Accounting technology / Glossary / Expense management

What is expense management?

Definition

Expense management is the process, and the software, for handling employees' business spending: capturing receipts, checking each item against the expense policy, routing expense claims for approval, reimbursing staff who paid personally, reconciling company card transactions and posting the costs, with tax, to the ledger. It replaces spreadsheets and paper receipts with rules applied as spending happens.

Also calledexpense reportingT&E managementtravel and expense

Compare the softwareBest spend management software →All 9 spend and expense management vendors →

Covers: Employee cards and expense claims
Main controls: Policy rules and approvals
Part of: Spend management

How expense management works

Spending reaches the system two ways. Company card transactions arrive in real time and the employee adds the receipt, category and purpose, often prompted on their phone. Out-of-pocket costs are submitted by photographing the receipt, which the software reads to fill in merchant, date, amount and tax. Policy rules flag items over limits, missing receipts or banned categories; approvers see only exceptions or amounts above a threshold. Approved out-of-pocket items are repaid in the next reimbursement run, and every item posts to the ledger with its account, cost centre and reclaimable sales tax or VAT. Expense management is one part of spend management, which also covers supplier invoices, procurement and budgets. Expensify and Emburse focus on expenses; Pleo, Payhawk, Moss, Ramp and Brex combine them with company cards.

Common questions

What is the difference between expense management and spend management?+

Expense management handles employees' spending: card transactions and expense claims. Spend management adds supplier invoices, purchasing, subscriptions and budgets, so it covers all money leaving the business.

What is an expense report?+

A list of business costs an employee incurred over a period, with receipts, submitted for approval and reimbursement. Card-based tools turn it into a running list of transactions instead of a monthly report.

Can expense software recover VAT on receipts?+

Yes, where the receipt is a valid VAT invoice and the cost qualifies. Software reads the VAT amount from the receipt and posts it to the VAT account, and some tools also reclaim foreign VAT.