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How to Manage Petty Cash Effectively in 2024

Vlad Falin

October 26, 2023

5

Not every expense in the company requires you to issue a check. Payments like petrol, supplies, stamps, etc., are paid via cash. For these business transactions, either the employees take cash in advance or put in a request for reimbursement. This mechanism requires you to set some cash aside and employ a person for receipt management and reporting. The cash is referred to as petty cash. 

What Is the Meaning of Petty Cash?

Petty cash refers to a small amount of money that businesses keep readily available for handling minor payments and expenses that are too small to be processed through regular accounting procedures. It is often kept on hand and is reimbursed periodically.

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What are Petty Cash Examples?

Petty cash includes small miscellaneous expenses, such as:

  • Office supplies
  • Gifts
  • Client lunch
  • Refreshments
  • Postage
  • Medicine and first aid
  • Minor repairs
  • Transportation

What Is the Process of Petty Cash Disbursement?

The first step in petty cash disbursement is to define policies and procedures. This includes specifying:

  • The purpose of the fund
  • The maximum cash amount 
  • The types of expenses the fund can cover
  • The process for replenishing the fund

The next step is to appoint a petty cash custodian. They are responsible for handling the petty cash fund. 

Then, you set up the fund by transferring the initial sum of money into a safe or locker. This amount should be sufficient to cover minor expenses for a defined period. 

When employees make small purchases, they request funds from the custodian. After the purchase, they return with a petty cash voucher, receipt, and cash balance. 

The custodian reviews the receipts and provides reimbursement. They maintain detailed records of every transaction, including the date, purpose, recipient, amount, and a brief description of the expense. This record-keeping method ensures transparency and accountability.

After that, the custodian reconciles the petty cash fund at regular intervals. They add up the safe's cash balance and the receipts' value. The total should match the original amount in the fund. 

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What are the Two Types of Petty Cash?

To manage petty cash, the custodian relies on either of the petty cash book systems:

1. Imprest Petty Cash Book

An imprest petty cash system involves maintaining a fixed amount of money in the petty cash fund at all times. 

For instance, you set up a fund of $100. When the fund gets down to $20, the custodian requests reimbursement and replenishes the fund to $100.

2. Columnar or Analytical Petty Cash Book

A columnar or analytical petty cash book is a detailed and structured method of recording petty cash transactions. It categorizes expenses into different general ledger codes for better tracking.

For instance, you create separate columns, such as "office supplies," "refreshments," "meals," etc. Whenever a transaction occurs, the custodian records it in the appropriate column and specifies its purpose.

What are the Challenges of Petty Cash?

While the process of petty cash seems linear and simple, it has many intricacies in practice. 

Imagine the custodian getting hundreds or thousands of requests and receipts every day. So, maintaining a petty cash system is easier in a smaller business with limited expenses and reporting needs. However, for larger enterprises, relying on manual vouchers and physical safes/lockers causes a lot of chaos. 

1. Vulnerability to Theft and Misuse 

Unlike an automated system, a manual petty cash system lacks controls and security measures.

For example, if the custodian is not vigilant, employees can use the cash for personal expenses. Similarly, if the custodian gets stuck between multiple requests and receipts, it leads to oversight.

Moreover, the physical nature of cash in a petty cash box makes it an easier target for theft. Since there's no immediate digital record, anybody can steal money, which goes unnoticed for a while. This lack of transparency and a digital audit trail makes it difficult to identify funds misuse.

2. Poor Receipt Management 

Receipts are the document of proof for the expense. With the traditional approach, custodians have to chase employees for receipts. This results in incomplete or unaccounted-for submissions. 

Moreover, relying on the manual petty cash process makes it harder. The custodians have to manage countless receipts daily, making reconciliation tedious. Hence, you end up with misplaced, duplicate, or even damaged receipts. 

A common example of this issue is when a custodian receives multiple receipts and with an analytical petty cash book to maintain. It takes them hours to reconcile, report, and ensure accurate categorization. 

The worst is when it's time to report, and locating these receipts takes hours.

3. Chaotic Approval Workflow  

In smaller companies, getting approval for expenses is easy. But, in large enterprises, even small expenses can prompt approvals from various departments and stakeholders. This makes the approval workflow complicated and time-consuming. This delays the fund release, disrupting the workflow and reimbursement process.   

For example, imagine an employee who wants to buy a subscription for less than $300. In a big company, it will prompt approval from the manager, IT, finance, and legal departments.  

All this back-and-forth slows things down a lot.

4. Internal Resentment

In big companies, there's tension between the finance team and other departments.  This issue occurs when employees can't access the funds and have to wait for approval. Such a delay disrupts the work or delays the reimbursement.

For instance, an employee needs to buy a subscription for work. But the delay in approval impacted the deadline and client relationship. This creates problems and stress between the finance team and other departments.

