What are the most innovative expense management strategies, and how can you implement them?

Integrating technology has been a constant struggle over the years. People always delay or react to incorporate Technology as they fear that it will reduce their competitiveness and human resources. But we must consider that technology does not exclude human from work, on the contrary, it pushes him to be more productive and deal with more important issues and more efficiently. The possibilities that exist today allow the entire management of the expenses to be done automatically from the registration to the comparison with policies during their approval.

Integrating BI tools for analysis, reporting and self control by each area has been very helpful in my experience. Finance can develop this with tools like Power BI or Qlikview assuring data integrity and completeness as well as financial analysis to later train and deliver such tools to the areas for auto control of budget and forecast to build on accountability. This could be leveraged also by implementing incentives on savings for innovative ideas creating a sense of owwnership. Preventive controls on expense accounting may be implemented before month-end to track execution and avoid unexpected variances and detective controls are important to identify issues such as missing accruals using root-cause analysis.

Category of Expenses must be defined, and should be linked with ERP Cost code, and Employee Code for easy reporting and tracking in future.

Some ERPs offer this functionality e.g Oracle financial has iExpense feature which captures employees routine expenses and route the expenses statement to employees’ supervisor for approval. Once it is approved, it provides accounting entries based on account mapping setup for each expense. The accounts department only needs to validate the entry and alignment of the supporting documents with the approved expense statement which is very efficient and helps in reducing lead time i.e from the day expense is submitted, get approved, verified, accounted for and till the day payment is released.

Implement innovative expense management strategies such as automation, AI, predictive analytics, mobile reporting, corporate cards, and real-time monitoring. Develop clear expense policies, outsource when needed, and negotiate vendor discounts. Focus on employee training, data visualization, and sustainability. Regularly audit expenses and streamline approval workflows using cloud-based solutions to ensure cost control and efficiency.

This is mostly like control tools through workflow approvals to ensure expenses are aligned with policies and also for cost recognition .. one a side note this is also important for forecasting, trend analysis and run rates

Moreover, Integration of expense data with accounting systems is invaluable for forecasting costs based on commitments made. If done effectively, it also makes for an accurate aid in period end budget carryover and accruals. Therefore, integration is undoubtedly key to cost accounting.

Integrating systems can be costly, however, it pays back tenfold in the long run. We should keep in mind though that there are always ways to to automate process outside of ERP's. For example using power query to automate data capturing from external sources such as Excel budget excel files, and directly comparing that to data from system databases for actual vs budget. Even with integrated systems, building a data warehouse is invaluable.

Integration is the key nowadays. It avoids in accuracy and creates efficiencies. The best thing to do with expenses is to have them integrated to ensure meaningful analysis and proper accounting can be performed.

In my experience, the reduction of administrative labor through system integration is invaluable. Time and energy can be focused on higher value tasks such as forecasting and strategy.

I completely agree with this, the transaction is recorded as soon as the card is swiped. The buyer is not dependent on memory and slips, especially in fast paced environments. Petty cash is outdated and poses risks on all fronts.

There is always a fraud risk when it comes to cash. Because cash is one of few assets subject to theft, controls to mitigate that risk are integral to company's operations. Prepaids cards are an innovative way to address that risk.

Cloud-based expense management solutions further enhance the ease of use of paperless expense tracking systems. When employees can access the expense system from anywhere, any time and on any device, compliance is further increased.

Cloud based expense management solution would be really effective in tracking expenses on real time basis. Further concise SOP for expense management would benefit. Pre sanctioned limit is also another way to reduce cost and time.

Artificial intelligence because it can remember everything and compare all data can more easily detect patterns in case of evasion of some expenses or fraud. But because the A.I. is still learning, we should first take advantage of its potential to make big data tasks and analyzes faster and save time so that manpower can be more engaged in monitoring data and drawing conclusions.

Once again, where is AI and machine learning are getting less expensive by the day with the introduction of newer and better tools however, not every organization can afford them. In case affordability is not an issue and it is cost-effective then usage of such tools can bring about lots of benefits.

It is very important that all expense policies are properly communicated so that all employees comply in the same way and understand which expenses are in the best interest of the business and which are excesses that ideally should not be covered. To achieve this, constant feedback is needed at the beginning so that any deviations are corrected immediately and all employees quickly understand which expenses can and cannot be incurred. Equally important, all managers who approve spending understand when they can make exceptions and to what extent.

Expense management is critical/crucial for survival of any organization. We experience during COVID, when Brent crude price touches rock bottom and fear of not covering even production cost. There was dilemma on maintaining production levels, continuing ongoing capital projects, maintaining workforce etc. Generally in any organization, the top management will press panic button and react by cutting operating budgets arbitrarily,shelving ongoing capital projects, irrational layoffs etc.Contrary to it, during this critical times, Senior management of my company(of course led by CEO) performed extremely well and took lot of initiatives to optimize the cost by involving all the stakeholders, renegotiating contracts, rational layoff etc

Allows employees to directly capture receipts using their phone cameras by having a mobile expense reporting app. This eliminates the need to submit paper receipts, and never to worry about receipts fading. This will also improve the reimbursement and liquidation processes.

All are valid but what is needed is to manage the expenses and to ensure that the spent is linked to the business in either one or many ways. Zero based budgeting a great way to build it for the forthcoming planning calendar. Bottom up means the mangers of functions must take a critical view of what happened in the last 12 months and then build it to the next 12 months. With great information systems this is not that difficult. Having activities that drive the costs is one critical element that the systems must build-incorporate. This enables the build on # of activities rather than values and the rates eliminated from the user. When ERP is enhanced to capture activities not costs, it will change the way we work to a more meaningful one

Manage exceptions. Ideally there should be no exceptions, because if exceptions are made routinely then what we have built will be torn down. In order to achieve this, you need to formulate the best possible policies, which are fair and foresee what will be done in special cases. When the rules are in place and have been properly communicated then it is easier to achieve compliance and for automation and technology tools to work with minimal human involvement.

One innovative approach to expense management involves reevaluating the allocation of resources, particularly in the context of compliance with CSR and ESG requirements for listed entities. Rather than conducting generic awareness sessions, companies can focus on targeted, value-driven initiatives that align with their sustainability goals. This can not only help reduce unnecessary expenses but also demonstrate a commitment to responsible resource allocation and environmental stewardship. By prioritizing initiatives that yield tangible benefits and align with corporate responsibility, companies can optimize their financial resources more effectively.

One important thing that I found helpful in managing organization's expenses is centralization, especially in small businesses like restaurants. In many cases, the owner of the business want to show his power or authority by approving many expenses without regarding them to the accounts department. This will create a big conflict between owner and accountant. So, expenses' centralization is best way to avoid such conflict and enhance cost accounting very well.

One of the most comprehensive expense management strategies is to have an integrated ERP system which ensures capturing, recording and approving expenses. A typical example could be an overseas travel by a Sales Executive can be entered directly by him into ERP, visible to approving authority on his desk and the accounting guy can approve it for recording into ledger. This completes the whole process. Further AI can be integrated to analyse and report any variances, trends or incongruencies. So effective ERP is the solution to a better expense management system.