FORTUNE Small Business

A speedier way to file expense accounts

Web firms ease the pain for as little as $200 a user per year

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By Janet Stites, FSB contributor

(FSB Magazine) -- Track increasing sales? What a kick! Track rising expenses? That's usually a thankless, frustrating job for an entrepreneur - and expensive for your company to boot. But help is just a click away, thanks to a flock of companies now offering T&E tracking services to the small-business market. The great innovation of recent years is the on-demand availability of the products, allowing employees to file expense reports and submit receipts via the Internet. Implementation is quick, from several days to three weeks, depending on the needs of the client, and the service is hosted on the servers of the provider, not the customer. Data from the system can easily be integrated into a company's accounting software.

Less than a decade ago such a service required a company to install a software system costing several hundred thousand dollars from a big provider, such as Oracle, PeopleSoft, or SAP, and maintain an IT staff. Today's on-demand model allows a software provider to create one platform for all its users. The annual cost can be as low as $200 a user.

Hosted expense management isn't for everyone. Not all businesses are comfortable outsourcing control of confidential financial data. And in the Sarbanes-Oxley era, most large corporations and all public ones need heavy-duty, customized expense software that can handle today's complicated regulatory-compliance burden. That's also a concern for any small company that might be contemplating a future IPO.

But hosted expense management is an increasingly popular option for small private firms. Take Baker Communications (bakercommunications.com). The Houston-based sales-training company has 40 employees on the road; they run 150 classes a month in 14 locations. Rarely in the home office, the trainers are constantly incurring expenses airline tickets, rental cars, meals, and entertainment. For years they had to mail or hand in expense reports to the accounting department, with the proper paperwork and receipts. The accountants would then painstakingly reconcile the figures while checking for overspending or fraud. Once through the process, the trainer was reimbursed and the client billed.

Systems and finance director Christie Bissias looked at three competing expense-tracking applications: ExpenseWatch.com (based in Conshohocken, Pa.), Expensable.com (based in Irvine, Calif.), and Concur Technologies (concur.com) of Redmond, Wash. Bissias found Expensable too limited: She wanted expense-management software that could track functions such as purchasing and invoicing as well as employee spending. Concur and ExpenseWatch both fit the bill, but ExpenseWatch got the nod because it cost just $4,000 a year for about 20 users, about 50% cheaper than Concur's service.

The investment is paying off handsomely. Baker chief executive Walter Rogers estimates that ExpenseWatch has saved his company $20,000 a year in salary that he would otherwise pay a bookkeeper to process expenses manually. But the biggest boon has been in cash flow. Says the satisfied CEO: "ExpenseWatch has accelerated our client billing cycle from two weeks to two days."

Expense controls improve as well. In 2005 medical device manufacturer Cardiva Medical was expanding its sales team and needed to put expense controls in place. Comptroller Rose Ang had used Gelco, a product of Gelco Information Network (gelco.com) in Eden Prairie, Minn., at two previous jobs, so she implemented the on-demand service at Cardiva. For Ang, Gelco's approval-tracking process was a major selling point. Cardiva, based in Mountain View, Calif., had been using Excel spreadsheets to track budgets and expenses. Managers would be asked to approve expenses via e-mail, but there was no way to track which approval or rejection went with which expense.

Most vendors offer real-time budget approval, systematic workflow routing, and integration with sales-management software such as Salesforce.com. Another common feature is that users' credit cards are linked to the system. If a salesperson logs on from his hotel room after a client dinner, he will often find the expense already booked to his report. If his company requires him to file a paper receipt, he can scan it and send it by e-mail or fax it in from the hotel's business center. As soon as he posts his report, it's available for management review.

Some expense-tracking providers charge monthly or annual subscription fees with no additional costs for setup or support. Others charge $5 to $15 a transaction. Most charge less per user as the number of users rises. The discounts can be as much as 40%, especially for longer contracts.

The services continue to evolve. Troy Thibodeau, director of marketing for Gelco, looks forward to the day his company will offer touchless expense reporting. "Because the credit cards are linked to the system and people are using less and less cash, eventually when an employee logs on, his expense report will be in place, with each expense categorized," he says. "All he'll have to do is review and approve it. The only out-of-pocket cash he might have to report will be for tipping a bellboy."

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.