{"id":3905,"date":"2020-11-30T17:19:41","date_gmt":"2020-11-30T11:49:41","guid":{"rendered":"https:\/\/razorpay.com\/learn\/?p=3905"},"modified":"2023-08-23T16:27:49","modified_gmt":"2023-08-23T10:57:49","slug":"expense-management","status":"publish","type":"post","link":"https:\/\/razorpay.com\/payroll\/learn\/expense-management\/","title":{"rendered":"A Brief Guide to Expense Management for Businesses"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Expense management &#8211; dealing with the cost of processing, paying, and auditing expenses can directly impact the bottom line. Most businesses don&#8217;t effectively manage their expenses because of the gaps in the system they&#8217;re used to. Automation is the answer to effective expense management.<\/span><\/p>\r\n<p><span style=\"font-weight: 400;\">But before that, let&#8217;s take a look at what expense management is really all about.\u00a0<\/span><\/p>\r\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69d1a0d3d2015\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d1a0d3d2015\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/razorpay.com\/payroll\/learn\/expense-management\/#What-is-expense-management\" >What is expense management?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/razorpay.com\/payroll\/learn\/expense-management\/#Types-of-expense-management\" >Types of expense management<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/razorpay.com\/payroll\/learn\/expense-management\/#Traditional-expense-management-process\" >Traditional expense management process<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/razorpay.com\/payroll\/learn\/expense-management\/#Automated-expense-management\" >Automated expense management<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/razorpay.com\/payroll\/learn\/expense-management\/#Automate-your-expense-management-process-with-RazorpayX\" >Automate your expense management process with RazorpayX<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"What-is-expense-management\"><\/span><span style=\"font-weight: 400;\">What is expense management?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\r\n<p><span style=\"font-weight: 400;\">Expense management is the approach a business takes to process, pay, and audit their business overheads. Expense management also includes the policies that govern business spending, along with the technologies and services utilised to process and analyse data linked to it.\u00a0<\/span><\/p>\r\n<p><span style=\"font-weight: 400;\">Expense management has two key elements.<\/span><\/p>\r\n<ol>\r\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">How a business pays for particulars\u00a0<\/span><\/li>\r\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">How it tracks that spend<\/span><\/li>\r\n<\/ol>\r\n<h2><span class=\"ez-toc-section\" id=\"Types-of-expense-management\"><\/span><span style=\"font-weight: 400;\">Types of expense management<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\r\n<ul>\r\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Travel &amp; accommodation management &#8211; managing expenses involving employee travel and accommodation<\/span><\/li>\r\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Purchase management &#8211; business purchases like raw materials, finished goods, etc., purchased from the vendors<\/span><\/li>\r\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Cash management &#8211; expenses like rent, utility bills, outings and gatherings, etc.\u00a0<\/span><\/li>\r\n<\/ul>\r\n<p><span style=\"font-weight: 400;\">Managing expenses can be a difficult task, especially if you&#8217;re tracking expenses from multiple <\/span><span style=\"font-weight: 400;\">sources<\/span><span style=\"font-weight: 400;\">. Without a proper system in place, you will quickly find yourself amidst a number of invoices.\u00a0<\/span><\/p>\r\n<p style=\"text-align: center;\"><a style=\"border-radius: 3px; background: #528ff0; padding: 15px; font-weight: 600; cursor: pointer; text-decoration: none; color: white;\" href=\"https:\/\/razorpay.com\/x\/?r=blog_cta_business_banking_expense_management&amp;utm_source=blog&amp;utm_medium=cta\" target=\"_blank\" rel=\"noopener noreferrer\">Automate your expense management<\/a><\/p>\r\n<p><span style=\"font-weight: 400;\">Expense management not only tracks business spends but also determines how your business will reimburse the costs incurred.<\/span><\/p>\r\n<p><span style=\"font-weight: 400;\">It can be hard to establish an audit trail if expenses aren&#8217;t processed immediately. And, finding the time to process expenses as they come through can be equally challenging when you&#8217;re a small business.