Keeping Expenses in Check

EMA software helps companies control spending by automating the filing, approval and payment of employee expense reports.

Only a few years ago, as the economy boomed and e-commerce flourished, revenue opportunities seemed boundless. So while stock prices zoomed upward, budgets expanded at a similar velocity. At many companies, travel and entertainment (T&E) and other expenses became an afterthought in the quest for new market share and sales growth.

When the economy turned sour, the trouble began. Organizations large and small started slashing costs and looking for ways to better manage spending. Suddenly it wasn't acceptable for employees to book flights on the airline of their choice or stop by their local office supply store to buy a printer for business use. "Over the last couple of years, the environment has changed and the mind-set has changed," observes Michele Flynn, president of Expense Management Solutions Inc., a Southborough, Mass., consulting firm.

Many organizations are now turning to software that helps them control costs. According to Christa Degnan, a senior analyst at market research and consulting firm Aberdeen Group Inc. in Boston, today's expense management applications enable companies to better monitor and control enterprisewide spending by automating the filing, approval and payment of employee expense reports. Many of these Web-based applications help organizations streamline reimbursement processes, enforce purchase-policy compli- ance, and track spending patterns for improved reporting and analysis.

These systems provide substantial benefits. Aberdeen Group estimates that with the right expense management automation (EMA) system, an enterprise can shrink the time required to enter an expense report by 60 percent. Companies can also trim the costs associated with processing reports by 80 percent and reduce the time required to settle a claim by 90 percent. Last year, Aberdeen Group found that companies processing expenses manually averaged $48 per transaction, compared with $18 at firms using EMA applications. "It's an area that can offer a tremendous return on investment," Degnan says.