How to choose the right expense management system
Expense management affects almost everyone in an organization, yet it's often handled using systems that no one is truly happy with. The system may be too rigid to adapt to the way your organization actually works, its tax handling may fall short in the countries where you operate, or there may simply be too much manual work left despite your investment in a digital solution.
Software has fundamentally changed
Most organizations evaluating an expense management system ask roughly the same questions today as they did in 2022: “Does it support our countries?” (and settle for a simple “yes” or “no”), “Can we configure approval workflows according to X and Y?”, and “Can the system extract information from receipt images?” While many of these questions are still relevant, it’s time to start asking new ones that help solve the real challenges.
Traditionally, expense management systems have been built around predefined workflows and configuration options. Vendors anticipated what customers might need and built their products accordingly. As a result, organizations have had to adapt to the system rather than having the system adapt to them. Flexibility has largely been measured by the number of configuration options available, favoring vendors that have been around long enough to continuously expand their products. At the same time, AI, more specifically OCR combined with machine learning models, has become commonplace for extracting information from receipts. Vendors with the largest volumes of receipt data have generally offered the most accurate extraction, or at least they should have, given the amount of data available to train their models.
Today’s AI, powered by large language models, has fundamentally changed the landscape. Systems can now receive instructions in plain language and generate the required logic automatically. This means that, with the right expense management system, you can shape it around your own processes, policies, and exceptions instead of being constrained by rigid system settings. And for the first time, systems can take over tasks that previously required human judgment. It’s no longer just about extracting a few fields from a receipt, but about understanding what was actually purchased, identifying complex policy deviations, and introducing a new level of continuous learning.
All of this changes the questions you should be asking when selecting an expense management system.
Questions to bring into your next procurement process
How is the system configured?
Do you have to configure everything manually through a user interface, or can rules be described in plain language and generated automatically? The answer determines how flexible the system really is and whether it will still meet your needs three years after go-live.
What does the system actually understand about a receipt?
Extracting the date and amount is standard. But can the system distinguish between a receipt and an order confirmation? Does it understand what was actually purchased? A deeper level of understanding is the foundation for meaningful automation.
How does the approval workflow respond to the content of an expense report?
A modern system should be able to route expenses to the right approver based on the content, project type, or who attended the business entertainment, rather than relying solely on fixed reporting hierarchies.
How do you test the system’s tax handling?
Don’t just ask whether the system supports a particular country. Instead, choose a specific and slightly unusual scenario and ask the vendor to demonstrate exactly how it is handled. The answer will tell you far more than most product demos. A truly flexible system offers robust tax support without requiring workarounds.
