Getting More out of EMA

Aberdeen: Receipt collection, payment functionality add value to expense management automation

Tempe, AZ  March 8, 2002  Companies considering an expense management automation (EMA) implementation should include receipt collection and flexible payment functionality in their planning, according to a report from technology consultancy Aberdeen Group.

In a "Finding of the Week," Aberdeen analyst Christa Degnan asserts that while companies most often look to EMA to streamline expense entry activities and to enforce corporate rules and contracts, automating expense management can bring additional value if the right functionality is included in the EMA system.

"Aberdeen research indicates that the time and cost savings of these systems can be extended to the areas of receipt processing and payment as well," Degnan writes.

EMA systems promise to move the expense management process online, but at the same time they have not eliminated the need for receipts to back up expenses for tax purposes. As such, forcing a company to collect and manage paper receipts could negate much of the efficiency to be gained from expense automation. "Facilitating the process of getting receipt content into digital format is the lynchpin in the entire process," Degnan writes.

The analyst suggests that EMA systems should make provisions for digitizing receipts through fax or scanning, and for collecting receipts on computer disk or CD-ROM. The systems should also allow the receipts to be stored and searched online.

The payment process, too, can be a "bottleneck" that prevents a company from realizing the full potential value of an EMA system, in the same way that offline payments tripped up online e-procurement systems. "To gain the full benefits of the automation process, companies want to free up the accounts payable people and keep transactions flowing smoothly," according to Degnan.

EMA systems should support direct deposit and corporate card payment, and should also allow for multiple payment methods, the Aberdeen researcher says. Most EMA systems currently allow employees to chose how they want to be reimbursed, an important feature when the employees are covering company costs out of their own pocket. As Degnan notes, "Travel and entertainment (T&E) is a sticky corporate process that involves employees' personal time and money, so it is important for organizations to keep a high level of response and respect."

"User organizations that include receipt processing and payment as part of their EMA implementations are likely to experience a higher return on investment (ROI) than those who do not," Aberdeen concludes, adding that companies should include the appropriate functionality in their plans from the start of an EMA initiative.

For more insights into expense management automation, see The Net Best Thing column, "Expense Reports Made Inexpensive," in the December 2001 issue of iSource Business ().