Taking the Pain Out of Expense Management
The new rules of money
How long do you and your colleagues spend sorting old receipts and submitting expenses? Whether it’s done using physical receipts, scans or a digital expense management system, logging and processing expenses is a necessary yet time-consuming process.
But have you ever considered how much this actually costs your business? According to a survey of 200 businesses, the majority (80%) did not know the average cost of processing a single expense report. This can lead to situations when the cost of processing an invoice can actually be higher than the value of the actual expense.
There are a variety of ways companies choose to manage their expenses – for example, senior executives may be given corporate cards, while other employees might use cash, pre-paid cards, or be expected to absorb costs upfront and submit their expenses later on. While each of these processes can be said to work, their level of efficiency and effectiveness is increasingly being called into question.
With many expense-management solutions currently in use, one problem is the lack of transparency and visibility, since the finance department cannot properly see expenses until they can been reviewed, approved and analysed. Without this visibility, it makes it harder for the finance department to spot anomalies in a timely fashion, and it impacts their ability to forecast and budget effectively. It also hinders their ability to identify opportunities to negotiate better rates with frequently used airlines, hotels and restaurants – all of which can ultimately impact a company’s bottom line.
Another problem is that most expense-management processes, in terms of review and approval, only occur after the fact. This means that although each company has its own policy for what can be expensed and what cannot, it pushes the responsibility for keeping within that policy onto its employees, which leads to the time-consuming process of submitting expenses and reviewing them in the first place.
With a greater awareness of these shortcomings, forward-looking companies are re-examining their travel and expenses process to reduce costs and increase the capabilities of their finance team.
Visa is helping develop these types of solutions by partnering with fintech companies, giving them access to Visa’s APIs (application programming interfaces) to create a more automated and user-friendly experience. “Employees want the same convenience that comes with consumer IT but in a business setting,” explains Stefanie Koh, Head of Enterprise Platforms and Solutions, Asia Pacific at Visa. “We are moving from desktop-first solutions to mobile-first. Expense management should be easy.”
It’s this philosophy of effectiveness and convenience that has inspired Fraedom, a New Zealand-based expense-management software vendor recently acquired by Visa. “Our goal is to take the pain and the paper out of the travel and expense-management process,” says Kyle Ferguson, Fraedom’s CEO. “For us, it’s all about the idea of a touchless transaction. Imagine a world where you tap your phone against a POS device and that's the last time you ever actually have to do anything with that transaction. That's where we are heading.”
Fraedom is built to integrate with any company’s existing invoice systems, to automate all travel and expense management in a single place, and allow companies to track and reconcile expenses more accurately. Using its mobile-first platform, employees can submit their expenses whilst on the move, photographing receipts and having them ready for instant approval and processing. This saves time, reduces errors and gives companies greater visibility and control over expenses. “There are so many things that Visa can do for the small company community in terms of innovations and integrating certain APIs,” says Ferguson. “We have only just scratched the surface.”
One example of this is a brand-new AI-powered feature that Fraedom is currently developing. By using a combination of past transaction data, GPS location and e-invoices from major companies accessed via Visa’s APIs, the AI will automatically identify and submit the expense. Ferguson uses popular app-based taxi services as an example, explaining that by integrating APIs with the Fraedom platform, after booking a ride, they will be able to send an e-invoice to Fraedom, meaning users will not even have to log into Fraedom to submit the expense.
Alternatively if an e-invoice is not available, the new AI feature will be able to read the information from a receipt using optical character recognition (OCR), link it with the transaction data provided by Visa and enter it into Fraedom. “It will say, ‘Hey, we noticed that the last four times you went to this coffee shop and you submitted it as this code, would you like us to use that code today?’ Then you click, so it reduces significantly the amount of time and effort required to manage expenses,” says Ferguson.
Whilst Fraedom is already available and being used by over 200,000 companies today, Ferguson predicts the new AI feature will be available in the next year or two. “Better expense management is part of the new rules of money,” says Ferguson. “Make the money work for you. In the new digital age, you have to look ahead of the curve to the technology to help you to grow, compete and plan for the future.”
Fraedom is just one of a wide variety of new fintech solutions available to help companies operate more efficiently and effectively. When it comes to expense management, companies now are left with a stark decision – to continue operating as before, or to adopt these types of new solutions, saving employees time and transforming the effectiveness of their finance department.
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