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Deep Dive: Expense Management & Compliance (End-to-End)

Introduction​

Zudello's Expenses module provides an end-to-end solution for managing employee-initiated spend, aiming to simplify capture, enforce compliance, streamline approvals, and facilitate timely reimbursement or reconciliation. This guide covers the entire lifecycle, from how expenses enter the system to how they are processed, approved, and integrated, with a focus on compliance and automation.

See also: Deep Dive: Expenses Module, Zudello v3 Architecture Overview

1. Expense Capture​

The first step is getting expense details and proof of purchase into Zudello.

  • Receipt Capture (Most Common):
    • Mobile: Employees use the Zudello web app on their phone to snap a photo of a physical receipt immediately after purchase.
    • Email: Employees forward email receipts (e.g., from online purchases, ride-sharing) or email photos of receipts to a designated Zudello inbox (often expenses@yourcompany.zudello.com). Zudello automatically links the expense to the employee based on the sender's email address.
    • Web Upload: Employees upload receipt files (PDF, JPG, PNG) via the desktop interface (Expenses > Expenses > Upload).
  • Manual Creation:
    • No Receipt: For minor expenses permitted by policy without a receipt, employees manually create an expense record (Expenses > Expenses > New Expense), selecting the appropriate type and entering all details.
    • Mileage: Employees create a mileage expense record, entering trip details (route or distance) for calculation based on configured rates. See Mileage Expenses.
    • Allowance (Future): Employees create an allowance record for per diem claims.

2. Extraction and Enrichment​

Once captured, Zudello processes the expense data:

  • Extraction (Receipts): The Cognitive Engine (LLM/OCR) extracts key data: Supplier Name, Date, Total Amount, Tax Amount, Currency.
  • Enrichment:
    • Employee Linking: Automatically links the expense to the Employee based on email sender or manual creation context.
    • Supplier Linking: Attempts to link the extracted Supplier Name to an existing Supplier record.
    • Default Coding: Applies default coding dimensions (Department, Cost Centre, GL Account) based on:
      • Employee Profile defaults.
      • Expense Category defaults (if an Expense Category is selected/determined).
    • Calculations: Calculates tax/exclusive values based on extracted amounts and the tax_included flag (often assumed based on region/defaults for expenses).
    • Status: Sets initial status, typically REVIEW or READY_TO_CLAIM.

See Deep Dive: The Enrichment Engine.

3. Coding and Validation​

The employee (or potentially an AP admin) reviews and completes the expense details:

  • Review Extracted Data: Verify accuracy of Supplier, Date, Amounts.
  • Select Expense Category/Type: Choose the appropriate category (e.g., Meals, Travel, Software) which may drive default coding or policy checks.
  • Apply Coding: Ensure correct dimensions (Department, Project, GL Account, Cost Centre) are applied.
  • Add Compliance Details: Enter required information like:
    • Business Purpose/Description: Justify the expense.
    • Attendees/Guests: List participants for meals/entertainment.
    • FBT Details: Flag Fringe Benefits Tax applicability and related details (e.g., onsite/offsite).
    • Personal vs. Corporate Card: Indicate payment method.
  • Validation & Policy Checks: The system runs validation rules and configured Expense Policies:
    • Missing Receipts: Flags expenses over a threshold missing an attachment.
    • Amount Limits: Checks against category or claim limits.
    • Date Limits: Ensures expenses aren't submitted too late.
    • Duplicate Detection: Flags potential duplicate submissions.
    • Required Fields: Ensures fields like Business Purpose or Attendees are filled based on category/policy.
    • Violations result in Warnings or blocking Errors. See Understand Policy Warnings, Deep Dive: Validation Framework.
  • Status: Moves to READY_TO_CLAIM once coded and free of blocking errors.

4. Claim Creation and Submission​

Expenses are bundled into Claims for submission.

  • Create Claim: Employee initiates a new Claim (Expenses > Claims > New Claim), giving it a name/purpose.
  • Add Expenses: Employee selects one or more READY_TO_CLAIM expenses and adds them to the Claim. The Claim totals update accordingly.
  • Submit Claim: Employee submits the Claim.
    • Final validation checks run (e.g., claim total limits, all included expenses valid).
    • Status changes to PROCESSING, triggering the approval workflow.

See Submitting a Claim.

5. Approval Workflow​

Claims route through approval steps defined by Sentences.

  • Routing Logic: Typically based on:
    • Claim Total Amount (using DOA or simple thresholds).
    • Submitter's Manager (using Management Tree).
    • Specific Expense Categories or Policy Flags (routing to Finance/Compliance).
  • Approver Actions: Approvers review the Claim details and individual Expense line items (including attachments). They can Approve or Reject the entire Claim. Rejection typically requires a reason.
  • Status Updates: Sentences update the Claim status based on approval outcomes (e.g., MANAGER_APPROVAL, FINANCE_APPROVAL, COMPLETE, REJECT_REVIEW).

See Deep Dive: Approval Workflow Design.

6. Reimbursement or Reconciliation​

The final stage depends on whether the expenses were Personal or Corporate Card spend.

  • Reimbursement (Personal Spend):
    • Status: Approved Claims move to a final status like COMPLETE or READY_FOR_PAYMENT.
    • Integration: Claim data (Employee, Amount, Coding) is sent to the ERP or Payroll system via integration (triggered by Sentence/Workflow).
    • Payment: Finance processes payment to the employee.
    • Mark as Paid (Optional): The Claim status in Zudello might be updated to PAID manually or via integration feedback.
  • Reconciliation (Corporate Card Spend):
    • Card Feed: Transaction data arrives from the corporate card provider (via direct feed or import) as Payment records, often linked to the Employee/Cardholder.
    • Matching: In the Card Reconciliation screen (Expenses > Card Reconciliation), Finance/AP admins match imported Payments to approved Expenses/Claims coded as Corporate Card spend. Matching is based on Amount, Date (within tolerance), and potentially Merchant. See Match Transactions.
    • Handling Exceptions: Unmatched Payments or Expenses require investigation (e.g., personal spend on card, missing expense submission, feed errors).
    • Integration: Reconciled data may be sent to the ERP for GL posting (clearing the corporate card liability account).

Compliance and Reporting​

Throughout the process, Zudello facilitates compliance and provides data for reporting:

  • Policy Enforcement: Automated checks via Sentences/Validations reduce non-compliant spend.
  • Audit Trail: Detailed history tracks all actions, changes, and approvals for both Expenses and Claims.
  • FBT Reporting: Data captured for Attendees, Guests, and FBT applicability allows for easier FBT calculation and reporting.
  • Spend Analysis: Data can be exported or viewed in dashboards (future) to analyse spending by Employee, Category, Department, Project, etc.
  • Carbon Tracking (Future): Mileage and travel-related expenses can contribute to ESG reporting.

By managing the entire expense lifecycle within a single platform, Zudello provides businesses with greater control, visibility, and efficiency over employee-initiated spend while ensuring compliance with internal policies and external regulations.