automation tools can consolidate data and report on spend by category, budget versus actual spend, taxes and audits, cash flow, and more.

Manual expense management — which typically involves paper-based processes, spreadsheets, and emails — requires founders and finance teams to collect receipts from employees, fill out expense reports, scan documents, and approve expenses. If you have more than a handful of employees, doing this by hand can take time away from vital strategic work. 

Take a look at how manual and automated expense management compare.

Moving from a manual process to an automated one won’t happen overnight. It requires careful planning and consideration. To ensure your company’s implementation of expense management automation software goes smoothly, follow these best practices.

Map existing workflows

Thoroughly document your current processes. This includes how you handle purchases, receipt collection, approval, reimbursement, reconciliation, and reporting. Pinpoint bottlenecks and areas of concern. Look for any duplicate steps or unnecessary tasks that you could eliminate.

Audit and adjust expense policies

Review and adjust your policies — such as spending limits, receipt requirements, approval thresholds, and reimbursement rules — prior to setting up any automations. This will ensure that your new, automated system follows up-to-date rules and simplifies manual processes (and doesn’t cause chaos).

Automate repetitive tasks

When deciding what to automate, prioritize repetitive, high-volume, and error-prone tasks, such as receipt matching, expense categorization, approval routing, policy checks, and data entry. These tasks can be automated with rules-based workflows. 

Standardize categories and coding

Create consistent expense categories, cost centers, and project codes. This will help to improve automation accuracy, simplify workflows, and make reports easier to understand.

Integrate accounting systems

Connect your chosen expense management software with your accounting tools or ERP software. This way, approved transactions, tax data, expense categories, and supporting documentation can flow seamlessly between your company's systems and, in turn, reduce errors and manual work.

Test automations before a full rollout

Before rolling out any automated workflows to your full team, run a pilot with a small group and limited expense category to see if it works smoothly. This is a good time to identify and correct integration issues, incorrect rules, or workflow gaps.

Train employees

Make sure employees understand how to use any automated workflows and new tools. For instance, they should feel comfortable submitting expenses, capturing receipts, and using company cards. They’ll also need to know how to respond if the system flags their transactions.

Measure results

Track key performance indicators, such as expense processing time, approval turnaround, and reimbursement speed. Evaluate whether the automation is meeting goals or if it needs to be adjusted.

Finding the right automation expense management solution for your organization isn’t always easy. Here’s what to focus on.

What features to look for

As you evaluate your options for automated expense management solutions, prioritize features that will speed up your company’s processes and minimize bottlenecks. Here are key features to look for:

• Automated receipt capture: This includes mobile uploads, optical character recognition (OCR), and automatic receipt-to-transaction matching.
• Automated categorization: With this type of automation, expenses get coded based on merchant data, transaction details, and accounting rules.
• Custom approval workflows: This makes it possible to automatically route expense approvals based on categories like department, amount, project, or expense type.
• Policy controls: With these, you can set spending limits, receipt requirements, restricted categories, exception flags, and more.
• Corporate card support: Opt for physical and virtual credit cards that have built-in spend controls and rewards, such as cashback, that meet your company’s needs.
• Reimbursement capabilities: Look for tools that’ll simplify your reimbursement workflows, including employee submissions, approval tracking, and payments.
• Integrations: Integrations can unite tools in your finance tech stack, including accounting, banking, ERP, and reporting tools.
• Security and audit trails: Role-based access, activity records, data protection, and clear process documentation can help strengthen security and automatically create audit trails.
• Real-time spend visibility: Detailed dashboards that show spending by employee, team, vendor, project, and other categories in real-time will help you make more accurate and informed business decisions.

Questions to ask vendors

Make sure you fully understand the value of a given tool by asking vendors the right questions, such as:

• How much of our current expense process can the platform automate?
• How much manual work should our finance team realistically expect after implementation?
• Which of our current systems does it integrate with?
• How does data sync between systems, and how often?
• Which AI features are fully automated, and which ones require manual review?
• How will the system adjust if our accounting practices change?
• How will pricing change as we add employees, cards, or transaction volume?
• What implementation, migration, and employee training support is included?

Many expense management automation tools use rules-based workflows to complete tasks. Increasingly, tools are also using artificial intelligence to yield highly efficient and accurate results.

 AI plays an important role in categorization, policy enforcement, and anomaly detection. AI tools can accurately analyze transaction details, receipt data, and past spending patterns to assign expense categories and improve coding accuracy over time. Also, artificial intelligence can review expenses against company policies and flag restricted merchants, duplicate claims, and out-of-policy spending. These tools are particularly useful for identifying spending that stands out from normal patterns and surfacing fraudulent or erroneous activity.

 In the future, spend management automation solutions that use AI will likely be able to take on even more complex, multi-step tasks. AI agents may be able to complete entire workflows. For example, they may eventually be able to identify a missing receipt, follow up with the right employee, collect the documentation, update the records, route the expense for approval, and reconcile the expense. 

By taking on a more proactive role and running expense management in the background, these future technologies with expense management AI agent automation may meaningfully help founders and finance teams to spend much more time on strategic tasks, and minimal time managing expenses.

If you didn’t need to remind employees to submit receipts or enter expense data into your accounting system, what else could you be doing with your time? It’s likely that you’ve already got a long list of tasks that need prioritizing above manual expense management.

With Mercury’s automated expense management tools (including granular spend controls, role-based access, and corporate cards that scale with your business), you can manage employee expenses in minutes. Plus, the simple setup will minimize your finance team’s work at month’s end.

Explore how Mercury’s expense management tools save you hours each week, so you can focus on growing your business.