<\/span><\/p>\r\n<p><span style=\"font-weight: 400;\">Delaying the processing and payment of expenses can lead to problems in your <\/span><span style=\"font-weight: 400;\">cash flow<\/span><span style=\"font-weight: 400;\">.\u00a0\u00a0<\/span><\/p>\r\n<h2><span class=\"ez-toc-section\" id=\"Traditional-expense-management-process\"><\/span><span style=\"font-weight: 400;\">Traditional expense management process<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\r\n<p><span style=\"font-weight: 400;\">The business receives invoices for all the expenses from vendors, suppliers, employees, and more. All these invoices are passed on to the finance team. Next, the finance team reviews the invoices and documents particulars in ledgers or spreadsheets, and finally processes payments to the respective payees.\u00a0<\/span><\/p>\r\n<p><span style=\"font-weight: 400;\">If the business has to make vendor payments, the finance team also must ensure that appropriate taxes are deducted and paid to the government. And these payments are recorded in the ledgers or spreadsheets as well.<\/span><\/p>\r\n<p><span style=\"font-weight: 400;\">These methods are ancient in this day and age as tracking expenses on paper and ledgers is not convenient for any business. With the onset of technology, the usage of spreadsheets for these functions has been employed, but they still do not solve the expense management process encounters&#8217; problems.\u00a0<\/span><\/p>\r\n<p><span style=\"font-weight: 400;\">Here are some of the major disadvantages of traditional expense management.<\/span><\/p>\r\n<ul>\r\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Managing expenses traditionally is time-consuming<\/span><\/li>\r\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">It experiences a higher risk of human error<\/span><\/li>\r\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Compiling data manually to track spending trends lacks sufficient insight to make the right decisions<\/span><\/li>\r\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">There is a significant drop in productivity and efficiency as the finance team has to spend a long time compiling and reviewing expense data<\/span><\/li>\r\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Lack of visibility due to insufficient data<\/span><\/li>\r\n<\/ul>\r\n<h2><span class=\"ez-toc-section\" id=\"Automated-expense-management\"><\/span><span style=\"font-weight: 400;\">Automated expense management<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\r\n<p><span style=\"font-weight: 400;\">Modern methods of managing expenses are a lot more efficient and can facilitate better experiences for businesses.<\/span> <span style=\"font-weight: 400;\">Automated expense management does everything that the traditional process does but in a much efficient way. <\/span><\/p>\r\n<p><span style=\"font-weight: 400;\">Invoice information is directly uploaded to the system from where the software can extract the specifics from the invoice and generate an expense report within minutes.\u00a0<\/span><\/p>\r\n<p><span style=\"font-weight: 400;\">The expense report is verified for any inconsistency or policy violations. The finance team can then perform necessary corrections.\u00a0<\/span><\/p>\r\n<p style=\"text-align: center;\"><a style=\"border-radius: 3px; background: #528ff0; padding: 15px; font-weight: 600; cursor: pointer; text-decoration: none; color: white;\" href=\"https:\/\/razorpay.com\/x\/?r=blog_cta_business_banking_expense_management&amp;utm_source=blog&amp;utm_medium=cta\" target=\"_blank\" rel=\"noopener noreferrer\">Automate your expense management<\/a><\/p>\r\n<p><span style=\"font-weight: 400;\">Businesses don&#8217;t have to shuffle through tons of paper receipts and emails as they can use the software to fetch any expense details with just a few clicks.\u00a0<\/span> <span style=\"font-weight: 400;\">The software also shares valuable insight into these expenses and also categorizes them. <\/span><\/p>\r\n<p><span style=\"font-weight: 400;\">This gives businesses the ability to make informed decisions to cut down on expenses.\u00a0<\/span> <span style=\"font-weight: 400;\">Security is also one of the strong suits as traditional methods are prone to fraud.