Expense reports are no longer a requirement with a spend management solution

This article first appeared in the CPA Practice Advisor’s Special Report: Spend Management Advisory: A Growing Opportunity for Accounting Firms in January 2025.

As a trusted advisor, you recognize your clients' continuous effort and focus on managing costs. According to a spend management survey conducted by CPA.com, the business and technology arm of the AICPA, 72% of small and medium-sized businesses (SMBs) report wanting a proactive approach to expense management, shifting away from the historical credit card expense report, to automation that matches anticipated expenses to budgets before the money is spent. Why?

Macroeconomic trends are driving the speed of decision-making and access to data. At the same time, global changes like supply chain disruptions and the normalcy of remote work have made company-wide spending and cash flow management harder than ever to predict. In the same survey, 53% of SMBs said their company is reducing costs, and 69% said they want new options to help control costs.

Not only are your clients struggling to manage spending, but their challenges are also getting passed along to you, ultimately having the opportunity to step up and troubleshoot their back-office and operational needs. Troubling credit card receipt management, out-of-policy spending, chasing expense reports, and struggling to complete an accurate month-end close are pain points across all industries—but it doesn’t have to be this way. Accounting firms have a golden opportunity to solve their clients' spend and expense pain points and deliver even greater value (while achieving firm efficiencies) by introducing spend management services.

“Spend management services have been a slow addition when it comes to the services arsenal at firms. Sticking points like client loyalty to their Amex, resistance to technological changes, and the perceived lack of capacity among the CAS team are all barriers,” said Kim Blascoe, senior director of CAS professional services at CPA.com and a former CAS leader for a top 100 firm. “The firms that take the time to create a plan to overcome these barriers, leveraging CPA.com’s resources and expertise, are able to ramp up this approachable yet lucrative advisory service quickly.”

Two similar concepts with a distinct difference

Although “expense management” and “spend management” are sometimes used interchangeably, CPA.com explains the nuances of each.

Legacy expense management is a retroactive approach to managing part of a company’s spend. An invoice is paid and recorded only after the actual expense occurs, typically 30 days or more later. With this traditional approach, businesses have limited visibility of their cash flow as expenses arise. Your client's financial operations are experiencing stress as staff rush to verify the expense, chase down receipts, and process reports. Not only can this traditional process be stressful, but it can also drain efficiency and open the door to out-of-policy spending.

“Out-of-pocket expenses can quickly become hard to track if a corporate card is not given to an employee or if multiple team members use a [shared] corporate card,” said Jody Grunden, partner and virtual CFO practice leader at Anders CPAs + Advisors. “It can also be difficult for an employee to gauge how much they can spend on purchases if real-time information is not easily accessible. This has been a headache for many of our clients in the past, leading us to recommend a spend management tool.”

Modern spend and expense management takes a proactive approach. It leverages an integrated financial operations platform and corporate cards that are connected to pre-set budgets and spend limits. Corporate cards, both physical and virtual, are issued to clients and their employees, and linked to an integrated platform, so all company spending is not only pre-approved but also tracked in a timely manner. Spend management technology gives you the tools to help clients set budgets, track spending, and improve the accuracy of forecasts. Cashback and a robust reward program may also be available to corporate card clients.

Virtual corporate cards, digital versions of a physical card, can be used exclusively for one vendor as an added security feature. A virtual card is also great for recurring expenses, such as monthly subscriptions, and for managing certain budgets.

“If my client knows their software subscription is going to be $150 a month, a virtual card can be set for that software subscription with a limit of $150, and now they have very good control of that spend,” said Grunden. “The merchant can’t overcharge the client, they are not buying anything they don’t want to buy, and if there is fraud or something happens with that card, the card can be turned off immediately. It alleviates the need to switch out a card number with every single merchant; we can do it with just that one.”

So, how does a modern spend management solution evolve from legacy expense management software? Let’s look at five key areas:

 
By now, you should have a better understanding of the differences between traditional expense management processes and the capability that an approachable modern spend and expense management solution brings.

About the author
Kimberly K. Blascoe, CPA, leads CPA.com’s CAS 2.0 practice transformation programs, focusing on helping firms establish and grow optimized CAS practices through consulting, practice development and training offerings. Prior to joining CPA.com, Kim spent more than 30 years in public accounting, which included leading the CAS practice for a Top 20 firm.