The expense management ecosystem has seen significant innovation in recent years as more FinTechs step onto the market to help businesses more diligently track spend.
For decades, expense management was often coupled with business travel, addressing the friction of the post-business trip expense report still so often filled out on spreadsheets and reimbursed weeks or months after the spend occurred.
But the scenarios in which companies pay for goods and services has evolved. No longer do employees have to travel to spend company funds, even across borders. And while those lattes and taxi rides remain important purchases for business travelers, employees are also making higher-value purchases from their offices or remote workspaces that are not suited for the expense reimbursement model.
With fewer employees willing to front the bill, and with businesses seeking a more effective way to automatically track and reconcile spend outside of the accounts payable (AP) department, expense management technology is proliferating beyond the business trip — and beyond borders.
In a conversation with PYMNTS, Dileep Thazhmon, co-founder of newly launched expense management FinTech Jeeves, discussed the importance of tackling global expense management at the infrastructure level, and the unique challenges that high-growth businesses face when managing money spent around the world.
Cross-Border Pain Points
Global transactions present no shortage of friction for businesses, regardless of payment method or rail used. When it comes to cards, the familiarity of the payment tool and the ability to automatically capture payment data make it a popular companion to expense management technology, even today.
But when that spend occurs across borders, foreign exchange (FX) fees can hit especially hard. The alternative is filled with friction, too, noted Thazhmon, who highlighted the process that many businesses must go through when operating in new jurisdictions: opening up a new account and obtaining a card from a local issuer, calculating FX conversions, and struggling to obtain clear visibility into spend across markets and geographies.
Even obtaining a corporate card product in various markets can be a challenge thanks to the individualized underwriting processes for each financial institution (FI).
“The companies we’re targeting tend to be fast-growing and either have cash coming in on a monthly basis, or they’re well venture-funded companies,” explained Thazhmon. “And still, ironically, they cannot get access to credit.”
Some issuers will need years of tax returns to prove a growth trajectory of an applicant, a practice Thazhmon said was “fair” for some firms, but not for all.
An Infrastructure Approach
Enabling businesses to access a corporate card without FX fees that can be used across borders is one solution to this pressing pain point. But it’s not the whole picture of solving for cross-border expense management, Thazhmon noted.
While local jurisdictions around the globe continue to invest in domestic payments infrastructure, cross-border transacting remains complicated, especially for B2B payment scenarios. Thazhmon emphasized the importance of developing and owning infrastructure — what he described as the “orchestration layer” — to actually move funds.
“We looked at this from a perspective of, ‘If you wanted to connect multiple countries together, how would you do that?’” he said.
The AP Differentiation
Having ownership of that infrastructure will be important to enabling more agile product development for a solution like Jeeves. Flexibility will be key, especially as the face of expense management continues to evolve.
While Jeeves began development before the pandemic hit, the last year accelerated what Thazhmon said he saw as a mindset shift in how organizations allow their employees to work. With professionals now able to operate and make purchases from anywhere, the need for cross-border-friendly expense management tools is expected to expand.
And while Thazhmon said he is optimistic about the return of corporate travel, business trips are not the FinTech’s key market. Rather, it’s the cloud-based services like Amazon Web Services that tend to show up. They’re high-value purchases that can happen domestically or across borders, depending on the unique needs and situations of each business.
Recognizing that expense management is no longer just about corporate travel will be important for the ongoing evolution of FinTechs operating in the space as they find themselves offering solutions that look more and more like AP tools.
“The distinction [between expense management and AP] is not in the functionality,” said Thazhmon. “The distinction is more from a process perspective. With accounts payable, you need some form of invoicing. That’s a pretty big distinction from expense management.”
While Jeeves has the potential to facilitate AP transactions — and indeed, Thazhmon said the company will eventually look to build out that invoice processing capability in the future — the focus today remains on digitizing and optimizing non-invoiced, cross-border business spend.
There is a greenfield opportunity for businesses to migrate more of their high-value purchases to cards, with Thazhmon pointing to one client that had previously been spending upwards of $40,000 on FedEx charges off of a card because that business could not obtain a card product in that particular market. Easing the reliance on wire transfers and cash, especially across borders, can bring a new level of transparency and control to the money flowing out of a business that legacy expense management practices cannot.
“Now, it’s almost that every company is a global company to some effect,” he said. “We have employees in six different countries, and we have yet to file an expense report.”