Why your Expense Management Solution needs Accounting Integrations?

Expenses are inevitable in every business, but the way they are managed can make all the difference.

In a digitally connected world, an efficient expense management product isn't an option—it's a necessity. As an expense management provider, it is imperative to provide the best-in-class solution to attract and retain business customers. In this blog, we’ll show you what you need to provide a winning expense management product. (Hint: It’s accounting integrations via RootFi’s Unified Accounting API)

Related: 5 Accounting Automation Solutions You Can Build Using RootFi’s Unified API

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What is an expense management solution?

Modern expense management involves streamlining tracking, approving, and processing employee expense claims via an intuitive and user-friendly application.

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Benefits of an Expense Management Solution

A spend management solution provides obvious benefits to employees and businesses, which we’ve quickly noted below.

Employee benefits from an Expense Management Solution:

• Reduced to no out-of-pocket expenses, manual work and data entry
• Easy receipt scanning, submission and tracking
• Reduced risk of human error or policy violations
• Increased employee satisfaction and improved productivity

Business benefits from an Expense Management Solution:

• Faster, simpler processes boost operational efficiency
• Reduced chances of errors, delays, and fraud
• Increased expense policy enforcement and compliance
• Improved productivity from time and resources saved from manual approvals
• Real-time visibility of cash flow and a better understanding of financial health.

Leveraging accounting integrations for reconciliation unlocks new benefits and amplifies existing efficiencies. By categorising expenses according to a business’s pre-established accounting practices, including recognising spend against the correct chart of accounts, you can save your business customers time and resources and improve the accuracy of their bookkeeping and their understanding of their finances.

Offering reconciliation using accounting integrations also helps you, the provider, attract and retain customers. Brex found that 83% of companies said that being able to close their books faster is equally if not more important than employee satisfaction. If you choose to use RootFi’s Unified API, you can integrate with us once to instantly access 16+ accounting integrations and expand your pool of potential business customers.

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What is the expense management workflow?

Let's understand the expense management workflow with an example. Assume a business uses an expense management solution to provide its employees corporate cards (which eliminates the need for out-of-pocket expenses and reimbursements) the expense management workflow follows these steps:

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1. Expense Logging
   An employee uses a corporate card to pay for an expense that is automatically logged in the expense management product.
   
   For example, an employee uses their corporate card to pay for Slack.
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2. Attaching Receipts
   The employee can then attach a bill/receipt to the associated expense.
   
   In our example, the employee attaches the digital receipt/PDF generated by Slack to the expense.
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3. Expense Approval
   The finance manager approves or rejects the expense.
   
   In our example, the finance manager approves the expense.
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4. Categorization
   Based on the established categorization processes of the business, the software automatically categorizes the expenses with the correct accounts from the business’s accounting platform of choice. The manager can approve or change these categorizations.
   
   In our example, the finance manager checks that the expense was categorized as a software expense.
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5. Reconciliation
   Once the expenses and categorizations are approved, the data is synced to the relevant accounts in the business’s accounting software based on the sync frequency established.
   
   In our example, the Slack expense, digital receipt/PDF is pushed to the relevant chart of accounts in the business’s accounting software.

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However, the last two (and often most cumbersome) steps of reconciliation are often not automated and finance teams are forced to manually categorize and reconcile expenses in their books. According to a PWC report, 30 percent of a finance team’s time may be spent on manual reconciliation. Accounting integrations connect your expense management product with your business customers’ accounting platforms, allowing for automated reconciliation of expenses. Without automated reconciliation, an expense management product remains an incomplete solution.

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Why accounting automation is needed for Expense Management solutions

Some challenges with manual expense management software are apparent. Manual expense management is often error-prone and leaves businesses vulnerable to fraud. Receipts get lost, expense approval processes are lengthy or lost in email threads, and policy compliance violations are more frequent. Manual processes also prevent businesses from complete oversight of their financial health as data remains outdated and inaccurate across systems.

However, expense management solutions remain incomplete without accounting automation. Manual reconciliation is a drain on time and resources, lowering both employee and business productivity. An automated expense management solution allows for the automatic reconciliation of expenses into a business’s chart of accounts. Brex found that 87% of finance heads said accounting integrations are the most crucial feature in an expense management solution.

As more and more businesses embrace digital transformation, the demand for an effective expense management solution only grows. The global expense management market was estimated to be $6 billion in 2021 and is estimated to reach $12 billion by 2029 (Source).

As the demand for effective expense management grows, the market is becoming increasingly competitive. Incumbent providers like SAP Concur, Expensify and Chrome River are being challenged by fast-growing entrants like Brex and Ramp. Many leading platforms have built accounting integrations in-house or used a Unified API provider like RootFi.

