Can Expense Management Software Help with Expense Compliance?

Published by Gary Roy Markham on Jan 27, 2021

The 2020 ACFE Report to the Nations was conducted to assess occupational fraud and abuse. The study found that "poor internal control contributes to fraud,” and unfortunately, there are multiple factors that contribute to poor internal controls. These include unclear expense procedures and lax reimbursement processes. Poor execution of company policies can also lead to poor internal controls.

All companies should have mechanisms in place that address fraudulent behavior and expense inefficiencies. To achieve this, companies have been implementing automation solutions that target policy compliance failures and inefficient expense regulations.

Automated expense management software can auto-extract data about expenses from a variety of file formats as well as images (e.g. of receipts). Finance departments can then take advantage of this data to better supervise expenses, or even to automate the checking of an expense against company policy using rules-based automation.

Expense fraud challenges

Given the current nature of business expenses, submitting accurate employee expense reports is crucial. Evaluating the accuracy of expense reports is also an important step for claiming business tax deductions.

When it comes to ensuring employee compliance, new policies can be created, or old policies can be updated. Either way, the policy should:

  • Allow finance departments to interact with employees regarding expense policy rules.
  • Promote company-wide expense policy cooperation through inter-departmental communication.
  • Eliminate structures that enable expense fraud and associated risks.
  • Ensure strict compliance with parameters of regulatory requirements.

Expense management software such as ExpenseCore can simplify the process of ensuring expense policy compliance. Solutions of this nature can also reduce invoice and expense report processing costs. Advanced expense management solutions also offer rules-based automation of accounts payable processes.

Technology for expense policy compliance

Automating expense policy compliance using AI/ML enabled expense management software can:

  • 1. Provide structure to expense policies – Expense policies differ from company to company, but compliance to those policies does not have to be difficult. Expense management solutions can help provide much-needed structure to expense policies, processes and workflows by presenting them on an easy to use platform.
  • 2. Introduce limitations – In the absence of expense management software, employees in finance and other departments have to rely on their memories to recall expense rules and regulations. This opens the door to errors and expense policy violations. Expense management software ensures that rules and regulations are not forgotten or misconstrued, and the software can even flag expense reports and invoices that violate pre-set limits or rules.
  • 3. Increase efficiency when dealing with policy violations – Expense management software can redline non-compliant line items, which makes it easier for finance departments to quickly address the issue. Expense management software can also create awareness among both employees and vendors, encouraging them to be more aware of the fact that non-compliant spend will be flagged. This has proven to make employees and vendors more aware of what they submit.