5. Branch-Level Petty Cash Management

Large enterprises use separate petty cash systems for departments at the branch level. This means that each department has its own petty cash fund to manage.

Managing small amounts of cash at individual branches is tricky. Employees misuse/steal the money as there's not much oversight. There is no visibility on how money is being spent. Maintaining funds for multiple branches becomes a headache. Also, departments find it challenging to request more funds.  

Reconciliation becomes challenging as the finance teams have to chase branches for complete information. This leaves a lot of loopholes for employees and branch custodians to misuse petty cash.

6. Tedious Reconciliation Process

Reconciliation ensures that the petty cash fund's balance matches the sum of all expenses. 

Manually, reconciliation in large enterprises takes weeks and is prone to errors. Moreover, when adding up expenses, the process is prone to manual errors, which are hard to identify and correct.

For instance, the custodian overlooks a receipt. This mismatch between the recorded expenses and the actual cash on hand can take him weeks to spot errors. 

7. Low Visibility Over Expenses

Traditional petty cash systems lack real-time data. At any given point of time, the custodian is unaware of the fund's current status. This lack of visibility delays financial decision-making. For instance, it can take weeks before the custodian realizes that the petty cash fund is running low. This can lead to temporary cash shortages for essential expenses.

The absence of a clear record makes it slower to notice problems and reconcile the cash. Moreover, transactions and expenses are recorded on paper, which leads to further errors. For example, when an employee uses petty cash to buy office supplies, there will be a delay until the expense is recorded.

Similarly, when many employees spend money simultaneously, tracking them in real-time is tough. This lack of transparency allows employees to misuse petty cash for personal expenses.

How to Manage Petty Cash Effectively With Pluto? 

To overcome the challenges described previously, you can not rely on any automation tool. Instead, you need a product that is tailored to your specific needs. While many tools can assist you in digitizing petty cash management, Pluto goes the extra mile.

With Pluto, you no longer need to maintain a physical safe or countless vouchers and receipts. Pluto records every transaction in real time and gives you visibility at each step. From receipt to reimbursement, you manage everything with complete control and clarity.

Unlimited Corporate Cards

Pluto enables you to issue unlimited corporate cards, simplifying petty cash management. It eliminates the need for physical lockers or safes, promoting smoother cash flow. The availability of unlimited cards allows you to replace shared credit cards. This enables the use of cards for even small petty cash expenses. 

Finance teams get full control and visibility over each petty cash expense in real time.

Employees can either swipe the cards for a seamless process or withdraw cash from ATMs. Every expense made with the corporate card triggers an approval workflow. It prompts employees to add receipts and managers to approve expenses. They can then add the receipts simply via WhatsApp and get reimbursed without any delays.

With all the data consolidated on a single platform, reconciliation becomes easier. This simplified process eliminates the need for a dedicated custodian to manage petty cash.

Not only do you get more control, but you save money with visibility at each step.  

Budget Control

Pluto allows you to specify limits for corporate cards issued. This ensures employees stay within budget. 

When the spending exceeds, employees can request more funds. The budget expands on the manager's approval in seconds, allowing for necessary spending.

Administrators can also issue zero balance cards. These cards with zero balances prompt an approval request for each expense. This approach ensures budget control without causing any delays or resentment.

Easy Receipt Management 

Pluto simplifies receipt management thanks to its seamless WhatsApp integration. 

Your employees can upload receipts via WhatsApp, which are recorded in real-time. The custodians no longer need to run after employees for the receipts.

However, Pluto does more than just store receipts. It extracts vital information through OCR, including vendor names, amounts, and GLs. As a result, your accounting team spends less time on manual tasks like creating logs.

Approval Workflow  

Normally, getting approval for expenses can involve a lot of back and forth. But with Pluto, you can set up custom approval processes to make the process smoother. 

When an employee uploads receipts, Pluto automatically starts the approval workflow. It notifies the custodian and managers to approve the expense, removing the friction.

The reimbursement process accelerates without any compromise on efficiency.

Further, Pluto uses OCR to detect duplicate receipts to avoid dual payments and fraud. This makes it easier to double-check expenses and approve the legitimate ones. 

Digital Expense Report  

Pluto offers digital expense reports that compile data from all the receipts. 

The report simplifies the task for your finance teams to see how each branch/department is spending. It enables them to make adjustments to policies and procedures as needed.

For instance, a company has small office supply purchases spread across various departments. Pluto's real-time visibility and report help to locate these costs. As a result, finance teams can reconsider and promote bulk purchases for cost savings. 

With Pluto, the custodian gets complete visibility into the expenses and the available funds at all times.

Close Books 10X Faster  

Pluto simplifies the process of closing books. 

