The Road to a Modern Finance Organization


The benefits of modern financial organizations are well-documented. Efficiency. Flexibility. The ability to track activity in real-time and instantly provide snapshots for stakeholders, managers, and auditors. However, making sudden, wholesale changes in processes and technology can backfire. 

Modernization is a journey. It starts with a single step. And if you follow this roadmap, you’ll have fewer bumps and obstacles along the way.

Take our 2-minute quiz to see where your team is on the road to a modern expense management process. Then, after reading about your level, learn what steps you can take to uplevel your game.

Level 1

For the most part, Level 1s are paper-ists: using petty cash to pay for both small and large expenses and keeping paper receipts for every transaction. In fact, they may have a designated “receipt box” in the office. Organization at this level is challenging, but Level 1s try to make the best of what they have.

Because they use liquid capital, $10 and $20 bills are stowed in a desk drawer to pay for office supplies, mailings, or pizza for the crew. At the end of the year, someone sifts through a pile of receipts—and possibly even pay stubs for contract workers—and hopes everything is accounted for. 

Level 1s are concerned about capturing and deducting every expense, and rightfully so. But this process eats up time that could be spent analyzing spending. Level 1s are left wondering just how much money is going to office expenses, how much those staff lunches are adding up to, and whether they are missing any potential areas for tax deductions.   

If you’re a Level 1, gradually shifting into more digital methods for expense tracking can help free up time and make for more accurate spending logs at the end of the year. Your move from paper to digital can help reduce mistakes, potentially lower tax liability, provide insightful metrics, and free up time all through the year—time that can be used to be more productive, grow, and spend more wisely.  

Here are two tips to help you get started:

1. Moderately modernize

Start off easy with some light modernization tools that can keep track of expenses. If Quickbooks feels like it’s too much, Excel is a good place to start tracking your expenses. When receipts come in, get into the habit of documenting them in Excel and snapping a photo with your phone. Keep pictures of receipts in their own album either on your phone or your computer so you have access to them at all times.

At the end of the year, you’ll be able to scroll through one spreadsheet rather than sift through a pile of receipts to calculate and categorize yearly expenses. Once you get comfortable with Excel, you can go one step further and look into accounting software to do even more of the heavy lifting for you.

2. Get a handle on your expenses

Modern tracking makes it easier and faster to review activity at the end of each month. And rather than a year-end (often unpleasant) surprise of what’s been happening over the last 12 months, now you have the capability each month to sort data by person, department, or any other field in your system—and gain some insight into where your money is going.

Right out of the box, PEX prepaid and corporate cards give you the ability to capture receipts with a photo and sort spending according to your business needs. Schedule a demo

Level 2

Level 2s excel at Excel, relying on spreadsheets as the foundation for expense tracking. If you’ve mastered the dance known as the Excel Two-Step. First, the check is recorded in the checkbook, then on the spreadsheet. That said, even with great rhythm, the paper build-up can be hard to maintain. 

With Excel, there’s no mechanism for matching paper receipts with entries. If thousands of dollars worth of petty cash and expenses are going out of the organization, this can become difficult to keep track of without a firm up-to-the-minute grasp on where it’s all going. 

Level 2s often find themselves wasting valuable time matching, recording, and duplicating effort. They need a more efficient way to pay for and keep track of expenses—one that makes payments seamless, provides insightful metrics without having to do numerous data sorts on spreadsheets, and doesn’t chew up time. 

Here are two steps Level 2s can take to improve the accounting systems they already have in place and make expense tracking easier.

1. Let’s get digital

Ditch the cash and go digital. There are several online payment software options on the market for making and tracking payments, including Quickbooks Online. There’s a reason that 7 million businesses use this secure, cloud-based software, and with several plans to choose from, you can determine which one is the right fit for your organization. 

