Expense report systems are essential for capturing employee expenses and credit card purchases. With the right software, the process of recording, submitting, approving, and reimbursing expenses becomes streamlined and automated.
This not only reduces the time and effort required from employees and finance teams but also enhances efficiency, accuracy, and compliance in managing company expenses.
Connecting your expense report system to your Enterprise Resource Planning (ERP) tool allows seamless transfer of information, eliminating the need for manual data entry. This integration leads to less time spent reconciling expenses, better utilization of ERP features for reporting and controls, and ultimately, improved financial management and operational efficiency.
However, these systems often need to share information with other related systems like Human Resources Information Systems (HRIS) or Payroll systems. To help clarify this, we’ll explore different architectures for connecting your ERP to your expense reporting system.
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Architecture with an HRIS System
Let's examine an architecture involving an HRIS/Human Capital Management (HCM) system. Companies with an HRIS/HCM typically invest heavily in labor force management, requiring a robust system to capture and maintain this information.
If a significant portion of the workforce is responsible for expenses (e.g., consultants in professional service companies), data exchange with other systems becomes crucial.
In this setup, the expense software connects directly to a bank to pay expenses, converting approved reports into payments. Payments can also be processed through payroll, necessitating integration with the HRIS/HCM system.
The HRIS/HCM typically holds the master employee data. To keep the expense report system updated, an integration syncs employee information. Additionally, integration with the ERP records the financial impact of paid expenses, creating a journal entry in the ERP.
The diagram below illustrates this model. Employee information is stored in the HRIS/HCM and pushed to the expense report system.
Employees enter expenses, which are paid either directly from the expense report system or pushed back to the HRIS/HCM for payroll processing. After payment, the ERP is updated to reflect the current situation. General Ledger (GL) accounts from the ERP are regularly synced to the expense report system, ensuring accurate journal entries.
Note: Consider the Impact on Personnel Information Storage and Management.
Since personnel information sits in both the HRIS and the expense report system, care must be taken to minimize stored sensitive data and manage security risks.
Architecture with ERP Syncing Expense Reports
In this architecture, expense report details are synced with the ERP, useful for re-billing expenses to customers. By pushing expense reports to the ERP, billable expenses can be intercepted and customer invoices generated.
For smaller workforces not requiring an HRIS, this setup can still be viable with slight modifications. Alternatively, expense reports can be brought directly into the ERP for payment, especially if the expense report system lacks bank integrations or has specialized needs.
Example: Consolidating Information Within Your ERP
Another option is to integrate the expense report into the ERP for direct payment. This architecture also works if the expense report system lacks bank integrations or specialized needs require ERP details. The ERP could also pass on the information to a payroll system to have that system pay out. This could also be an HRIS/HCM system but let's go with a specialized software for this use case. This setup may involve syncing all expense items and master data like GL accounts, employees, departments, and subsidiaries.
Although it may seem like a heavy sync between systems with overlapping functions, leveraging existing ERP functionality (e.g., roles, permissions, approvals, banking information, consolidated reporting, AP automation) can be beneficial. This architecture integrates seamlessly with existing payroll processes, reducing the need for direct expense report system integrations.
However, with employee information in three systems (payroll, ERP, and expense report), additional security considerations are necessary to manage personnel data.
No Integration Architecture
The final architecture is a ‘no integration’ or centralized approach, where expense reports are fully contained within the ERP. This model suits companies in the initial phase before selecting an HRIS or expense report system, those with small volumes of expense reports, or those needing quick turnaround on re-billable expenses.
Expense reports can be stored within an ERP system, eliminating the need for separate systems and integrations. You can still pay directly from the ERP or through payroll or HRIS/HCM systems. Centralizing everything in one software allows you to leverage existing ERP functionalities.
Keeping expense reports within the ERP allows for credit card expenses to be represented as vendors and paid using vendor bills. This architecture is also more secure, but approval and policies may not be as elaborate as in native expense report systems.
Choose GURUS Solutions for Your System Architectures
Choosing the right NetSuite partner is crucial for successful expense report system integration. GURUS Solutions stands out with extensive expertise and experience in NetSuite implementations. Our team understands the complexities of connecting expense report systems to your NetSuite ERP and related systems.
With GURUS Solutions, you can expect a tailored solution that aligns with your business needs and processes. We assess your current architecture, identify the optimal integration approach, and ensure seamless data flow between systems.
Our goal is to streamline your expense reporting process, improve accuracy, and enhance overall efficiency.
Contact us for a free consultation