Since employees can submit receipts directly through WhatsApp, custodians don’t need to chase employees for receipt submissions. This enables you to close the book 10X faster by accelerating the reconciliation process.  

Pluto records all transactions in a centralized digital platform. This streamlines audit logs and eliminates the need to maintain physical records.

With its OCR-based receipt retrieval, finding specific receipts and information becomes more effortless. This simplifies the reconciliation process, making the entire book-closing process faster. 

Replace Petty Cash With Corporate Cards

Small expenses and cash transactions can not be removed. However, finding an expense management tool can make petty cash management simpler. 

Stop relying on manual traditional processes to manage petty cash. Choose Pluto to replace your tedious petty cash books and vouchers with corporate cards. 

Sign up today to digitize your petty cash for complete visibility and control.

Find out how much your business can save with Pluto

Discover your savings with Pluto's Cost Saving Calculator and take control of your expenses. Unlock cost-efficiency now!

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Learn how Pluto is helping Keyper        to eliminate petty cash spending and optimize spend management

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Guide to Accounts Payable Audit With Step-by-Step Process and Checklist

Your employee receives the vendor invoice and goes to the department manager and procurement department for three-way matching — invoice, purchase order, and goods receipt. Once approved, the finance department prepares to clear the payment. Finally, the accounting department makes the journal entries and updates accounting records. This is an end-to-end accounts payable process.

But it isn't as simple and straightforward. The chances of errors increase with various stakeholders involved. These range from manual data entry mistakes and invoice duplications to missed discounts, late payments, and inaccurate coding. This intricate process further results in unapproved invoices, incomplete documentation, vendor communication gaps, and mismatched purchase orders.

Hence, it becomes imperative to conduct regular checks. The inspections look into the internal processes to identify loopholes and act as an early sign. This post will discuss what an accounts payable audit is and how you can prepare for it.

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What is an Accounts Payable Audit?

An accounts payable (AP) audit is a type of accounting audit that investigates a company's accounts payable records, statements, and processes for potential errors, fraud, and non-compliance.  

In an AP audit, auditors track AP transactions from beginning to end, including the purchase order, invoice, approval steps, payment, and reconciliation, ensuring that everything has been recorded and documented correctly. 

The auditors assess the internal records and documentation for the following:

  • Validity - Are all invoices and transactions verified as genuine, preventing payment for unauthorized items?
  • Completeness - Are the invoices, purchase orders, and delivery receipts recorded correctly to avoid missing any payments?
  • Accuracy - Is every invoice amount cross-checked against corresponding purchase orders and delivery receipts to prevent payment errors?
  • Compliance - Are the accounts payable documents compliant with tax and company policies to avoid penalties and ensure ethical financial practices?

Further, the auditors inspect the internal processes for the following: 

  • Segregation of Duties -Are responsibilities clearly divided to prevent conflicts and maintain a system of checks and balances
  • Approvals - Are transaction approval processes in place, ensuring compliance with policies and accountability?
  • Access Controls - Are access controls effectively implemented to protect sensitive information, preventing unauthorized access and potential breaches?

By addressing these questions, the auditors find areas to improve and strengthen the accounts payable system. This process provides a thorough picture of financial operations, identifying weaknesses that could affect accuracy, efficiency, and compliance.

How to Conduct an Accounts Payable Audit

Before establishing an audit plan, you need three things to prepare for an accounts payable audit:

1. Stakeholder Input

Schedule meetings with key stakeholders such as finance managers, approvers, and document handlers. Ask for their insights on pain points, challenges, and expectations related to the accounts payable process. Document their feedback and use it to tailor the audit plan. It helps to address specific concerns and improve efficiency.

2. Documents Repository 

Conduct a comprehensive review of the current document storage system. Ensure all relevant documents are organized, labeled, and stored in a secure, easily accessible location. If you are using digital AP software for the repository, validate that it has proper version control and is updated. 

Checklist of Documents Required

  • Vendor Invoices
  • Purchase Orders
  • Goods/Services Receipts
  • Vendor Contracts and Agreements
  • Payment Records
  • Expense Reports
  • Vendor Statements
  • Credit Memos
  • Internal Controls and Policies
  • General Ledger Entries
  • Tax Documents
  • Bank Reconciliation Statements
  • Vendor Information
  • Access Logs
  • Expense Allocation Documentation
  • Documentation of Disputed Invoices
  • Employee Authorization Forms
  • Proof of Payment
  • Inventory Records (if applicable)
  • Regulatory Compliance Documentation

3. Access Control

Review and update access controls to restrict access to sensitive financial data. Work with IT and security teams to ensure only authorized personnel can access critical systems and repositories. Also, periodically verify user access levels and promptly revoke access for individuals who no longer require it. This helps maintain a secure and controlled environment.

