The expense report has come a long way since the days of paper spreadsheets and stapled receipts. In the last decade, automation technology has closed the gap between booking a business trip and filing an expense report for reimbursement, significantly easing friction for both employees and finance teams.
Yet the evolution is ongoing, and many organizations that have embraced automated expense management software solutions have nonetheless found themselves in a predicament of managing employee spend — particularly today, when professionals are working from home and shifting their buying habits even more quickly than before.
In a conversation with PYMNTS, Center CEO Naveen Singh — whose father co-founded SAP Concur — described why many of the automated expense management tools on the market today fail to address the needs of a dramatically changing dynamic in employee spend.
Merging Expenses With Procurement
According to Singh, as more employees began to make purchases for the organizations the way they made purchases online in their personal lives, their buying habits dramatically shifted.
“Ten to 15 years ago, automating the expense report was really focused around travel,” he explained. “A couple years ago, we started to see that more spending was done in what we think of as a consumerized model. Employees were putting down their credit card to buy everything from travel to software subscriptions — things that would normally be done in procurement on an invoice were now being put on a personal credit card and funneled through the expense report.”
This has blurred the line between procurement and travel and entertainment (T&E) in dramatic fashion with profound implications. Because the expense report was never designed to facilitate real-time visibility into company-wide spend, the current paradigm has left finance and accounting teams struggling to manage and control what can quickly become high-value spend.
Singh pointed to one client that experienced a period of rapid growth. To facilitate expansion, the firm wanted to empower employees to be able to make whatever purchases they needed to get their jobs done. The result was as much as $20,000 worth of software subscriptions that could have been consolidated into one enterprise-level subscription — yet was instead being spent unknowingly.
Today, the challenges involved in accounting for employee spend have grown even greater thanks to remote workforces and the need for professionals to make purchases for home offices in a siloed setting.
Driving Real-Time Data Through Cards
According to Singh, the only way to truly gain visibility into employee spend as their purchases become higher value and more diverse is through real-time data. And, he said, the credit card is a valuable payment tool to achieve that insight.
“Our point of view is that the card is effectively the next frontier for control,” he said.
Not only do cards facilitate the generation and collection of transaction data in real time, but they support a bi-directional model of data in which information can be used to further control and customize spending abilities. For instance, technology that lays atop a commercial card can automatically enforce company policy around which merchants are approved for purchases, or around transaction limits.
Singh noted that Center is also exploring the potential for virtual cards to further enhance that control and security.
As employee expense management systems like Center augment their offering through integrated card programs, the industry is also following the continued evolutionary path of employee and company spend as more volume moves from professionals’ personal cards to a commercial card product.
The result is a shift in T&E and expense management technology providers focusing on making the expense report more automated, agile and real-time concentrated to usher in a new phase of the market in which the expense report no longer exists at all.
“As millennials become a bigger percentage of the workforce, the reality is that it’s unfair to ask people often saddled with a lot of debt to float the business,” said Singh, adding that the historical motivation of using personal cards for company purchases — rewards and points programs — has limited value.
“The value in saying you never have to do an expense report again outstrips any value you’d get out of a traditional card program.”