Deep Dive: Expenses Module

Introduction

Zudello's Expenses module streamlines the process of capturing, submitting, approving, and reimbursing employee expenses, as well as reconciling corporate card transactions. It aims to reduce manual effort, enforce company policies, ensure compliance (e.g., with tax regulations like FBT), and provide timely visibility into employee-initiated spend.

This guide covers the core concepts, lifecycle, configuration options, and advanced features of the Expenses module.

See also: Zudello v3 Architecture Overview

Core Concepts

Expenses vs. Claims

• Expense: Represents a single instance of spending incurred by an employee (e.g., a single taxi receipt, a mileage log for one trip). Expenses are captured, coded, and validated individually.
• Claim: A collection of one or more Expenses submitted together by an employee for approval and reimbursement or reconciliation. Claims move through an approval workflow. Expenses cannot be submitted independently; they must be part of a Claim.

Expense Types

Zudello supports various ways to capture expenses:

• Receipt-Based: The most common type, initiated by uploading a receipt image (photo, scan, PDF) or emailing it to a designated inbox. Zudello extracts data (supplier, date, amount, tax) using OCR/LLM. See Uploading Expenses.
• No Receipt: For minor expenses where a receipt wasn't obtained or required by policy (e.g., small cash purchase). Created manually, requiring the user to enter all details.
• Mileage: For claiming reimbursement for using a personal vehicle for business travel. Calculates the claimable amount based on distance travelled and configured rates. See Mileage Expenses.
• Allowance (Per Diem - Future): For claiming fixed daily allowances during travel, often replacing individual meal/incidental receipts.

See Expense Types Explained.

Personal vs. Corporate Card Spend

• Personal Spend: Expenses paid using an employee's personal funds (cash, personal credit card). These typically require reimbursement to the employee after approval.
• Corporate Card Spend: Expenses paid using a company-issued credit or debit card. These typically require reconciliation against a card feed/statement rather than direct reimbursement to the employee.
• Zudello allows configuring expense types or specific fields to differentiate between these, impacting the claim's purpose (Reimbursement vs. Reconciliation).

Expense Lifecycle

1. Capture: Employee captures the expense via:
   • Mobile: Taking a photo of a receipt using the Zudello web app on their phone.
   • Email: Forwarding email receipts or sending photos to a designated Zudello inbox.
   • Web Upload: Uploading receipt files (PDF, JPG, PNG) via the desktop interface.
   • Manual Creation: Entering details directly for No Receipt, Mileage, or Allowance types.
2. Extraction & Enrichment:
   • For receipt-based expenses, Zudello's Cognitive Engine extracts key data (Supplier, Date, Amount, Tax).
   • Enrichment attempts to link the Supplier, applies default coding (from Employee profile, Expense Category defaults), and calculates tax/exclusive values. See The Enrichment Engine.
3. Coding & Validation:
   • The employee (or AP admin) reviews the extracted/entered data.
   • Coding dimensions (e.g., Department, Project, GL Account) are applied, often defaulted based on the Employee or selected Expense Category.
   • Validation rules and Expense Policies are checked. See Understand Policy Warnings.
4. Ready to Claim: Once coded and validated (passing any blocking rules), the Expense moves to a status indicating it's ready to be added to a Claim (e.g., READY_TO_CLAIM).

Claim Lifecycle

1. Creating a Claim:
   • An employee initiates a new Claim, usually giving it a descriptive name or purpose (e.g., "Trip to Sydney - June").
   • The Claim inherits the Employee link.
2. Adding Expenses:
   • The employee selects one or more Expenses in the READY_TO_CLAIM status and adds them to the draft Claim.
   • The Claim totals (amount, tax) are updated based on the sum of the added Expenses.
3. Submitting for Approval:
   • Once all relevant Expenses are added, the employee submits the Claim.
   • Final validation checks occur (e.g., ensuring all added expenses are valid, checking claim-level policies).
   • The Claim status changes (e.g., to APPROVAL), triggering the approval workflow. See Submitting a Claim.
4. Approval Process:
   • The Claim routes through one or more approval steps (e.g., Manager, Finance) based on configured Sentences (often using DOA or Management Tree logic).
   • Approvers review the Claim details and individual Expenses.
   • Approvers can Approve or Reject the Claim (often requiring a reason for rejection).
5. Reimbursement/Reconciliation:
   • Reimbursement (Personal Spend): Once fully approved, the Claim moves to a status indicating it's ready for payment (e.g., COMPLETE, READY_FOR_PAYMENT). Finance processes the payment to the employee via the ERP or banking system. The Claim might be marked as PAID in Zudello afterwards (manually or via integration).
   • Reconciliation (Corporate Card Spend): Approved claims/expenses are matched against corporate card transaction feeds. See Corporate Card Reconciliation.