4-Step AP Audit Procedure

With all the documents ready, inputs gathered, and access shared, you can initiate the AP audit procedure. It includes the following steps:

Audit Plan

Establish an audit plan to define the scope of the audit, specifying the departments and time frame under consideration. Assign audit team members and allocate necessary resources for the audit. Identify potential risks such as errors or compliance issues.

Here is what an audit plan looks like.

Audit Plan

Objective: The primary aim of this audit is to express an opinion on the fairness of XYZ Company's financial statements in accordance with Generally Accepted Accounting Principles (GAAP).

Scope: The audit will cover the financial statements of XYZ Company for the year ended December 31, 20XX, including the balance sheet, income statement, statement of cash flows, and accompanying notes.

Audit Team: The audit team will consist of the lead auditor, staff auditors, and specialists as needed. The team members will be assigned specific tasks based on their expertise and the areas to be audited.

Audit Approach: The audit will be conducted as per the auditing standards and guidelines issued by the relevant regulatory bodies. The approach will include substantive testing, tests of controls, analytical procedures, and other audit procedures as deemed necessary.

Materiality Threshold: The materiality threshold for the financial statements is set at $XXX. Any misstatements or discrepancies exceeding this threshold will be considered material.

Risk Assessment: The audit team will conduct a risk assessment to identify and assess the risks of material misstatement in the financial statements. The evaluation will consider both inherent and control risks.

Audit Procedures:

  • Cash and Cash Equivalents:
  • Confirm bank balances and reconciliations
  • Test cash transactions and cutoff procedures
  • Review bank statements and related agreements
  • Revenue Recognition:
  • Test sales transactions and revenue recognition policies
  • Review contracts and agreements for completeness and accuracy
  • Verify the accuracy of recorded revenue
  • Inventory:
  • Observe the physical inventory count
  • Test inventory valuation methods
  • Review inventory turnover and obsolescence
  • Accounts Payable:
  • Confirm outstanding payables with vendors
  • Test completeness and accuracy of recorded payables
  • Review payment terms and agreements
  • Fixed Assets:
  • Verify the existence and valuation of fixed assets
  • Test depreciation calculations
  • Review additions and disposals

Documentation: All audit procedures, findings, and conclusions will be documented in working papers, including supporting evidence and references to applicable accounting standards.

Reporting: A draft of an audit report will be prepared for management review before issuing the final report. The report will include the auditor's opinion on the financial statements and any relevant disclosures.

Fieldwork

With the audit plan in place, the audit team moves on to a detailed examination of the accounts payable process. Simultaneously, it also engages with key stakeholders to get valuable insights into the practical aspects of the AP process. In this stage, it ascertains the effectiveness of internal processes in safeguarding against potential risks. It performs the following assessments: 

  • Verify completeness and accuracy of invoices, purchase orders, and payment records
  • Match invoices with purchase orders and delivery receipts
  • Check for discrepancies in amounts or quantities
  • Evaluate the adherence of the approval process to established policies
  • Confirm proper authorization before payment processing
  • Review vendor master file for accuracy and up-to-date information
  • Implement checks to identify and rectify duplicate payments
  • Ensure compliance with internal policies, industry regulations, and legal requirements
  • Review accruals and prepaid expenses for accurate reflection of the financial statements

  • Verify the accuracy of data entry in the financial system

However, an audit team struggles the most with finding the proper documents. Either the internal team fails to provide the specific invoices, purchase requests, and purchase orders, or it gets lost in the pile of documents. This slowdown in the audit process increases the risk of oversight and incomplete scrutiny, compromising accuracy and thoroughness.

The best way to fix this leak is to go for accounts payable automation.

With AP automation, you streamline approvals and payments and create a centralized hub for bookkeeping. Instead of manual record-keeping, the tool automatically captures and extracts all necessary documents. Its integration capabilities ensure consistent data across the organization, simplifying data management and retrieval.

Audit Report

Finally, the audit team prepares a detailed audit report, including an executive summary, methodology, findings, and recommendations. The report provides a comprehensive overview, detailing identified issues and areas of strength.

To read an audit report and implement it effectively, follow these steps:

  1. Involve the audit committee, executive director, and senior financial staff in reviewing the report.
  2. Identify significant issues, such as financial conflicts of interest, and address them promptly. Classify minor concerns, such as operational inefficiencies and technological deficiencies, for resolution over several months.
  3. Consider the list of best practices and custom recommendations provided by the auditors. Use them to plan and prioritize your organization's next steps.
  4. Evaluate the "scope, nature, and timing" of the audit conducted by the audit team to assess the auditors' efficiency in utilizing resources without redundancy. Explore ways to make the audit process more efficient for the next cycle.