2. Increase your card count 

Assign company cards to those who do the most buying, and you get two advantages. First, it’s safer than having your executives loan out their credit cards (whether it’s their personal or corporate card)—even if it is to the most trustworthy employees. And two, when employees use their personal cards to pay for business expenses, reimbursements become an added burden. Using company cards makes reporting and reconciliation significantly easier; you eliminate having to do reimbursements and reduce the number of payment methods. 

PEX lets you issue cards to staff without lengthy approvals. This frees finance departments from time-consuming reimbursement processes and simplifies reporting and reconciliation. Schedule a demo

Level 3

Level 3 is where modernization starts to take hold and going fully paperless becomes a major priority. At this level, an organization’s finance department is using more sophisticated tools to keep track of expenses such as:

  • QuickBooks Online or other online accounting software

  • Payroll reimbursements for staff who use personal cards to pay for expenses, or to cover the several “house” cards used around the organization

So while the good news is that there’s some automation and digitization, for the most part, Level 3s are still contending with a sea of different systems—petty cash, payroll reimbursements, personal employee cards, company credit or debit cards loaned out when needed.

The few modern systems help maintain major financial functions, but that’s only part of the story. The other part is that these systems lack integration—it’s cumbersome to maintain so many systems. Plus, too often, Level 3s are still hanging onto some paper methods.

If your organization is a Level 3, using digital tools across the board will help you organize the chaos. Here are a few tips on what you can do:

1. Implement corporate cards with set limits 

Reduce your workload and fees by using one uniform expense platform. While you’re on the path to becoming paperless, you’re still not quite there. Therefore, it’s time to say goodbye to payment by cash or personal check, or using your (personal or corporate) credit card as the go-to-card—it’s both inefficient and a security risk. Instead, give company cards to those with spending privileges—anyone from the Director of Procurement to the intern who does the twice daily Starbucks run—and install specific limits based on each person’s spending needs. 

2. Increase integration

Integration among the systems currently in place will also push you a step further in the journey to becoming paperless. Your organization would greatly benefit from utilizing Receipt Capture. Adding this tool to cards with pre-approved budgets and spending categories gives cardholders the ability to photograph receipts at point-of-sale, automatically feeding all information into QuickBooks. Without having to manually sort through scanned receipts, your process is faster and your reporting more accurate.

3. Access real-time data

With one form of payment and an online AP system, you’ve got just one place to look for all of your organization’s real-time spending data. That means having greater accuracy and a better handle on expenses. When spending information is in one place and up-to-the-minute, it’s significantly easier for you to manage your general ledger, spot expense issues, and forecast.

The PEX mobile app lets users report spending in real-time using your accounting codes. Accounting software integration streamlines back-office processes. Schedule a demo

Level 4

Level 4s are highly modernized, relying heavily on digital systems and almost entirely paperless. By using tech-based processes to automate expense tracking and digital tools like Receipt Capture, the paper trail has been broken. 

The reporting and reconciliation benefits of Receipt Capture are evident to Level 4s, yet they haven’t made the full crossover to optimizing. Organizations that are Level 4 juggle a diverse number of systems and accounts across multiple field offices and divisions, requiring a massive effort to maintain order. 

One of the biggest factors hindering advancement into complete efficiency and management is a lack of spending and budget controls. One size no longer fits all at these active organizations. But caution: control doesn’t mean inflexibility. In fact, as you’ll see below, controls give your organization more flexibility.

Here are three important steps that you can take as a Level 4 to get more value from your expense reporting technology.

1. Install parameters and take control 

As your organization expands, it’s critical to have the capability to set parameters at any level, at any time, from any place. These are just a few of the parameters you should be able to control:

  • Types of purchase: What can specifically be purchased with the card, e.g., office supplies, educational supplies, meals, gas, client entertainment, equipment rentals, event tickets, construction materials, nonprofit relief efforts, etc.

  • Dates for activity: When the purchase can be made, whether that’s for a few hours, days or months. It may mean no weekend spending, or spending only during the hours 9-5, or just on February 14 from 12-2pm. 

