Difference Between Manual And Software Expense Management

2 3 minutes read

Successful businesses develop efficient models for themselves, their clients, and their employees. Finance is a major department of any organization, and efficiency in finance is not taken lightly, no matter the scale of the organization. Expense management is an important skill that helps companies streamline their finances.

Expense management used to be done manually for a long time. However, with upcoming expense management software, business owners are moving towards this cutting-edge technology for their finance management requirements. There are businesses that still continue with manual expense management. If you want to know how they both differ, read further to learn more.

Mode of working:

Manual expense management is done by people, usually employees in the finance department of the company who keep a track of all the company’s invoices, bills and payments.
An expense management software in an online tool which streamlines business spendings and employee expenses among others according to the rules and policies of the company.
When people are responsible for expense management, they, too, use different tools for the same. Excel sheets are commonly used by employees to track expenses.
Expense management software is an all-in-one online tool that integrates all the finances like employee spendings, reimbursements, corporate cards, etc., all in one place. There might be one manual operator required for this, but not a whole team.

Difference in speed:

When expense management is done manually, it can take time to process payments. Man is not fast as a computer and finances need to be dealt with care.
Expense management software on the other hand work on advanced computer and AI technology to give better efficiency and save time.
If a finance department is responsible for expense management, they need to employ people with a background in finance or accounting or something similar. After that, the companies’ policies and procedures for the same need to be taught, thereby taking a lot of time.
Expense management software can be operated by one person and usually has a user-friendly interface so that any business owner can easily use it for their company or hire an employee to take up that responsibility.

Scope for errors:

Making mistakes is a human trait, no matter how professional or careful one is. Manual management has more scope for errors, especially if traditional methods and tools are used.
Softwares on the other hand are known for their accuracy. Since finance deals with numbers, softwares can do the most complicated calculations within seconds.
However, human eye can also spot errors that robots can’t. If the software is not properly managed or been customized with filters and settings specific to the company, it can make errors which might be difficult to resolve on a large scale.

Approval period:

If expense management is done manually, it has to go through different stages of approvals, sometimes including a number of individuals.
This also includes producing invoices, bills and other documents which need to be signed and approved by the authorities, consuming a lot of time.
With software, approvals can be done quickly, and invoices and other important documents can be produced digitally.
If there is a designated manager who has to approve payments, the software can be customized accordingly.

Difference in efficiency:

Manual expense management can take a lot of time to approve, reimburse, and process payments.
Expense management done manually is also prone to errors, like calculation errors, lost receipts or gaps in transaction history.
Manual expense management also requires more people, paper, and other tools to get the work done.
Software is quick, comparatively more efficient, and not easily prone to errors if used correctly.
Softwares also help with quick approvals and seamless transaction of funds among other things which reduces the burden on the finance team.
They save paper and labour and can be operated with minimum effort due to their user-friendly interfaces.

When we compare the two, it is evident that expense management software is more efficient than manual expense management. They are faster, cost-friendly, and less likely to make errors. However, it should be noted that to operate software, you will need a device and an internet connection at all times to use it efficiently.

Now that you have learned how both the approaches work and what are their pros and cons, choose the one that suits your business needs and goals the most.

Also Read: Why Electricians Who Rely on Paper Are Losing Money