15 essential features to look for in a travel expense management system

The number of firms moving to travel expense management systems is increasing sharply.

According to a survey by Levvel research, firms that adopted Travel and Expense Management (TEM) systems were able to increase the efficiency of their reimbursement processes by 71%, improve their visibility over spending by 66%, and reduce processing costs by 53%. The need to effectively manage the complexities of T&E processes is the driving force behind firms of all sizes flocking to TEM systems.

Let’s take the example of a typical business trip—say your sales manager is attending an international trade expo. Their business trip can be divided into 3 stages. The pre-trip process involves creating a travel request and getting it approved. While they’re on the trip, they record the incurred expenses. Finally, post-trip, they combine their expenses to generate a report, submit the report to the approver, and once it’s approved, get their reimbursement. While the flow seems effortless, there’s a lot going on behind the scenes. With the right features, you can automate these processes in a streamlined manner.

Here are some key features that can improve your firm’s expense management process:

Pre-trip: 

Multiple users: An ideal expense management system should provide different functionalities to different users. Your administrator should be able to add multiple users and assign roles based on authorization levels—so your employees will be able to access only the data your admin wants them to. For example, while the sales department head needs to oversee the approval process for an entire department, the sales engineer reporting to them only needs to submit their travel expense report. Providing role-based accessibility ensures data security.

Implement travel policies: Using this feature, your administrator can configure the TEM system according to your firm’s travel policies, from expense amount limits to per diems, mileage expenses, and approval workflows. This helps your firm improve its policy compliance rate and prevent misuse of travel funds. Different departments in your firm might have different spending requirements and expense limits, so a good TEM system will allow you to implement different policies for each one.

Localization of per diems: Since the cost of travel varies for different countries, your TEM system should give you the ability to set rates for travel, meals, accommodation, and incidentals based on the travel location. Using this feature, you will be able to automatically allot per diems to your employees based on the country they’re travelling to, as opposed to manually configuring spending limits each time an employee creates a trip request. This also helps your travel team to track per diem expenses for different countries individually.

On-trip:

Auto-scanning of receipts: This feature simplifies the process of recording expenses to a great extent. Your employees will no longer have to record each expense manually or worry about lost receipts. They could simply capture a picture of the receipt using the TEM mobile app, and the in-built OCR (Optical Character Recognition) will extract the key details like the merchant/vendor name, date, and amount to create an expense. The digital copies of the receipts are then stored for as long as they’re needed.

E-mail receipts forwarding: With this feature, your employees can simply forward their electronic receipts to the e-mail address provided by the TEM system, and the system will automatically create expense transactions for those receipts.

Auto-categorization of expenses: Expenses can be auto-categorized based on the data from the receipts. Your TEM system should make it easy to track the expenditure by sorting expenses into relevant categories automatically. While setting up the system, your administrator will have to add vendors/merchants to the system and select the relevant category. Once this is done, expenses containing the merchant’s name will be auto-categorized (as meals/travel/accommodation) based on the past entries during auto-scan. For example, a receipt from Starbucks would be auto-categorized as a meal expense.

Itemization of expenses: Your employees should be able to itemize (multiple expenses would be listed as line items) their expenses using your TEM system. Now, your employees can easily categorise these expenses and apply the correct tax rates to each line item. For example, at the end of their hotel stay, your employee would be handed a bill for the lodging, room service, parking, etc. With this feature, each expense listed in the bill can be itemized individually, and the appropriate tax rate can be applied to each line item.

Record mileage expenses: Expense management systems have taken to integrating with Google Maps and Apple Maps to record mileage expenses by calculating the total distance travelled. Your employees can record their mileage expenses by entering the distance travelled or the start and end readings of their vehicle’s odometer. However, the most convenient way is to use GPS tracking in a mobile expense application to record the mileage. An enhanced feature allows your employees to log their mileage expenses for multiple stops in a day as a single expense.

Credit card integration: Providing corporate credit cards to employees embarking on business trips improves spending transparency, prevents overspending, and reduces fraudulent expenses. Your travel manager can set spending limits for the cards, so each employee gets a card with an assigned budget.

By integrating your TEM system with your credit card provider, you can enable automated bank feeds or direct feeds – card transactions are automatically pulled from the supported bank to your TEM system. Now, your employees can easily convert the card transactions into expenses with a few clicks instead of re-entering the expenses. Also, this makes reconciliation easy since you no longer have to spend time manually matching transactions. The card transactions are automatically matched with the corresponding expenses recorded in the system. 

Post-trip:

Automate expense report creation and submission: Manually creating and submitting expense reports is painstakingly time-consuming. This is why you should look for a TEM system that automates this process. With automation, the unreported expenses from a specific date range are automatically grouped to form a report. This report will be automatically submitted to the assigned approver.

Control expense theft: Your TEM system should have policy controls to detect and flag policy violations in expense reports automatically. For example, if your policy requires the employee to submit a receipt for every expense that exceeds a certain amount, and they fail to include a receipt, the system flags the expense and notifies the employee and their approver. Ideally, potentially duplicate entries are flagged based on the dates and amounts so that the employee can either merge or delete the duplicate entry.

Automated approval workflows: Rule-based automated workflows reduce manual intervention and shorten the approval process. Your administrator can set approval rules to sort the expense reports based on the criteria applied. For example, you can set approval rules for expense reports exceeding a certain limit to be forwarded to the finance manager for final approval. Also, if you have several departments in your firm, you can create separate workflows for each department to process the expense reports.

Auto-approval and auto-rejection of expense reports: Your approvers should be able to set criteria for auto-approving or auto-rejecting expense reports. For example, a line manager can set criteria for an expense report free from policy violation to be approved without intervention. It’s a win-win for both – the approver and the employee.

Advanced analytics: TEM systems provide a diverse set of real-time analytic reports on expenses, expense reports, reimbursements, policy violations, and more. With these analytics, you can track every penny spent and get insight into the travel expenses. You can view the analytic reports based on location, department, employee, or expense category to get a breakdown of the top policy violators, the areas where the majority of your T&E funds are being spent, the policies being violated, and so on.

You can also build custom analytic reports to work on specific data sets that may not be a part of the built-in reports. Using these, the travel team can make adjustments to the travel policies and T&E budget by checking the actual travel spending against the planned travel budget. You can also automate analytic report generation by scheduling these reports to be delivered to your email address.

Seamless integration: The TEM system you’re choosing should be able to work well in synchronization with third-party systems and your other applications. It should offer seamless data transfer, so you don’t have to import and export your firm’s expense data manually. Look for TEM systems that integrate well with your accounting software, different payment systems, HR and payroll software, booking tools (like Uber and Lyft), CRM system, and other applications.

Here’s your takeaway!

Those were some key features you should look for in a TEM system. Here’s a suggestion – map out your firm’s expense management processes in detail. This should include the pre-trip, on-trip, and post-trip processes. Now, look into what is currently working well and the areas where you can use some improvement. Based on this, you can make a list of the features or third-party integrations needed. After this, you can then read the product reviews of different TEM systems and compare the features, flexibility, and pricing before choosing the right fit for your firm.

We know how important it is to have an expense management system that incorporates all these key features and is flexible and easily configurable. That’s why we’ve built Zoho Expense –   online expense reporting software tailor-made for businesses worldwide to help business travellers at every step of their trip. With Zoho Expense, you can automate expense report creation, streamline approvals, and make swift reimbursements. Try our online expense management software for free today to see how it helps your corporate travel management program.