How to Control Your Spend Without Expense Reports
Expense reports are expensive and ineffective. They demand manual effort, and don’t offer real control of your spend. The Lola.com spend management platform offers a better way to control spend, without expense reports.
What are you trying to accomplish?
When it comes to expenses your goals are simple.
You want to make sure your company is spending according to plan.
You want to do this without being too overbearing. And you want good data to help you keep your budgets in sync with reality.
Obey the law
You need to follow IRS guidelines on taxes and deductions. You need to reimburse employees for business expenses. And you need to report everything correctly to pass an audit.
Why do you use expense reports to control spend?
Everyone can spend money. Only a few can manage it.
If only everyone could understand your general ledger. And interpret IRS Publication 535. And grasp the rules of accrual accounting. Then you might not need expense reports.
Unfortunately, your finance team is the only group that has this knowledge. So you need a way to communicate spending data to this specialized team.
This communication needs to be flexible. Because payment information is presented in wildly different formats by many different vendors.
Expense reports were the original solution. They offered a flexible format for employees to give finance the information they needed.
How has expense reporting improved over time?
Pen and Paper
Up until the early ‘90s, expense reports were mostly paper forms. Fill them out, staple your receipts, and send them to the mailroom. The biggest advancement in this era was the pneumatic mail tube.
Digital Expense Reports
The ‘90s brought a wave of digitization. Companies like Concur took existing processes, and moved them into software and emails. This process cut costs in the print room. But it didn’t make the process any easier, or offer you more control over your spend.
Expense Management Software
Founded in 2008, Expensify improved the existing process by focusing on ease of use.
It introduced receipt scanning, shared receipt inboxes, and approval workflows. It mapped expense categories to GL accounts. It embraced modern UI to make software easier to use for employees and finance.
But all of these improvements did not eliminate late or incorrect expense reports. And they still did not provide you real control over spend.
Expense reports were still central to the process. So expenses were reported after the fact. And you could only exercise control by threatening non-reimbursements, clawbacks, or offering repeat offenders “education.”
Expense reporting is still as inefficient and expensive as it was in 2008 when Expensify was founded.
What are the problems with expense reports?
It’s easy to make mistakes
Expense reports require every employee to manually transcribe every expense correctly.
And your general ledger is complicated. Your employees are not going to pick the right expense category from hundreds of choices.
And expense reports are usually the last thing anyone wants to do. The chances are your employees are rushing to get through their expenses.
You can guarantee expense reports will be wrong.
They are expensive
Expense reports force you to compromise during your month-end close.
The guarantee that there will be errors forces you to check every report manually. And this time consuming process is always delayed by late expense reports, surprise invoices, and holidays.
But the business needs clean expense data to update rolling forecasts and budgets. A late forecast is useless, and a late budget is ineffective. Expenses need to be processed at the beginning of the month, in a timely manner.
But there is always something else happening at the start of the month. Competing priorities like board reports, annual planning, sales forecast crises, etc. Everything is time sensitive, so you have a few expensive options.
You can increase overhead by outsourcing or hiring headcount to review expenses. You can push your team to work more hours. Or you can skip forecast and budget updates, and hope everyone will make their own adjustments.
You don’t actually have control
Expense reports force you to run your business on the honor system.
Expense reports are always reported after the fact. First your employees spend money. Then they report it.
And if they bought something out of policy or over budget? You have 4 options:
- If a personal credit card was used, you withhold reimbursements.
- If it’s a payment by invoice, you refuse to pay it.
- If a corporate credit card was used, you claw it back from their next paycheck.
- You don’t do anything, and “educate” the employee to do better next time.
Every option damages your relationship with your employees and vendors. Your team will avoid this conflict, especially for smaller transactions.
Introducing Spend Management
The Lola.com spend management solution is a reimagination of how companies manage spend. Our software eliminates expense reports, and gives you real-time visibility and control of your spend.
How? Spend management combines several technologies to automate the manual work around expense reports.
Tech-enabled cards collect data about every transaction before it clears. Our platform processes this data in real-time, and validates it against your policies and budgets.
Real-time control of spend gives your budgets new meaning.
Before Lola.com, you shared budgets weeks after the budget period already started. They were one-off documents communicated through emails and spreadsheets. And they were enforced on the honor system via after-the-fact expense reports.
With Lola.com, everyone can track their budget-to-actuals in real-time. Over-budget transactions are denied before they clear. And you can make enforceable changes to plans instantly. Spend management makes your budgets flexible and enforceable.
AP automation brings the same improvements to your invoiced vendor payments. Our platform scans and categorizes AP invoices automatically. Each invoice is validated against your policies and budgets before you pay them. And invoices are reported alongside card expenses. Your team has real-time visibility into all of their program spend.
This approach sets you up for the future. More and more vendors are adopting multiple payment methods, blurring the line between cards, invoices, and ACH transfers. With large expenses flowing through invoices and cards, you need to bring the same disciplines to both payment channels. The Lola.com spend management solution is built for this future, combining all of these expenses into a single budget-to-actual view.
Our spend management platform gives you the control to change how your company spends. Get real-time visibility and control. And empower your finance team to act strategically, instead of reacting under pressure.