B2B Payments

Cutting The Expense Out Of Expense Management

Of all the industries negatively impacted by the global pandemic, the airline and travel sector has been among the hardest hit.

That's not only linked to lockdowns and plummeting tourism, either; with corporates implementing work-from-home policies, the business trip has all but vanished — and some analysts predict volumes may never recover.

So it's a bit of a conundrum that in the midst of this troubling trend, corporate expense management FinTech innovation seems to have accelerated dramatically, with companies like Center and Paystand recently expanding their expense management solutions with the addition of integrated card payment offerings.

Ramp is yet another B2B FinTech in the business expense management arena. Unlike some other players in the sector, however, the company first entered the market with its corporate card solution, later adding its connected expense management tool (announced earlier this month). The firm's co-founder and CEO, Eric Glyman, spoke with PYMNTS about the motivation behind that strategy, and why the expense management landscape has found momentum even as businesses' budgets tighten.

Adding Value With Cards

Corporate expense management has become one of the biggest drivers of commercial card adoption in recent years thanks to the ability of cards to automatically generate transaction data for reconciliation and reporting purposes.

According to Glyman, the decision for Ramp to begin with a corporate card solution and add an integrated expense management solution later — as opposed to the other way around — was a deliberate one guided by feedback from finance professionals.

"We found that they were spending about a week each month ... manually re-entering and auditing expense data of information that was readily available through the card transaction data itself," he said, adding that focusing on the card experience first allowed corporates to automatically connect their spend policies and restrictions to a card product, as well as automatically capture spend data from the card to integrate with expense reports.

In addition to their data-generating capabilities, cards are also a valuable component of expense management thanks to their flexibility in facilitating distributed spend — that is, spend of small-, medium- and high-value transactions, said Glyman, adding that ACH and wire may be useful for larger-value spend but lack the ability to automatically enforce corporate spend policy or integrate request and approval processes.

Reducing The Expense Of Expense Management

Enforcing spend controls is vital in today's business climate as businesses pinch pennies to remain viable. Indeed, while some businesses may actually be reducing spend — especially on business trips — the need to cut costs is exactly why the expense management industry is in the midst of an innovation boom.

"It comes down to cutting costs and designing a process that works remotely," said Glyman. "Whether you have expense report software or not, dealing with expense reimbursements are expensive."

Beyond enforcing spend controls, nixing the expense report from workflows can also save money (and time) as organizations do not have to retroactively monitor employee spend after payments are already made. Automation is another cost-saver, while transaction data and analytics technologies also offer the value-added opportunity to understand spending trends and additional areas to potentially cut costs.

As businesses enter a recovery phase, some analysts expect business travel to indeed recover. A report from researchers at Harvard University's Growth Lab found business travel is directly linked to a country's economic growth, pointing to the travel of "knowhow" — that is, the business expertise and knowledge of traveling professionals — supporting the expansion and sharing of that information across borders.

Whether business travel volumes recover or not, organizations are likely to pick up some long-lasting effects from the current pandemic, including prioritizing cost savings through expense management technologies. Glyman emphasized that this was a key focus for the development of Ramp, which, he said, helps businesses spend less even if it means Ramp makes less money as a result.

"In a world where companies are trying to make every dollar go further," he said, "improving expense management is a high ROI activity."



Banks, corporates and even regulators now recognize the imperative to modernize — not just digitize —the infrastructures and workflows that move money and data between businesses domestically and cross-border.

Together with Visa, PYMNTS invites you to a month-long series of livestreamed programs on these issues as they reshape B2B payments. Masters of modernization share insights and answer questions during a mix of intimate fireside chats and vibrant virtual roundtables.