\u00a0<\/span><\/p>\r\n<p><span style=\"font-weight: 400;\">Fraud occurs when,<\/span><\/p>\r\n<ul>\r\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Duplicate invoices are submitted<\/span><\/li>\r\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Errors are created while making accounting entries<\/span><\/li>\r\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Expenses are exaggerated in the invoices<\/span><\/li>\r\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Expense receipts are forged or fictitious receipts are submitted<\/span><\/li>\r\n<\/ul>\r\n<p style=\"text-align: center;\"><strong>[Suggested Read &#8211; <a href=\"https:\/\/razorpay.com\/blog\/e-book-the-complete-guide-to-closing-the-financial-year-for-startups\/\" target=\"_blank\" rel=\"noopener noreferrer\">A 7-step checklist to help you wrap up FY 2020-21 error-free]<\/a><\/strong><\/p>\r\n<h2><span class=\"ez-toc-section\" id=\"Automate-your-expense-management-process-with-RazorpayX\"><\/span><span style=\"font-weight: 400;\">Automate your expense management process with RazorpayX<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\r\n<p><span style=\"font-weight: 400;\"><a href=\"https:\/\/razorpay.com\/x\/\">RazorpayX<\/a> completely changes the way businesses carry out expense management. It does everything mentioned above and then some more.\u00a0<\/span><\/p>\r\n<p><span style=\"font-weight: 400;\">With an option to set your approval workflow, you can now create a workflow that you are comfortable with.\u00a0<\/span> <span style=\"font-weight: 400;\">Y<\/span><span style=\"font-weight: 400;\">ou can also set limits on any expense. In case it exceeds the budget, it gets flagged for review. These limits help control unnecessary expenditures without checking if any expense has gone out of budget.<\/span><\/p>\r\n<p><span style=\"font-weight: 400;\">RazorpayX also shares valuable insight that enables businesses to make informed decisions. With the categorisation of expenses, you can now see where most of the unavoidable expenses are taking place. RazorpayX also offers a very user-friendly interface to track expenses, verify them, and understand insights with ease.\u00a0\u00a0<\/span><\/p>\r\n<p><span style=\"font-weight: 400;\">With <a href=\"https:\/\/razorpay.com\/blog\/vendor-payments-automation-a-guide-for-businesses\/\">Vendor Payments<\/a> and <a href=\"https:\/\/razorpay.com\/blog\/simplify-vendor-payouts-razorpayx\/\">Payouts<\/a>, you can make 24*7 instant payments to your vendors, suppliers, and employees.\u00a0<\/span><\/p>\r\n<p>You can also set up recurring payments for products and services with <a href=\"https:\/\/razorpay.com\/blog\/what-is-a-corporate-credit-card\/\">Corporate Credit Cards<\/a>.<\/p>\r\n<p>Managing employee expenses like salaries, reimbursements, etc., are also very easy. <a href=\"https:\/\/opfin.com\" target=\"_blank\" rel=\"noopener\">Opfin<\/a> automates your whole payroll process so you no longer have to spend hours and hours on payroll.<\/p>\r\n<p><span style=\"font-weight: 400;\">Efficient expense management leads to a successful business. And, RazorpayX has all the right tools to assist you along the way.<\/span><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\r\n\r\n<div style=\"text-align: center;\"><a style=\"border-radius: 3px; background: #528ff0; padding: 15px; font-weight: 600; cursor: pointer; text-decoration: none; color: white;\" href=\"https:\/\/razorpay.com\/x\/?r=blog_cta_business_banking_expense_management&amp;utm_source=blog&amp;utm_medium=cta\" target=\"_blank\" rel=\"noopener noreferrer\">Automate your expense management<\/a><\/div>\r\n","protected":false},"excerpt":{"rendered":"<p>The cost of processing, paying, &#038; auditing expenses directly impacts the bottom line. Learn how you can automate your expense management with RazorpayX.<\/p>\n","protected":false},"author":151156458,"featured_media":3908,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3404,3476],"tags":[3489,2138],"class_list":{"0":"post-3905","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-payroll","8":"category-payroll-glossary","9":"tag-expense-management","10":"tag-invoices"},"_links":{"self":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/3905","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/users\/151156458"}],"replies":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/comments?post=3905"}],"version-history":[{"count":14,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/3905\/revisions"}],"predecessor-version":[{"id":8747,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/3905\/revisions\/8747"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media\/3908"}],"wp:attachment":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media?parent=3905"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/categories?post=3905"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/tags?post=3905"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}