Spend Management vs. Expense Management: What’s the Difference?

"I paid for six floppy disks by check — I'll fill out the expense report and fax it to you."  

How would you react if a colleague said this? Probably with a double-take, wondering if you’d slipped into a time warp. Language and technology are constantly evolving, and what’s cutting-edge today can quickly become as obsolete as a Blackberry.  

Using outdated terminology might make you sound old-fashioned, but relying on obsolete technology can be far more costly. A recent Snaplogic survey of business leaders found that legacy technology is costing businesses big — nearly $3 million a year. On top of that, the cost of maintaining these old systems keeps climbing, putting even more pressure on company resources. 

Many traditional expense management processes are a prime example.  

The tedious task of filling out expense reports has become a relic of the past thanks to advancements in spend management. Modern tools, powered by automation and generative AI, have transformed this process into something far more intuitive and efficient — leaving outdated methods in the dust. 

What is Expense Management?

Expense management is the process of tracking, reporting, and reimbursing employee expenses incurred during business operations. This includes travel, meals, software purchases, and other workforce-related costs. 

For years, the process of managing employees’ expenses, particularly around T&E spending, relied on employees paying for something up front, then begrudgingly filling out an expense reimbursement request and attaching a receipt.

The advent of expense management software revolutionized the process by digitizing key steps. Employees can now easily submit requests, attach receipts, and monitor approval statuses — all in one streamlined system.

While this innovation has eliminated much of the manual, paperwork-heavy processes of the past, it’s not without its challenges. For instance:

• Filling out expense reports can be time-consuming and prone to errors. 
• Receipts are often lost, resulting in incomplete records. 
• Delays in approvals and reimbursements can burden employees and create inefficiencies. 
• Administrators struggle to analyze spending in real time, leading to poor decision-making and compliance risks. 

Expense Management Example 

What does expense management look like in practice? 

Let’s say a software company sends its sales team to a three-day conference in New York City and uses an expense management platform to streamline costs.  

Employees log expenses like flights, hotels, meals, and transportation in their organization’s expense management app, which automatically checks compliance with company policies (e.g., economy flights, $350/night hotel cap, $75/day meal allowance).  

After the trip, the system routes expenses to the correct approvers based on policy rules, and processes reimbursements once approved. Some expense management platforms can even route reimbursement funds directly to the employees’ bank accounts.  

What is Spend Management?  

Spend management builds on the foundation of expense management but takes it several steps further. It’s a comprehensive approach to controlling and optimizing all types of non-payroll business spending, combining four key functions into a single platform: 

1. Procurement: Acquiring goods and services. 
2. Accounts payable (AP): Managing vendor invoices and payments. 
3. Corporate cards: Enabling seamless company card transactions. 
4. Expense management: Simplifying employee reimbursement and expense tracking. 

Unlike traditional expense tools, spend management integrates these processes into one system for end-to-end visibility and control. Automation and generative AI power the platform, ensuring accuracy and efficiency while reducing manual work. 

Spend Management Example

How do spend management and expense management work together to simplify purchasing and payments? Let’s explore a hypothetical scenario:

For example, a mid-sized retail company uses a spend management platform to streamline its financial operations.

• Procurement: The company’s marketing team needs to order $15,000 worth of promotional materials for an upcoming campaign. They submit a purchase request through the platform, which routes it to the procurement manager for approval. Once approved, the system automatically generates a purchase order and sends it to the vendor.
• Accounts payable: After the vendor delivers the materials, they send an invoice for $15,000. The platform matches the invoice with the purchase order and delivery receipt, ensuring accuracy before routing it to accounts payable for final approval. The payment is processed directly through the platform, eliminating manual data entry.
• Corporate cards: The company issues corporate cards to team leads for smaller, day-to-day purchases like office supplies or client lunches. These cards are linked to the spend management platform, which tracks transactions in real time. For example, a team lead uses their card to buy $200 worth of supplies, and the system automatically categorizes the expense and flags it as compliant with company policy.
• Expense Management: Employees attending a trade show use the platform’s mobile app to log travel expenses, such as flights, hotels, and meals. Receipts are uploaded and matched to pre-set allowances (e.g., $300/night for hotels, $60/day for meals). Any out-of-policy expenses, like a $400 hotel night, are flagged for review before reimbursement.

Each transaction is automatically booked to the general ledger, creating a full audit trail. At the end of the month, the platform can generate comprehensive reports consolidating all spend data —procurement orders, vendor payments, corporate card transactions, and employee expenses. This gives the finance team a clear view of spending trends, helps identify cost-saving opportunities, and ensures compliance with budgets and policies.  

Spend Management vs. Expense Management  

Here's a breakdown of how spend management and legacy expense management processes differ: 

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