Regardless of the audit cycle, continuously assess and improve auditing procedures. Explore options such as accounts payable automation, process optimizations, and strategic partnerships.

Follow-up

During this stage, the audit team monitors the implementation of recommended changes. It involves continuous communication with stakeholders to address concerns or questions arising from the audit report. The team also ensures that the proposed improvements are effectively integrated into the organization's processes.

Preparing for Your Next Accounts Payable Audit

To make your next audit easier for the auditors and the internal team, address past findings and consider adopting accounts payable automation for efficiency. By addressing previous audit issues, you proactively improve your internal processes by resolving identified issues. It builds a culture of accountability and responsibility, laying the groundwork for a more efficient and effective audit process in the future.

An AP automation software becomes a central hub for the documentation, streamlining the intricate process. Automated document capture and retrieval ensure swift access, minimizing errors. Also, it highlights areas for improvement, enabling the team to address issues beforehand. 

As a result, audits become more streamlined, faster, and less stressful, ensuring strict adherence to rules and optimal functionality. We have curated a list of top AP automation software to help you pick the right one. Check the top 7 accounts payable automation solutions that simplify the accounts payable process and audits.

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December 20, 2023

Vlad Falin

Procure-to-Pay Process: What it is, Benefits, and Steps Involved

The procure-to-pay process doesn’t mean the procurement process. It is a subset of procurement that integrates purchasing and accounts payable.

Traditionally, the procurement process is scattered across the business, and the procurement team needs help to gain visibility or control. The employees purchase from different vendors, the approval process is chaotic and delayed, the stakeholders are stuck in email threads to review the expenses, and the procurement team struggles to get an overview of the organization’s needs.

Procuring the best goods and services becomes problematic since the team is left with open information loops. As a result, it spends more time optimizing the procurement cost and improving the bottom line.

What is the Procure-to-Pay Process?

The procure-to-pay process streamlines the scattered procurement parts to combine purchases and payments. Instead of a process spread across different software, the procurement process shifts to a centralized platform.

The employees get a dedicated platform to raise purchase requests and obtain approvals. The platform notifies stakeholders, such as managers, legal teams, finance teams, IT teams, and other relevant decision-makers to review and approve the proposals. As a result, the procurement team seamlessly moves to the vendor evaluation and negotiation stage without worrying about approvals or delays. The finance team efficiently handles accounts payable since the purchase and payment process is integrated.

So, while earlier, the purchases were handled solely by the procurement team and payments solely by the finance teams, the procure-to-pay process gives both teams an overview of the process from start to finish. In this post, we will discuss how this procure-to-pay process helps you optimize your procurement function and improve your bottom line.

Why Do You Need a Procure-to-Pay Process?

The procure-to-pay process is not just for your finance team or procurement team. It helps the entire organization to gain resources efficiently. Here are eight ways that demonstrate how moving to a streamlined process benefits you:

1. Visibility

All the relevant stakeholders get visibility into the process and the status. Be it the employee, managers, finance team, legal team, IT team, or procurement team — each one can track the progress without delving into multiple email threads. Additionally, teams get insights that help procurement teams optimize costs with data-driven decision-making.

2. Compliance and Control

You can implement advanced controls, such as customized approval workflows and spending budgets, without micromanaging the teams. You can successfully enforce internal control over financial reporting without creating unnecessary team resentment. 

So, for instance, if any expenses or purchases beyond $50,000 require additional approval from the legal and IT team, you can easily configure those controls within the approval workflow.

3. Streamline Workflows

The traditional process demands the employees to go from one office to another or spend days on email and Slack conversations before the managers give the green signal. At times, approval of a critical stakeholder is missed, causing delays and disrupting the workflow.

With the procure-to-pay process, you can create custom workflows depending on the purchase category, department, amount, etc. This accelerates workflow, and all the relevant stakeholders get notified right away.

4. Centralized Management

The procure-to-pay process integrates purchases and payments to bring all the critical information on a single dashboard. As a result, any discrepancies in the procurement process are identified in minutes. The entire procedure accelerates the real-time visibility of each stage.

5. Reconciliation

A centralized management system makes collecting and storing documents easy; additionally, since it integrates purchases and payments, the information syncs across accounting systems and ERPs.

During the audit season, this becomes a blessing where the finance team doesn’t have to chase teams for complete records. Also, it becomes easier to store and lock all the transactions and share these records with external parties.

6. Risk Management

The procurement operation is prone to financial, operational, and reputational risks. With the procure-to-pay process, teams can efficiently manage the vendors, purchase requests, approvals, and payments on a centralized platform in real time. It reduces the risk of fraud, ensures policy compliance, and provides visibility into spending patterns without burdening any team.

