Expense management is often a pain point for businesses and employees, and often at the heart of this pain is the time between when an employee makes a purchase, when that purchase is recorded and when reimbursements are paid out.
New features being rolled out from expense management firm Abacus aim to provide businesses with greater clarity into employee spend, regardless of when some of these milestones in the expense reporting process are reached.
Abacus announced Monday (Feb. 8) that it now offers an automatic accrual accounting feature that automates employee expense recording, regardless of when those expenses are actually filed. According to the company, the features allow employers to gain insight into employee spend in the month purchases are actually made, rather than weeks later when an expense report is filed.
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While accrual accounting is standard practice in corporate finance, Abacus said, many expense management solutions cannot support this tactic, instead depending on the traditional expense report to capture employee spend at incremental moments in time.
This process can lead to hangups in the corporate finance department.
“Due to the lag time and format, important expense data gets trapped inside arbitrary silos and restricts finance teams to only syncing expense data into their accounting software on a cash basis, sometimes spanning many months, rather than when the expense is incurred,” the company said in its announcement. “Companies that want to ensure expenses are accounted for under the accrual method must do so manually, requiring hours of time spent on data entry.”
But an automated accrual solution means expenses get recorded right when they are made, even if an employee does not file an expense report until later on.
In a statement, Abacus Cofounder Omar Qari said the new solution takes off the “blindfolds” for corporations, giving them greater visibility into employee spend and allowing them to make more informed decisions about future spend.
“Accrual accounting capabilities eliminate that challenge and put finance teams in a far better position to both understand their profitability and make more informed future spending decisions by knowing what levers to pull,” Qari said.