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The Role of Unified APIs in Accounting Automation and Modern Expense Management

Since integrations with accounting systems are a feature 87% of finance executives find crucial, your integration strategy becomes vital to your success (Brex). While you may consider using an embedded iPaaS solution or even building integrations in-house, using a Unified API becomes a clear solution when you consider the pros and cons of each approach.

In short, embedded iPaaS solutions are difficult to set up and maintain, since they require a thorough understanding of the API documentation for each accounting platform, and do not normalize data. Building and maintaining multiple one-to-one integrations will not only be cumbersome but has many drawbacks, especially when scaling.

While building in-house integrations to the exact accounting platforms you need may be tempting, as it offers complete control, building in-house has several drawbacks. Building multiple integrations in-house subjects you to extremely high build costs, a longer time to market, a shift of developer resources away from your core product, limits scalability and necessitates expertise in API integration maintenance.

The benefits of using Unified APIs like RootFi’s Unified Accounting API far outweigh any potential drawbacks and bypass all of the disadvantages other approaches pose. With a Unified API like RootFi, you can:

• Bypass the prohibitive costs of building in-house
• Reduce your Time-to-Market from quarters to weeks
• Offload maintenance including handling errors, API updates and rate limits
• Refocus developer resources on core product
• Effortlessly scale and add integrations

Related:

Compare the pros and cons of each integration strategy: embedded iPaaS, building in-house and using a Unified API provider like RootFi

Five Drawbacks with Unified APIs and How RootFi Solves Them

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How to Build an Expense Management Solution with RootFi’s Unified Accounting API:

Here’s how to build an expense management solution with accounting automation:

• Sign up for RootFi
• Test our platform by connecting up to five customer’s accounting platforms for free. We refer to one connected business as an ‘active connection.’
• Use our Docs to integrate your front-end user interface with RootFi’s API endpoints
• Onboard all your business customers via our Connect Link, a simple URL, or using SDK, to offer an embedded, white-labelled onboarding experience.

Leverage accounting integrations to automatically categorize and sync expenses to 16+ accounting platforms in real-time with RootFi’s Unified Accounting API.

By partnering with RootFi, some of the enhanced features of your expense management can offer include creating expenses, uploading documents, recording a credit card repayment, logging bank account withdrawals or top-ups (prepaid cards), managing employee reimbursement requests and payments and more. Our Expense Management Workflow Guide takes you walks you through setting up each of these actions in detail. Reach out to us if you’d like a copy.

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Key Features of an Outstanding Expense Management Product you can offer with RootFi

Regardless of the integration strategy you choose, some of the enhanced features of your expense management should offer include:

1. Connected, User-Friendly Interface with a Mobile Application
   Ensure an intuitive design and effortless user experience for web and/or desktop applications that allows managers to track and approve expenses. Offer a mobile application employees can use to log or view expenses. Use RootFi’s Unified API to build a User Interface connected to our API endpoints.
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2. Flexible Categorization
   Offer flexible categorization based on industry, size-specific, and business-specific requirements. Use RootFi’s Accounts data model to allow managers to create and categorize expenses.
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3. Multi-currency and Global Integration
   Ensure your solution can handle international expenses and taxes. Use RootFi’s Currencies and Tax Rates data models to serve businesses across the globe.
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4. Receipt Scanning and Processing
   Offer receipt scanning and processing powered by automation and AI-driven tools. RootFi’s Documents data model allows you to offer receipt uploads.
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5. Real-time Expense Reporting
   Offer easy-to-use dashboards and analytics for real-time insights. Use RootFi’s Webhooks to sync data in real time.
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6. Security and Data Protection
   Ensure essential security features to protect business, financial, and employee data. RootFi is ISO27001:2013 certified, SOC2 and GDPR compliant and encrypts data at rest and in transit. Data security is our top priority, so you can have peace of mind.
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7. Integration with Accounting Systems
   Build seamless bidirectional sync with every popular accounting platform. RootFi offers a Unified API, which lets you read and write data to 16+ accounting platforms.

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Leverage RootFi’s Unified Accounting API to build a best-in-class expense management product

Address your business customers’ pain points, including reconciliation with their accounting software, via accounting integrations and make them your competitive advantage. Ultimately, you’re not only providing accounting automation and helping businesses save time, money and resources but also ensuring company-wide financial data accuracy.

Partnering with a data integration like RootFi lets you serve a wide range of customers, as RootFi’s Unified Accounting API already supports 16+ accounting platforms. Your pool of potential customers grows with every accounting integration RootFi builds

If you’re interested in building a world-class expense management product, sign up to test our APIs for free, or speak to our team to learn how RootFi could be your accounting integration solution.

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