Expense-management systems can help companies control costs

Software allows employees to submit reports via Internet

Tracy Carbasho

Expense-management automation is becoming the new mantra for companies trying to control indirect employee costs.

"There is an increased awareness among companies about the need to automate their expense-management process in order to achieve bottom-line improvements and efficiency gains," said Ashok Dhar, president and CEO of Virtual Communications Inc. in Monroeville.

"Expense management has always been important to companies and now the technology has evolved to a point where it's natural to look at Internet applications more seriously."

VCOM, a technology company that provides Internet-based software for banks and businesses, began offering its Web-based ExpenseAnywhere product in 2002. The software gives employees the ability to submit expense reports over the Internet or Intranet, instantly delivering the information to managers for approval, to accounting for verification and then to payment processing and general ledger posting.

"ExpenseAnywhere seamlessly integrates with corporate Enterprise Resource Planning systems, corporate charge card providers and the company's banking system for direct payments to their travelers," said Mr. Dhar. "The system tracks and alerts the users about duplicate entry of expenses and about expenses not in compliance with the company's policies. It provides reporting capabilities at all levels, including forecasting and analytics."

Hanley Wood LLC, a Washington, D.C.-based business-to-business media company serving the housing and construction industry, replaced its manual paper-based system with ExpenseAnywhere in November 2002. Aaron Packard, vice president of technology, said Hanley Wood officials became aware of the product developed by VCOM while researching the available expense-reporting options.

"We compared VCOM's solution against other competing Web-based expense-management offerings and selected ExpenseAnywhere based on features, ease of use and overall return on investment," said Mr. Packard. "The user-friendly expense-reporting system has helped the company realize a return on investment and increased manageability of travel expenses."

REALIZING COST SAVINGS

Aberdeen Group Inc., a computer and communications research and consulting organization in Boston, estimates that travel and entertainment expenses can account for between 5 percent and 20 percent of a company's total indirect spending.

Aberdeen has conducted extensive studies to determine the value of Internet-based expense-management services in reducing costs. The research, conducted over the past two years, concluded that the use of automated systems can significantly reduce process cycle time and related expenses by streamlining information entry, workflow and payments to employees.

Expense-management automation has been identified by Aberdeen as a key tool for controlling indirect spending. Aberdeen lists several companies, including Ariba Inc. of Sunnyvale, Calif., and Concur Technologies of Redmond, Wash., among those having best practices in expense-management automation.

Ariba officials announced in November that PPG Industries has decided to use the company's spending-management software.

"In order for the company to better leverage its purchasing dollar, increase purchasing efficiencies and reduce costs, we first need to understand our spending patterns and see where the opportunities for savings and improvement lie," said Jim Polak, director of general purchasing for PPG, a Downtown-based global supplier of glass, coatings, fiberglass and chemicals.

Mr. Dhar said more companies are recognizing the importance of managing their expenses in an efficient, automated way. He has noticed a warming of the market over the past few months with more people visiting the company's Web site.

"Companies are realizing how expensive it is to manage their expenses internally with the traditional paper-based system. In fact, it can cost between $35 and $80 to process a single expense report using the manual, paper-based method," said Mr. Dhar.

"Switching to an automatic process can result in a savings of as much as 75 to 80 percent."

EASY TO INTEGRATE, CUSTOMIZE

The ExpenseAnywhere product is a highly scalable system that is available through the Application Service Provider hosted environment or as licensed software for in-house installation. Mr. Dhar said rapid implementation of under 10 days is attainable for either scenario, both of which have a high return on investment.

Mr. Dhar said the open-system architecture of ExpenseAnywhere allows it to be easily integrated into any accounting system that a company is currently using. The software can also be customized to meet the needs of individual clients by removing or adding features to suit their needs.

An offline option allows users to enter their expenses without being connected to a network in cases where the connectivity is not readily available. Using ExpenseAnywhere Offline, employees can complete their expense reports from anywhere at any time then file them over the Internet later.

Despite the many benefits of expense-management automation, Mr. Dhar said the majority of companies throughout the country are still using paper expense reports.

"Market research shows that only about 10 to 15 percent of the companies in the United States have automatic expense-management systems," he said.

"The numbers have been low because companies have generally not been aware of how much it is costing them to manage their expenses with a paper-based system."

Mr. Dhar said the cost for a company to implement ExpenseAnywhere varies depending on how many people will be using the system.

MS. CARBASHO is a freelance writer.