- Bills and expense management tools can automate a lot of the manual work in basic bookkeeping.
- Receipt Bank and Hubdoc are the leaders in the Australasian market for expense management tools.
- Some accountants are now offering expense management tools as a paid service to clients.
Why should accountants bother paying for a stand-alone expense management app when you can get one free with almost every cloud accounting app? Because it can standardise the account categorisation of transactions for all clients, effectively automating a lot of the manual work in basic bookkeeping.
Expense management software is primarily designed to capture all the little paper receipts employees collect in the course of performing their work.
A standard method used to gather this information is taking a photo with a mobile app or forwarding it to a unique email address. Most apps then use optical character recognition to read the data from the receipt and enter it as a spend money transaction or bill in your accounting software.
The software can also be used to collect other types of source documents such as paper and electronic invoices or bills, and statements. In addition, you could use it for contracts, warranties, or any terms of sale that would be convenient to associate with the transaction itself.
What bills and expense management apps are available?
Xero, QuickBooks and MYOB are all able to record receipts using an associated mobile app (Xero Expenses, QuickBooks Mobile App and MYOB Capture). However, there are also large libraries of independent apps that add more advanced features or cater to specific industries.
There are 44 apps listed in the bills and expenses category in Xero’s Australian marketplace and 38 for New Zealand. Most are variations on a theme, with slightly different methods of collection or greater levels of approval.
Receipt Bank was one of the first apps to join the Xero ecosystem. There are no public figures on market share but it is well known to have the highest subscriber count of any app in Xero’s 700-plus app ecosystem.
Although Hubdoc came much later to Australia, it had a unique “fetching” feature that collected statements from supplier websites for you, and then filed those documents automatically on your document management system in alphabetical and serial order.
A firm could set up Hubdoc to fetch bank statements from all its clients and have them all neatly lined up by customer name, bank name, bank account number and month. (Receipt Bank has since added this feature.)
Other global brands among expense management software include AutoEntry, Expensify and Datamolino. Squirrel Street, a localised version of the US app Shoeboxed, gives you an “indestructible” blue envelope that you can stuff with receipts and send to its processing centre for scanning on the cheap.
Lightyear is another worth mentioning. It specialises in scanning high volumes of bills, primarily for hospitality but now for other industries, and allows managers to approve bills for payment that have been processed by a bookkeeper.
How to decide what solution is best for your practice
When deciding which bills and expense management solution is best for your practice, ask yourself:
- How easy is the interface to use?
- How does the app integrate with my expense processing workflow?
- Can I use it to improve my own workflow?
- What training materials does it have for helping me improve my workflow?
- How well does the fetching work with my clients’ most common suppliers?
- What is the accuracy for reading data on documents?
- How many levels of approval does it have?
- How does the price change according to the number of clients?
Once you have chosen a bills and expense management solution for your practice and it comes time to implement it, remember these tips.
- Check the syncing regularly.
If you’re pushing data through and it’s not syncing correctly, you’ll end up with a lot of unreconciled transactions in your accounting file.
- Check your clients are using it properly.
A classic user error is turning receipts into bills in your accounting software. The owner may end up paying for them twice – and not every supplier will realise or admit it.
- Teach the process.
Most small businesses don’t have an approvals process and it is important to explain who is doing what, and documenting it, so staff can do it themselves.
Offering expense management as a service
“We have integrated Receipt Bank and Hubdoc into a solution for medical practices’ overall financial processes,” says Kelly Chard CA, founder of GrowthMD, a Brisbane-based accounting firm that focuses on clients in healthcare.
Chard gives clients the option of joining her Receipt Bank practice plan as the default. Receipt Bank is the first screen in her team’s workflow. It suggests matches for incoming expense documents with transactions in Xero and has an intuitive interface, says Chard.
For clients that scan documents regularly, she says, Receipt Bank automates up to 75% of the work in classifying expenses, attaching source documents, entering amounts, GST, due dates and so on into Xero.
“From the accounting side, it’s definitely less stress for my team because we have all the source documents readily accessible,” Chard says. “And clients are over the moon when they find out these tools are available.”
“From the accounting side, it’s definitely less stress for my team because we have all the source documents readily accessible.”
Chard has used expense management tools not only to automate transaction processing, but as a service she can sell to clients.
“Most of our clients don’t have an accounts payable or expense approval process. We can go in and advise on that as a service and introduce them to Receipt Bank,” she says.
Farewell filing cabinets and archive boxes
One advantage of using an expense management app is you can dramatically reduce the amount of paper that clients send you at the end of the financial year. Margaret Holmes CA, of Engine Room Chartered Accountants, was moving to a paperless office well before she started using Receipt Bank five years ago.
The digitisation of source documents eliminates the need for filing cabinets, archive boxes and storerooms – and it makes it much faster to locate a document when you need it.
Holmes’ practice usually serves clients around Tauranga and Pukekohe on the North Island, but recently when a client in the US had to file historic tax returns, Holmes could pull up all the required information online going back to 2011.
“That’s a huge difference to keeping seven years of paper in a shed,” Holmes points out. “[Now] we only empty our confidential recycling bin a couple of times a year and not once a month. My eco-warrior daughter is impressed.”
Holmes has recently thought about switching from Receipt Bank to the cheaper Hubdoc service, because she wasn’t recovering enough from clients to warrant the flat fee for her practice subscription.
She adds that the fetching technology in Hubdoc is superior to Receipt Bank’s and is a major attraction. “If we can get the customer to fetch the information – whether it’s bank statements or rates bills – that’s a big starting point in terms of getting what we need,” Holmes says.
An incentive to offer new clients
Other accounting firms such as Propeller Advisory in Melbourne use expense management software as a free incentive to pick up new clients.
“It’s a really good selling point to get clients into the firm. If I drop Receipt Bank into the first meeting they love it. They ask, ‘Why hasn’t my accountant told me about that?’” says Katie Bryan CA, Propeller Advisory’s founder and CEO.
Bryan has tested the most popular apps in expense management and says they all have their pros and cons. She mostly uses Receipt Bank.
“I love that you can automate the export of data [in Receipt Bank] straight into Xero, and that multiple users can upload photos of invoices. The set-up process is really quick – it takes less than 30 seconds. You give clients an email and password during a meeting without interrupting it.”
But, she adds, Receipt Bank’s drawbacks include an unclear pricing structure and accuracy that’s not 100%.
“There can be errors in picking up tax and suppliers. You need to be careful with aged accounts payable and make sure that duplicates don’t go through, otherwise you can have double payments of invoices to suppliers,” she explains.
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