7. Insights

You can easily see the inside out of your procurement process, whether you want to know how much the marketing team spends or which vendor costs you the most. It makes it more convenient to reduce procurement costs and optimize purchases to improve the bottom line. Also, as all the information is centralized, there are no gaps or missing loopholes, providing complete transparency of your expenses.

8. Invoice Management

The procure-to-pay process ensures that all the invoices are captured and extracted into a centralized platform. This facilitates two-way and three-way matching without causing delays. Moreover, the reconciliation process becomes easy as all the records are systematically recorded.

So, whether you receive an invoice via email, WhatsApp, or physical copy, you can easily add it to the system without risking losing an invoice.

What are the Stages in the Procure-to-Pay Process?

The traditional procurement process has over nine steps strewed across different platforms. These include identifying goods and services, purchase requests, vendor selection, negotiation, purchase orders, inspection of the goods received, three-way matching, approvals, and payment and reconciliation.

While the procure-to-pay process doesn’t alter these stages, it integrates them for a streamlined workflow. So, earlier, if the approvals took days or weeks, keeping employees and the procurement team on hold, now it only takes a few minutes or hours. You centralize the procurement process and save money and time.

Here are five key stages in the procure-to-pay process:

1. Purchase Request

Purchase Request

Employees no longer need to travel from one office to another, seeking approvals manually from managers. The streamlined procure-to-pay process gives employees a centralized dashboard to raise requests and specify their needs. It helps the procurement team to understand what the employee needs as well as examine the purchase details. Moreover, the stakeholders can quickly approve or reject the requests from the dedicated platform.

Administrators add customized approval flows to enforce internal policies. They create trigger-based approval workflows based on the expense amount, category, and department to accommodate intricate hierarchies.

For instance, they have the option to create separate workflows for expenses below $5000 and those exceeding a certain budget. Similarly, they can add specific stakeholders to the custom workflows for minimum friction and delay. 

2. Purchase Order

Purchase order

While the vendor evaluation, selection, and negotiation happen on dedicated ERPs, the procure-to-pay process enables you to bring all this information on a consolidated platform. You maintain a synced and consistent database to make purchases faster and more secure.

Pluto integrates with your ERPs and allows you to maintain a centralized vendor database. You can add the vendor directly to the platform and systematically record information. You can add a field in your approval workflow to determine whether the employees are purchasing from a vendor list or a new vendor.

A systematic list helps you consolidate expenses and optimize costs. Moreover, ordering becomes more accessible with a unified platform for raising and approving purchase requests and maintaining an ERP-synced vendor database.

3, Invoice Management

Invoice Management

Traditionally, vendors send invoices to a dedicated email or an address. The employees send them for approval and payment. It takes days to clear the expenses. Additionally, the accounting team spends considerable time and energy on maintaining records.

The procure-to-pay strategy reduces this effort and streamlines the procedure. It captures and extracts the invoice from the emails and attaches to a dedicated purchase request and order. This helps the teams match the purchase order, invoice and goods received note (GRN) without juggling multiple platforms.

It pulls all the information with optical character recognition (OCR) technology, reducing manual data entry. Since this platform syncs with the accounting system, the accounting team spends minimal time on data entry.

4. Payment Processing

Payment Processing

Processing payments becomes a task when the finance team has to chase employees for invoices and wait for approvals and verification. The procure-to-pay technique centralizes the entire process, giving real-time visibility and helping finance teams make timely payments. 

Moreover, with Pluto, you can integrate your procurement software with the payment gateways to ease the payment process further. Also, you get better Forex rates than banks, helping you save more money. Overall, with the approvals and invoices streamlined, payment processing becomes easy.

5. Reconciliation

Reconciliation

Reconciliation is the hardest part, even when you perform the data entry and data sync monthly. You risk losing documentation and creating gaps in the records.

The procure-to-pay process consolidates the entire procurement cycle to bring all the critical information on a single platform. There are minimal gaps; records are up-to-date due to real-time tracking and recording.

With Pluto, you can integrate with platforms like MS Dynamics, Oracle Netsuite, QuickBooks, etc. So, with your ERPs and accounting software synced, you can easily record all the transactions digitally and securely.

Pluto further enables you to lock the transactions to avoid fraud once approved. Moreover, you can create view-only access for your records to simplify auditing for external parties.

Improve Your Bottom Line With the Right Procure-To-Pay Solution

Overall, the procure-to-pay process helps you automate your procurement process without changing your approach too much. You just need to find the right solution that assists your procurement process. 

We discussed more about this in our procure-to-pay solutions post, where you will find what procure-to-pay software does and how to pick the right one.

5
All
Spend Management
December 1, 2023

Mohammed Ridwan

Top 6 Expense Management Software for Global Businesses in 2024

You have just received an OTP, and now you are guessing which one of your employees is spending this amount and why. You don’t have time to review it, nor can you delay the payment too much. You neither have control nor visibility. This is the problem of shared corporate cards. 

