What are the different types of expense software?
See how to choose the perfect expense software for your unique business needs.
In any business, keeping a keen eye on expenses helps maintain a healthy cash flow, aids in financial decision-making, and ensures regulatory compliance. A vital tool in achieving these goals is expense software, which simplifies and automates the task of recording, tracking, and analyzing business expenditures. This software helps businesses stay on top of their finances, save time, and make more data-driven spending decisions.
However, the landscape of expense software is quite diverse. These applications come in various shapes and forms, and each one is designed with a unique set of features catering to different business requirements. Here, we'll demystify the different types of expense software to help you better understand which one will best fit your specific business needs.
Standalone expense tracking and reporting software
At the most basic level of expense management tools, we have standalone expense tracking and reporting software, which caters primarily to the need for monitoring business expenses in a straightforward, user-friendly manner. These systems allow users to either manually input their incurred expenses or upload receipt images directly.
Once the data is within the system, the software provides tools to categorize expenses based on their nature, such as meals, transportation, or office supplies. This categorization ability significantly aids in understanding and controlling spending patterns within a business, forming the basis for more informed decision-making and budget planning. Moreover, these systems provide the means to generate comprehensive, easily digestible expense reports, which can offer critical insights into an organization's spending habits and trends.
Standalone expense tracking tools are often the simplest form of expense management software and serve as an entry point into the realm of automated expense management. It provides a simpler alternative to manual expense tracking methods like spreadsheet logging and paper-based filing. This kind of software brings accuracy, speed, and simplicity to the everyday task of recording and reconciling business expenses.
Two notable examples of standalone expense tracking software are Expensify and Zoho Expense. Expensify offers features like SmartScan, which automates the process of receipt capture and expense categorization, making the process of inputting expenses seamless and hassle-free. Zoho Expense, on the other hand, is particularly known for its intuitive interface and strong mobile capabilities, allowing users to track expenses on the go.
Integrated expense management systems
Businesses that want more than just basic expense management capabilities will look towards integrated systems. These software solutions are tailored to suit the needs of larger businesses or organizations with more intricate expense tracking requirements. Essentially, integrated expense management systems serve as comprehensive solutions that offer functionalities far beyond the basic expense tracking capabilities of standalone software.
An integrated expense management system seamlessly syncs with other business platforms, such as accounting software or enterprise resource planning (ERP) systems, to enable a holistic overview of an organization's financial health. These connections help to consolidate and centralize financial data, offering a more complete view of expenses in relation to the overall budget.
These advanced systems also streamline the process of expense management by using rules-based automation to categorize and assign expenses to specific projects, departments, or business functions. This automation simplifies the process of correlating expenses with relevant projects or departments, making it easier to analyze expense data within your broader business context.
Integrated expense management systems also allow for sophisticated expense analytics. They can generate advanced reports that provide insight into spending patterns and trends, enabling businesses to identify cost-saving opportunities and make more informed financial decisions.
Leading the pack in integrated expense management systems are solutions like SAP Concur and Coupa. These software suites provide a plethora of features that extend beyond the confines of basic expense tracking. SAP Concur, for instance, excels in travel and expense management, offering tools for pre-trip approval, travel booking, receipt capture, and expense reporting in one centralized system.
Both of these systems also integrate smoothly with a range of third-party applications and services, ensuring they fit well within an existing tech stack. Overall, integrated expense management systems are a robust and comprehensive option for businesses looking to enhance their expense management capabilities.
Corporate travel and expense (T&E) software
For businesses that have substantial travel-related expenses, corporate travel and expense (T&E) software is a more suitable solution. These tools are designed specifically for booking travel, tracking on-the-move expenses, and integrating these travel expenses with other types of business spending.
T&E software can be of significant help to businesses aiming to streamline the process of tracking travel-related expenses and ensure that all travel-related spending is in alignment with company policies.
Software solutions such as Certify and Egencia fall into this category. They offer a multitude of features, including integrated travel booking, mobile receipt capture, and automated checks for policy compliance.
Project-based expense software
For businesses that need to closely monitor expenses related to specific projects, project-based expense software can be an invaluable tool. These systems allow users to associate expenses with particular projects, making it easier to keep an eye on project budgets and understand how resources are allocated.
Project-based expense software is particularly useful for businesses in industries like construction or consulting, where expenses often need to be tracked at a highly detailed level and attributed to specific projects or clients. The ability to analyze costs on a project basis can enhance the cost management, financial planning, and client billing processes.
QuickBooks and FreshBooks are known for their project-based expense tracking capabilities. They allow for detailed expense allocation, integrated time tracking, and invoicing based on project expenses.
For businesses that need to manage a vast array of purchasing processes, procure-to-pay software is a valuable end-to-end solution. This category of expense software covers the entire procurement lifecycle—from the initial requisition of goods or services, through the approval workflow, all the way to the processing and payment of invoices.
Procure-to-pay systems typically incorporate integrated expense management tools, which makes them especially beneficial for businesses where purchasing operations form a substantial part of overall expenses. In addition to expense management, these systems can help automate and streamline purchasing processes, helping to create more efficient and effective procurement procedures.
The main advantage of procure-to-pay software is its ability to provide increased visibility and control over external spending. The centralized nature of these systems allows for real-time tracking of expenditures, thereby reducing the likelihood of budget oversights.
Noteworthy examples of procure-to-pay software include Procurify and Ariba. Both offer integrated tools for requisitioning, purchasing, and tracking goods and services, alongside managing related expenses. They provide a unified platform to manage the entire procurement process, from initial request to final payment, ensuring a smooth and efficient workflow.
However, the procurement landscape is growing more complex and competitive, and companies like Vendr are pushing the boundaries of what traditional procure-to-pay software can do. As a SaaS buying platform, Vendr is revolutionizing the way businesses buy, renew, and manage software. While not traditionally procure-to-pay software, Vendr facilitates the entire software purchasing process, helping businesses save money, time, and resources. By managing the negotiation, procurement, and renewal of SaaS tools, Vendr can effectively reduce software costs and streamline the purchasing process. It acts as a strategic partner, adding a layer of expertise and efficiency to your procurement operations.
These types of value-adds are what businesses need to consider when exploring different types of expense software to find the one that best aligns with their unique needs.
Expense software with advanced analytics and AI
Finally, there are expense software solutions that leverage the power of advanced analytics and artificial intelligence (AI) to provide deeper insights and automated expense management. These systems have the capability to analyze spending patterns, identify trends or anomalies, suggest cost-saving opportunities, and automate routine expense management tasks.
For instance, AI can be used to automatically read and categorize receipts, predict future spending based on historical data, or flag potential compliance issues based on established company policies. These software solutions can reduce the burden of managing expenses, enhance spending visibility, and drive cost-efficiency in the long run.
AppZen and Fyle are examples of such solutions. They leverage AI to add an extra layer of intelligence to their expense management capabilities, making the process of tracking and analyzing expenses more accurate and intuitive.
Whatever your needs, there’s an expense software solution for you
Whether you're a small business looking for a simple way to track expenses, a large enterprise needing a fully integrated system, or a business with specific needs like project-based expense tracking or travel management, there's an expense software solution out there for you.
The optimal expense software is one that meets your specific needs, integrates seamlessly with your existing systems, and is user-friendly for your team. Don't rush your decision-making process—take ample time to assess your requirements, explore different options, and choose the best fit for your business.