  • Merchant Category Code: MCCs indicate the type of good or service purchased and categorizes it into a subsection, such as transportation or food. Not only do you want to know this level of detail, it comes in extremely handy in preparing tax documents. For example, when it comes to transportation, you can limit some cards to 4121 for taxis and 4784 for airline tickets, so that no one decides to use it for 4457 boat rental or 4411 cruise lines.

2. Managing scale

Managing scale means managing expenses and employee spending, often across multiple accounts.

Increasing the number of employee cards you have in use will ensure that expenses can be taken care of quickly and from anywhere. With multiple systems and accounts, it’s important to manage purchasing and reporting in real-time. 

Integrating your accounting software for end-to-end reconciliation allows you to keep purchase information in one location. This makes it easier for you to look at your expenses, adjust your spending as needed, and calculate expense spending at the end of each month.

3. Prioritize real-time reporting 

As your company grows, and there’s more spending from more people, real-time reporting grows in importance. Huge sums can be transacted in just a few hours. You want to be able to see granular activity as it happens, but staring at columns of numbers on spreadsheets just doesn’t cut it. Savvy organizations recognize the value-add of dashboard metrics. With one quick look, you can see the KPIs most important to spending—what’s within budget, where there are outliers, and what’s trending up or down.

PEX gives you granular control over when and how each card can be used. Set spending limits by amounts, merchant categories, times of day—a wide range of business needs. Schedule a demo

Level 5

What keeps Level 5s at the top of their game? Utilization of real-time data flow and automated integration. Level 5s have up-to-the-minute knowledge of what’s happening with the expense cards used throughout their organization—either through real-time settlements, real-time reporting, or an API.

Integrated software is doing it all for Level 5s:

  • Managing multiple accounts for different businesses or units becomes easier at this level thanks to integrated digital systems and real-time reporting. You can see where your money is going at any time and from any place.
  • Each employee expense card has a predefined spending limit that can be updated on your terms as roles evolve, responsibilities change, and your organization grows.
  • Employees include notes and billing codes with every transaction—and track receipts using Receipt Capture.
  • Expense reporting and reconciliation are automatic and error-free.
  • Every transaction is simultaneously recorded into an accounting system. Tie-outs are clean; tax liabilities are properly accounted for; and though you’re managing more activity than ever before, your workflows hum without having to add more people.

Decision controls allow for even more flexibility: 

  • Tight integration with proprietary systems allows you to apply your own decisioning technology for authorizing spending. Decision Control features, like those found in PEX, enable you to approve or deny a purchase request in real-time. 

  • Decision Control ties real-time transactional data into your systems. For example, on-demand delivery services require someone to be authorized to go to a specific store and buy specific products (usually within a set timeframe or day). Money is placed on the card only at the time of order and can only be used as specified. Once the card is swiped at point of purchase, any excess balance is erased from the card. When done at scale (say with hundreds, thousands, or even a million cards), the value of Decision Control and real-time information across your systems is massive.
Advanced organizations use the PEX API for uber flexibility. You can automate controls to govern card usage according to pre-established processes and rules. Schedule a demo

Want to find out how to stay at the top of your game? Explore business solutions offered by PEX. 
Shot of smart business people working with plans while talking of their new design business in the office

5 AI Tools to Supercharge Your Back-Office Productivity Today

Businesswoman is talking about new project in the meeting room. Her team is sitting around a table and listening their manager carrefully.

Proactive Workforce Spend Management

Cheerful and smiling young successful female businesswoman standing with colleague looking at smartphone in modern office and coworking space

Introducing Text to PEX, Auto-Enforcer, and 3 More New Features for March

Stay up to date on the latest PEX news!

Opinions, advice, services, or other information or content expressed or contributed here by customers, users, or others, are those of the respective author(s) or contributor(s) and do not necessarily state or reflect those of The Bancorp Bank, N.A. (“Bank”). Bank is not responsible for the accuracy of any content provided by author(s) or contributor(s).