If you don’t proactively manage expenses, there’s a good chance your company is losing money.
We don't mean to be dramatic, but how else can you tell if employee purchases are really necessary? For that, you need an expense management system. By getting on top of purchases, you can learn how employees use company money, find opportunities to cut costs, and take control of company finances.
In this article, we explain the fundamentals of expense management, why you need it, and how to implement expense management processes according to experts.
But first, an expense management definition.
Expense management is a range of processes that includes planning, tracking, reporting, and reimbursing business expenses by your team. From utility bills and office supplies to client dinners and SaaS solutions, expense management makes sure every cent your employees spend is accounted for.
If that sounds like a meticulous process, that’s because it is—and with good reason.
Managing expenses helps your company control and optimize every level of company spend. By implementing expense management policies, you can gain visibility on finances, spot ways to reduce costs, and squash unnecessary spending.
Here’s why it matters:
The expense management process gives you complete control over purchases that require company funds. Here’s how it looks in action:
Expense management only works if you establish an efficient system that gives you full visibility while encouraging employees to follow the rules. To ensure your expense management system is successful, here are three expert-led best practices.
Every company reviews expenses differently. However, waiting too long results in purchases piling on. By the time you check, you’re already paying for services and products that aren’t needed. Instead, host regular spending audits to review transactions, overspending, and inefficiencies.
Alex Osmichenko, CEO of IT Monks, states:
Early on, we’d review expenses at the end of the month and be shocked by the random costs that piled up—subscriptions we barely used, tools we thought were necessary but weren’t, and minor inefficiencies that added up fast.
The moment we put a structured system in place, those surprises disappeared. We started running weekly (not monthly) reviews. That way, there’s no ‘How did this happen?’ moment at the end of the quarter.
Expense management takes time and effort. From referencing complex policies to lengthy reimbursement processes, it’s a workflow that requires work to establish and time to see through. Plus, processing claims comes with the risk of error.
To make expense management as efficient as possible, consider using a platform that automates the process. For example, Cledara Spend lets you issue and manage corporate cards and track spending in real-time while integrating with your accounting software.
Ayush Trivedi, CEO of CyberChief, shares how automation has supported the business’ expense management process:
We focus on automating as much as possible. Tools that integrate seamlessly with accounting software, offer real-time tracking, and provide detailed analytics are non-negotiable. Automation isn’t just a convenience—it’s a necessity for scaling without chaos. For example, using AI-driven tools to categorize expenses and flag policy violations has saved us countless hours while improving accuracy.
A clear expense management policy holds your team accountable and helps them understand their spending limits. At the same time, the approval process shouldn’t be so complicated as to deter them from making smart purchases. Instead, encourage employees to take ownership of their spending and empower them to make decisions that fall within your guidelines.
Nathan Barz, Founder and CEO at DocVA, explains:
You need to train employees to use expense management systems effectively to keep the process straightforward. Simplified dashboards and mobile access make it easier for employees to comply with policies without too much hassle.
At the same time, automated fraud detection and audit trails ensure financial integrity without complicating the process. Striking this balance helps you make sure that expense management is both efficient and secure.
Beneficial? Yes. Complicated? Just as much. There are common pitfalls that many business owners encounter when implementing expense management. Here are the most common challenges and how to avoid them, according to experts.
Expense management will likely take the effort of multiple teams. As such, employees from different departments will create their own documents and approval chains. This gets chaotic fast. As scattered information builds up, data silos become larger. The lack of organization leads to errors, delayed reimbursement, and difficult spending.
Ayush from CyberChief shares his experience:
“It’s easy for receipts and expense reports to get lost across different platforms or departments. To tackle this, we consolidated everything into a single dashboard where employees can upload receipts via mobile apps, and finance teams can access real-time updates. This approach has drastically reduced errors and streamlined approvals.”
So, the solution is to centralize all information through a single source of truth. If you’re managing expenses manually, create a master document that outlines policies, the approval chain, and spreadsheets for tracking. An expense management tool makes the process even easier by consolidating expenses, receipts, and approvals in one place.
Company expenses come in different forms. Managing them isn’t about reimbursing the occasional business trip or new office supplies. It also includes tracking recurring expenses for day-to-day operations.
Take your tech stack, for example. How many of your monthly subscriptions is your team actually using? If you’re not regularly managing your SaaS tools, chances are you'll find overlapping features, redundant solutions, and even duplicates. Consider which tools are helping you achieve business objectives and which need to be cut.
As Alex from IT Monks explains:
“One of the biggest pitfalls I’ve seen (and dealt with firsthand) is underestimating the impact of small, recurring expenses. A $30 tool here, a $50 subscription there, and suddenly, you’re leaking thousands a year. We got strict on trial periods: if a tool wasn’t actively making our work easier after 30 days, it got cut.”
Just because you have an expense management policy in place, doesn’t mean employees will follow it. If your new policy is unclear, inaccessible, and confusing, there’s a good chance that many will be slow to adopt it. This leads to delayed reimbursements, unauthorized spending, and compliance risks.
The best way to counteract this effect? Adhering to company policies should be as simple as possible. By reducing friction, you lower the barrier to compliance.
Kevin Shahnazari, CEO and Founder at FinlyWealth, shares how his team combatted non-compliance:
“To improve policy compliance, we introduced a simple traffic light system: green for pre-approved expenses, yellow for manager review, and red for finance team approval. This visual approach improved policy compliance by 85%.”
To improve policy compliance, we introduced a simple traffic light system: green for pre-approved expenses, yellow for manager review, and red for finance team approval. This visual approach improved policy compliance by 85%.
If there’s one big takeaway from expense management best practices and challenges, it’s that a tool makes the process easier by centralizing and automating your workflow.
Here are the three best platforms for the job.
Xero is a famous, cloud-based accounting software that you can use to manage expenses. While it may not be the best all-in-one tool, it does offer receipt scanning, real-time financial reporting, a dashboard, and automated categorization of expenses. This makes it easier to organize and process your reimbursement claims once approved. Plus, Xero integrates with Cledara to cut down on admin and streamline expense management for software.
Expensify is a software designed to streamline expense management for different purchase types. With features like receipt capture for automatic data retrieval, one-click expense approval, and automated audits, it makes approving and processing expenses simpler for time-stretched accounting teams.
Cledara originally focused on software spend management, helping companies track and optimize SaaS subscriptions. With Cledara Spend, the platform has expanded to cover business travel and general company expenses through virtual and physical company cards.
Cledara Spend is a good option for companies that already rely on SaaS subscriptions and need a simple way to manage both software and business spend. It stands out from other options, which focus more on credit-based corporate cards rather than prepaid solutions.
Unlike traditional expense management tools, which often rely on manual tracking and reimbursements, Cledara Spend provides prepaid company cards that integrate directly with expense tracking and approval workflows. This approach eliminates reimbursement delays, reduces administrative work, and gives finance teams real-time visibility into company spending.
Cledara Spend combines corporate card management with automation to streamline business expenses. Here’s what it offers:
*Virtual cards are currently only available in select countries.
Stephen is Cledara’s in-house Finance Manager who thrives in businesses with fast-paced growth. Stephen’s role is to provide insights to the wider business, he has been heavily involved in cross-functional projects stretching across the introduction of global benefits, financial modelling and KPI reporting procedures. Outside of work, football and American football are his favourite pastimes.
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