If you want to make it simpler for your employees, invest in expense management software. It is an automation tool to streamline employee-related expenses—reimbursement, petty cash, and corporate cards. In addition, it offers a centralized platform with real-time visibility into how employees spend company money. As a result, the entire cycle of approval and accounting becomes simpler.

In this post, we share the top six expense management software to help you get started. 

Top 6 Expense Management Software 

Here are six options for expense management software to manage employee-related expenses:

1. Pluto

pluto expense management software

Pluto is the best platform for managing employee expenses as it streamlines petty cash management, corporate cards, employee reimbursements and account payables. It is trusted by the largest finance and procurement teams in the Middle East, such as Tamara and Petrochem. With Pluto, you can transform reimbursements to get more control and visibility without causing delays or confusion.

Key Features:

  • Provides custom no-code approval workflows that adapt to the company's hierarchy for timely and accurate approvals 
  • Automates receipt capture through optical character recognition (OCR), with the ability to support bulk upload via WhatsApp
  • Supports unlimited corporate cards—virtual and physical, with budget controls to maintain expenses within corporate policies
  • Offers zero-balance cards, which get funded once the expense is approved
  • Ability to add comments and other transaction details to maintain a comprehensive audit log. View-only access is available for external accountants to review financial data without making changes
  • Facilitates card-specific policies to make branch and subsidiary-level reimbursements easy
  • Gives the option to make mass payments to reimburse employees
  • Offers custom expense reports to overview business expenses and spending trends
  • Alerts in case of duplicate receipt uploads to avoid fraud and compliance issues
  • Integrates with accounting platforms like Netsuite for advanced general ledger (GL) coding and tax tracking
  • Provides secure document storage with a five-year audit log and bank-grade encryption

Pricing:

Request a custom quote

Pros:

  • Enables branch and subsidiary-level spend tracking (not offered by other platforms)
  • WhatsApp integration to make receipt upload easy
  • Offers up to 2% cashback on all non-AED transactions 
  • Independent PCI DSS Level 1 Certification

Cons:

  • Slightly longer onboarding due to a corporate card offering 
  • Integrates with all other major ERPS except Tally

2. Airbase

expense management tool by airbase

Airbase simplifies expense reporting with AI and ML and ensures quick, hassle-free, and smart corporate expense management. It is an automation solution for small to midsize businesses (SMBs) and large enterprises with 100-5,000 employees.

Key Features:

  • Offers OCR to populate details, including GL category, date, amount, and purpose
  • Ensures compliance by sending reminders and, if needed, locking cards until policies are met
  • Facilitates reminders to upload receipts, eliminating the need to chase employees for receipts
  • Offers a designated email address to send receipts of virtual card transactions
  • Allows custom approval workflows and budget limits for physical cards
  • Provides alerts for suspicious activity, enabling quick responses to potential fraudulent purchases
  • Enables real-time audit trail with receipts, notes, and documentation for transparency
  • Automates expense reimbursements to employees' bank accounts once the expenses are approved

Pricing:

Request the sales team for a custom quote

Pros:

  • Flexible to accommodate varying team sizes and user base
  • Intuitive and easy to use; no training or previous knowledge required

Cons:

  • Slow mobile app; takes time to load pages 
  • Glitchy SSO-based login 
  • Not suitable for complex branch-level approvals and expenses

3. Ramp

expense management solution by ramp

Ramp is an integrated solution that streamlines expense management with corporate cards, automated expense tracking, and real-time reporting to help teams track expenses. It is a suitable solution for businesses of all sizes. 

Key Features:

  • Provides corporate cards with the ability to add spending policies to prevent unauthorized or non-compliant expenses
  • Facilitates customizable workflows for expense approval 
  • Enables employees to submit expenses on the go through SMS, mobile app, and integrations with platforms like Gmail and Lyft
  • Automates the capture and matching of receipts for every transaction, ensuring accurate expense tracking
  • Flags non-compliant expenses, including weekend spend, excessive tipping, and alcohol purchases, reducing the need for manual review
  • Provides instant access to real-time spending data, allowing businesses to make timely adjustments before exceeding budgets
  • Identifies cost savings opportunities, such as duplicate subscriptions and unused solutions

Pricing:

Offers three pricing packages—free or basic features, $15 per user per month for Ramp Plus, and custom quote for enterprises with features like enterprise ERP integration, custom implementation, and local card issuance.

Pros:

  • Unlimited 1.5% cash back on credit card purchases made using their VISA branded cards

Cons:

  • Only available to businesses registered in the US
  • Doesn’t have a mobile app for Android phones

4. Bill.com

Bill's expense management system

Bill.com simplifies employee expense tracking by providing real-time visibility and customization. It is an expense management solution for SMBs to control all corporate expenses. It streamlines a scattered expense management process with seamless syncing.