Advanced Coding Scenarios

Expense coding often requires capturing additional details for compliance and reporting:

• FBT (Fringe Benefits Tax): Certain expenses, particularly entertainment, may attract FBT in jurisdictions like Australia.
  • Configuration: Add fields to capture necessary FBT details (e.g., fbt_applicable boolean, onsite boolean/enum, potentially specific FBT categories).
  • Process: Users code expenses, flagging FBT applicability and providing details like attendee lists. Reports can then be generated for FBT calculation and reporting.
• Attendees & Guests: For meal and entertainment expenses, policies often require listing attendees.
  • Attendees: Internal employees attending the event. Can be linked via a multi-select field referencing Employee records.
  • Guests: External participants (clients, partners). Can be captured via a free-text field (guests) and a count (number_of_guests).
  • Purpose: Used for FBT calculation (distinguishing employees from externals), policy enforcement (e.g., cost per head limits), and record-keeping.

Expense Policies

Expense policies automatically check submitted expenses against company rules to ensure compliance and control spending.

• Configuration: Policies are typically configured using Sentences triggered by Expense status changes (e.g., Extracted, Submitted) or potentially dedicated policy extensions (future).
• Types of Checks:
  • Value Checks: Expense amount exceeds a limit (e.g., meal > $50, total claim > $1000).
  • Date Checks: Expense date is too old (e.g., > 60 days).
  • Attachment Checks: Receipt attachment is missing for certain expense types or amounts.
  • Keyword Checks: Specific words appear in the description (e.g., "Alcohol", "Gift").
  • Field Checks: Required fields (e.g., Attendees, Justification) are missing for certain expense categories.
  • Duplicate Checks: Check for potential duplicate expense submissions (based on date, amount, supplier).
• Outcomes: Based on policy configuration, a violation can result in:
  • Warning: A non-blocking notification displayed to the submitter and approver.
  • Blocking Error: Prevents the Expense from being added to a claim or the Claim from being submitted until resolved.
  • Alert/Flag: Marks the expense/claim for review without blocking submission (e.g., route to a specific compliance team).

See Understand Policy Warnings.

Corporate Card Reconciliation

This process matches expenses paid with company cards to the transaction data received from the card provider.

• Card Feeds: Zudello integrates with card providers (via direct feeds, Open Banking, or statement imports) to receive transaction data (Merchant, Date, Amount). These arrive as Payment transactions.
• Matching:
  • Automatic: Zudello attempts to automatically match imported card Payments to submitted Expenses based on Amount, Date (within tolerance), and potentially Merchant name.
  • Manual: Users review unmatched Payments and Expenses in a dedicated reconciliation screen, manually linking correct pairs.
• Handling Unmatched Items:
  • Unmatched Payments: May represent personal spending on a corporate card (requiring employee repayment) or expenses not yet submitted by the employee.
  • Unmatched Expenses (coded as Corporate Card): May indicate missing card feed data or incorrect coding by the employee.
• Process: Typically performed by Finance/AP Admins. Reconciled items are cleared, while exceptions require follow-up.

Mileage Expenses

• Configuration: Mileage rates are configured (often per financial year, potentially per vehicle type) in Settings > Dimensions > Mileage Rates.
• Calculation:
  • Route Planner: Users enter Start, End, and optional Stop locations. Zudello uses a mapping service (e.g., Google Maps) to calculate the distance.
  • Manual Distance: Users enter the total distance travelled directly.
  • The claimable amount is calculated: Distance * Applicable Rate.
• Validation: May include checks for reasonable distances, duplicate trip submissions, or adherence to travel policies.

Best Practices & Troubleshooting

• Timely Submission: Encourage employees to submit expenses promptly to improve accuracy and ensure timely reimbursement/reconciliation.
• Clear Descriptions & Attachments: Require clear business purposes and legible receipt attachments.
• Policy Training: Ensure employees understand company expense policies.
• Regular Reconciliation: Perform corporate card reconciliation regularly to identify issues quickly.
• Common Issues:
  • Cannot Add Expense to Claim: Usually due to validation errors or incorrect expense status.
  • Policy Violations: Require justification or correction.
  • Mileage Calculation Errors: Check route inputs, ensure correct rate is configured/selected.

The Expenses module provides comprehensive tools for managing employee spend efficiently and compliantly.