Card-carrying ways to automate expense reports

Q. During the pandemic, we had far fewer expense reports to process, which saved us many hours of manual work. Now that we are processing a lot of expense reports again, it’s taking up way too much time. Is there a better way to do expense reports?

A. I am blown away every day by how many companies still use paper receipts and complicated spreadsheets to manage expenses. Think about all the time and money being wasted for the human hours it takes to scan the receipts, copy last month’s spreadsheet, update the cells, and then print, sign, and scan again to submit the expense report. On top of that, consider the hours put into reviewing and approving the PDFs (fingers crossed for no questions), entering them into the accounting software, and cutting the checks.

Fortunately, as we start 2022, just about everything we do daily has been automated in some way. And that includes expense reports.

I’ve broken down some of the best options for automating this tedious process. Put down those paper receipts and read on.

Solutions to streamline the process

Expense reporting software has quietly been maturing for many years. These applications eliminate the need for the monthly “hokey pokey expense report shuffle” mentioned above and simplify the process of collecting, submitting, approving, and ultimately paying the expenses.

These solutions typically integrate with many popular applications, including all the major accounting general ledger packages and many payroll providers. In addition to the core applications, these solutions include many popular vendors used on expense reports, such as Kayak, Lyft, and Uber. One of my favorite features is the email automation to capture the receipts. Simply forward the email receipt to a specific email address, and 85% of the work is done.

An additional benefit of these software solutions is their mobile apps. The savvy user can capture, categorize, and submit expenses right from a phone. Simply take a picture of your receipt on your phone to capture the expense. The steps look like this: Order your coffee, take a picture of the receipt, take a sip of your coffee, provide a few minor details in the app, and you’re done.

The benefits of the mobile app go beyond just the camera and extend to mileage capture. At the beginning of your trip, you can open your app, initiate a reimbursable trip, and automatically capture the mileage as you drive.

We’ve been focused on the employee experience, but the back-of-the-office benefits are huge as well. A streamlined manager interface for reviewing employee expenses eliminates the paper shuffle by organizing all submitted expense reports in a single view. When reviewing the expenses, a reviewer can submit questions within the portal that are delivered immediately to the employee for their explanation. Once approved, it will be forwarded to the next step in the process, i.e., payment. The payment process occurs automatically and (when configured) gets entered into the general ledger without any additional human effort.

Next-level corporate cards

Historically, the use of corporate cards has been reserved for a small group of trusted executives/owners due to the lack of oversight and control associated with issuing a credit card to an “authorized user.” However, some new solutions are changing the way we think of corporate credit cards. They can eliminate the employee expense reimbursement process altogether.

With these solutions, setting up a new employee is a simple process that also allows granular rules to be set up to combat the “trust” concerns typically associated with corporate cards. Users can be set up with a monthly budget as well as vendor limitations, if desired. Also, making any changes to employee cards is simple and immediate.

Similar to expense reporting software, these corporate cards typically include a mobile app for employees. The mobile app includes receipt capture functionality using the camera and the ability to create virtual cards on demand to manage ongoing subscriptions or using a unique card number for online purchases.

As you would expect, these solutions usually integrate with your typical general ledger accounting software, and some options even integrate with popular bill-payment and payroll solutions.

Making the transition to a next-generation corporate card solution can eliminate the burden of the monthly expense reporting routine, improve your ability to manage business expenses, and offer some unexpected benefits such as premium rewards programs.

Below are a few popular options for replacing your current outdated expense report process:

Expensify

This is the classic option for those of us who have been in the automated game for a while. There’s a reason Expensify has been around for so long. Small companies can move away from paper tracking and get by with options starting at around $5 per user per month.

Features: The Collect tier of Expensify (the tier I recommend for small businesses trying to automate the entire reimbursement process) includes automatic mileage tracking, categorizing, and report submissions for employees, along with an automatic syncing feature to the accounting software you choose.

Expensify’s corporate card offering is a bit different from the industry standard. Everyone in the company can get an Expensify Card free with no obligations, but once you use the Expensify Card for more than half of your company’s monthly expenses, your entire Expensify subscription cost is cut in half. This is a great operational move by Expensify and an easy win for most businesses because once employees see how easy these cards are to use and manage, businesses will want to use them for everything.

Divvy

Recently acquired by Bill.com, Divvy’s specialty is corporate card management and offering an online portal for you to monitor expenses as they’re coming in. The best news of all is that Divvy’s standard offering is 100% free.

Features: Every employee in the company can get a Divvy card (which is just a Visa, so it works anywhere; see the screenshot below), and limits can be set, tracked, and monitored in real time using the Divvy online portal. It’s simple but amazing.

Divvy is also great when it comes to security. You know all those recurring subscription services the company uses? If you use Divvy, all those subscriptions will be given their own virtual account number, so even if your card information is stolen, it will be useless to cyberthieves.

Spend notifications, instant categorization, and transaction reviews mean you can view, organize, and approve/deny expenses before you sync your data to your accounting software. Expense reporting is an added bonus to handle any lingering needs, such as mileage reimbursements.

Brex

Brex is a bit of a unique offering in this space, with more of a focus on being a bank for your business while also handling expenses like the others in this article. Brex wants you to be able to pay your bills, collect your invoices, and manage what your employees are spending all in one place.

Features: Like Divvy and Expensify, Brex offers (physical and virtual) cards for all employees and subscription accounts. However, if you want to match the features of the others, like managing reimbursements, creating spending policies, and setting spend limits, you’ll need to subscribe to the Premium tier, which we are using for these comparisons.

Also, like Divvy, Brex has an online portal and mobile app to help you handle the day-to-day business and help automate the expensing process. It’s clean and to the point with all the info you need.

Automatic bill pay, easy invoice collection, and spend monitoring are all included in Brex Premium, which costs $49 a month. You can even set up alerts for high spend amounts per department. If you’re willing to subscribe to Brex Premium, it’s a very powerful tool.

No more scanning paper receipts. No more drowning in PDF submissions from employees at the end of every month. Everything else around us is improving. Why not fix this long-broken process while we’re at it? The incremental cost of the solutions will easily be offset by the time and headaches saved for our teams. Automating expense reporting is a win for everyone.

— By Byron Patrick, CPA/CITP, CGMA

Submit a question

Do you have technology questions for this column? Or, after reading an answer, do you have a better solution? Send them to jofatech@aicpa.org. We regret being unable to individually answer all submitted questions.