Key Features:

  • Extends credit limits ranging from $500 to $5 million to control spending within constraints
  • Provides custom approval workflows to speed up the approval process with minimal friction
  • Offers multiple payment options, including ACH, credit card, check, international wire transfers
  • Automates purchase order workflows with the ability to sync and automate two-way matching and three-way matching
  • Enables quick coding and sync with accounting systems to streamline expense reconciliation
  • Enables automated receipt matching, categorization, and expense reporting, reducing administrative workload
  • Offers security features, including the ability to freeze and create corporate cards instantly
  • Notifies administrators of each employee's transactions, ensuring timely oversight

Pricing:

Offers a free trial and essentials pack starting at $45 for six standard user roles. Its team and corporate pack are for $55 and $79, respectively. Enterprises need to request a custom quote.

Pros:

  • One-click swift payments
  • Minimum training required
  • Easy-to-use mobile app

Cons:

  • Customer support is difficult to initiate, slow, and unresponsive
  • Glitches in the reimbursement process lead to pending approvals

5. Rydoo

expense management solution by rydoo

Rydoo is a cloud-based expense management tool that streamlines reimbursement cycles, automates expense flows, and enhances team productivity. It combines the capabilities of an expense tracker and a travel service, enabling you to book flights and hotels. It is suitable for medium-sized businesses that are building international relationships with overseas offices as it supports multiple languages and currencies. 

Key Features:

  • Supports OCR scanning feature for receipt management
  • Automates approval flows for expenses based on company policies
  • Assures global compliance by setting up rules, mileage rates, per diems, and tax rates for specific countries and regions. Also provides an advanced rule engine for tailored policies in the admin panel.
  • Reimburses employees in their local currency, supporting diverse international operations
  • Integrates with popular third-party apps like Dropbox, Slack, Uber, Lyft, and SAP
  • Supports accounting software widely used in the European Union, such as Exact Online and E-conomic
  • Offers full audit trails for maintaining company policies, IRS compliance, and resource conservation with a 10-year data storage period

Pricing:

Offers a team plan at €8 per user per month with OCR scanning and integrations, growth plan at €10 per user per month adding controls and SAP/Oracle integrations, and enterprise plan with API support and custom pricing for ERP and HR

Pros:

  • Makes it easier to add expenses in different currencies and get paid in local currency with multi-currency support 

Cons:

  • Increases in prices over time leading to significant cost jumps over the years (Source
  • OCR doesn’t work efficiently and requires manual entry

6. Zoho Expenses

expense management software by zoho expense

Zoho Expense is a travel and expense management solution designed to cater to the needs of growing businesses. Trusted by thousands of businesses across 150+ countries, it is a customizable expense-tracking tool offering a mobile-first approach, automation, and integration capabilities. Its integration with the Zoho suite makes it suitable for SMBs seeking efficient travel and expense management.

Key Features:

  • Provides complete control over all stages of employees' business trips—pre-travel approvals, bookings, and post-travel management with a powerful self-booking tool for efficient business travel
  • Offers customization and multi-level pre-travel approval flows along with automated visa requests, documentation, and forms
  • Supports expense reporting by auto-scanning receipts for automatic expense creation
  • Enables simplified approval processes and timely reimbursements
  • Integrates with company cards to offer direct card feed retrieval and automated reconciliation
  • Facilitates budget creation and comparison with actual spending with customizable rules to restrict overspending
  • Provides AI-driven fraud detection for expense audits with country-specific editions for local compliance and mileage rates
  • Supports real-time communication with employees through chat, comments, and notifications
  • Integrates with leading travel, HRMS, accounting, ERP, and collaboration solutions

Pricing:

Offers flexible pricing plans, starting with a free option and scaling up to $3 per active member per month, $5 per active member per month, and custom enterprise pricing

Pros:

  • Adaptable to global taxation regulations 
  • Easy to set up and deploy, very affordable for SMEs

Cons:

  • Limited payment gateway integration options
  • Can be a little confusing to learn especially when transitioning from app to desktop

Finding the Right Expense Management Solution

Consider these three factors while choosing the right expense management software — ease of use, security, and flexibility. Choosing the right expense management software can help you start your journey towards a healthy financial ecosystem. 

In the end, what matters are your internal policies and controls that govern the expenses. Because no matter what platform you choose, if there are gaps in your internal control systems, the software will not be able to do the heavy lifting. 

If you want more clarity on how you can stop the chaos in your company and manage expenses better, read our detailed post on internal control over financial reporting (ICFR). You can also book a call, and our team will help you better understand the bottlenecks and how you can streamline your expense management.