SMB Expense Management, Beyond the Shoeboxes of Receipts

Once the purview of paper receipts and excel spreadsheets, for many SMBs, expense management is getting a makeover.

Technology is bridging the gap to shorten the cycle between when expenses are incurred – for everything from travel to entertainment to project based purchases – and when they are reimbursed.

In one recent announcement, real-time expense reporting software firm Abacus debuted late last month an integration with Capital One’s Customer Transactions API, which allows for faster and more secure expense reimbursement requests and approvals.

In an interview with PYMNTS, Abacus CEO and Co-Founder Omar Qari maintained that data sharing through a platform illustrates a trend that “allows SMBs and consumers to share bank login credentials with FIs without the need for an intermediary.”

Sharing data on demand, he said, especially financial data, eliminates the “needle in a haystack” approach that typically is used in expense management, and which through the hunt for missing or incorrect data, uncovers inefficiencies (and, sometimes, intentional misreporting).

Through oAuth technology, the firms have said, customers grant Abacus tokenized access to account information and skip a few steps, including the manual entry of personal bank login credentials and feed transaction data directly to banks, and thus automate the expense management process.   That’s especially useful, says Qari, as corporate cards as a payments tool, especially in B2B transaction, gain ground.

In one recent study, Mercator Advisory Group said the U.S. commercial card market (and it should be noted that the Abacus and Capital One deal is focused on the U.S. market), was worth $428 billion two years ago, and has been growing at about eight percent annually. Another survey, this one conducted by Capital One at an NAPCP payments conference in 2017, found that 91 percent of corporate finance professionals plan to adopt commercial cards, a gain of 36 percent from 2016’s tally.

Use cases are also expanding, Qari told PYMNTS, among verticals that are moving to embrace such cards, such as construction companies (as they pay for supplies as a job progresses) and professional services firms (as, for example, they spend time visiting clients or drum up business in new locations).

It should be noted here that the expense management field is a competitive one, with one bit of news coming as Expensify said earlier this week that it is suing Abacus “for infringement of two of our most core patents surrounding receipt scanning and, most importantly, the automatic matching of the scanned receipt to a credit card feed.”  Qari told PYMNTS he had no comment on the suit.

The movement, regardless of industry, to real-time expense reporting, as noted by Qari, allows for firms to “get all of their data and expenses classified.” For employees, the benefit is that as reimbursable expenses are submitted and approved, payments can be logged and disbursed as soon as the next day.  Automation ensures that company-defined policy and routing rules are automatically applied to each expense, he said, where spending limits can be set for an individual executive.  Recurring expenses also get auto approval, while exceptions get a second look to see if they pass muster or should be denied.  “Controls are in place,” said Qari, “with dollar amounts or can be applied on a project by project basis … you can do it [expense approval] as it happens.”

Thus, through automation, expense review time, approval and payout – the entire process, in other words, is reduced significantly (Abacus estimates an 80 percent reduction rate).

In a more general sense, said the executive, with some streamlining of process and workflow (requiring less manual input), management can glean a “three-dimensional view” of expense reporting in a “metadata” sense, which becomes “quite timely when data is captured via API.”  That data can be applied to find the returns on investment for certain projects (revenue brought in as measured against the expenses being incurred in real time), or even attendees at an event (i.e., how much has been spent on promotion).  Expense management, said Qari “goes from being a manual task … to becoming a strategic resource.”