Choosing an expense management tool involves several steps. Assessing security and compliance should be among them. In this article, we will highlight the areas you should pay particular attention to.
When you reach the final stages of selecting an expense management tool and your list narrows down to 2-3 candidates, it’s essential to pay close attention to details. Security and compliance considerations fall into this category, as they often require further investigation than what’s presented on the vendor’s website. Ignoring these aspects can lead to significant problems later on. Although it’s one of the less exciting technical elements, it’s vital to prioritise it properly.
Much like features, the industry you operate in and how your operations are structured will determine the security levels and requirements. Compliance might also vary depending on the location. In this article, we will outline the general areas to consider. However, what you assess within them will be your decision.
Why Security &?Compliance Should Be Front-of-Mind?
First of all, you must protect your and your clients’ data at all times. In a highly digital age, it is one of the most valuable assets a business has. Since the expense management tool handles data related to finances, it is particularly sensitive.
Regarding compliance, it is generally required by law, and you must follow it. Some industries also have specific codes of conduct, often related to safety or detailing how certain processes should be carried out or what policies must be adopted. These requirements are non-negotiable and must be adhered to exactly.
Key Security Considerations for Expense Management Tools
Let’s start with security. As mentioned earlier, the primary goal is to protect the data involved in processes, the expense management tool itself, and the data it stores. Different vendors have varying approaches to security and the measures they implement. Your task is to assess how well they align with your requirements.
Integration Security & API Risks
Expense management tools perform best when integrated with other solutions, such as accounting packages, ERPs, and more. However, weak integrations can create an insecure environment. Before choosing a tool, understand its API security, dataflow controls, and whether third-party integrations are properly vetted. Vulnerabilities within the integration process present numerous risks, including the potential for your data to be stolen, tampered with, or corrupted. In any case, this endangers not only your organisation but also your clients. Therefore, even if the software offers integrations that seem suitable, take the time to assess their security.
When unsure, consider versioning and sandboxing. Admittedly, this may increase decision-making time, but it’s better to be cautious than regretful. If possible, have an internal expert review and assess security, and collaborate with the vendor if you notice anything suspicious. It’s not in the software provider’s interest to allow security gaps during integration, so raising concerns will be appreciated. Moreover, there might be a quick fix available, meaning you won’t have to wait unnecessarily. Who knows, perhaps as a token of appreciation, the vendor might even offer you a discount?
Data Encryption
As the above already suggests, data security is one of your top priorities when selecting an expense management tool. Therefore, you also need to understand how the solution encrypts data, specifically which algorithms are used and who holds the keys. With data breaches becoming more sophisticated, protection against interception and data exfiltration is more crucial than ever.
Having your data leaked jeopardises your and your clients’ security, opening numerous avenues for harm. Therefore, understanding how the solution you’re interested in manages data security is essential. To evaluate it, request vendor documentation if it’s not freely accessible. Additionally, conduct an independent audit. If possible, either use an in-house expert or hire someone with relevant skills to understand how data encryption functions. Unlike the vendor, whose goal is to sell a solution, they will prioritise your interests.
Compliance Considerations
Compliance requirements are usually set by either the law or predefined industry standards. Given their importance for audits, it is essential to ensure the new tool complies with them. However, as compliance requirements vary depending on several factors, you first need to identify what specifically applies.
Regulatory Frameworks
The primary compliance-related concern is ensuring you meet the basic regulatory frameworks. Fundamental requirements like GDPR and other industry-specific regulations should be your priority. When selecting an expense management tool, it’s wise to verify if the vendor supports compliance with relevant frameworks and can confirm this through documentation. Additionally, check if the tools can support audits, generate reports, and provide evidence of compliance.
Since regulatory frameworks are established by governments and ruling bodies, it is essential for your company to operate within them. While you would expect the relevant software to comply with these policies, it’s important to remember that different countries have varying regulations. If you and the vendor are not based in the same location, there is a high likelihood that the tool won’t be adapted to meet the legal requirements of your area.
Industry/Sector-Specific Compliance
Similarly to above, different industries will also have varying regulatory frameworks. For example, in the recruitment sector, you need to be mindful of IR35 and PAYE; in healthcare, HIPAA; and so forth. Many tools are specifically designed for particular industries, helping you stay compliant effortlessly.
That said, if your business operates in a niche sector with specific regulations, you should prioritise expense management software tailored for your industry when making a selection. Even if the desired compliance-supporting features are not explicitly listed, they are likely included by default. Additionally, the vendor’s team will have knowledge of your sector, making it easier to communicate your needs effectively.
How to Evaluate & Compare Expense Management Tools With a Security/Compliance Lens
There’s a lot of information available on how to compare software based on functionality and long-term benefits. A less frequently discussed topic is how to do so from a security and compliance perspective. As with the previous point, it will require a strategy, although the steps involved will differ. They are outlined below.
Strategic Approach to Making the Right Choice
Similarly to how you need to approach choosing the right software strategically in terms of features, you also need to adopt a vigilant mindset when assessing it for security and compliance. This is especially important for an expense management tool, as it will record, store, and transfer a lot of valuable data that you do not want to be compromised.
The first step is to define the processes and operations where the tool will be used, whether manually or automatically. Identify the steps involving risks, how they can be mitigated, and whether the tool you select can reduce the threat. Next, prepare lists of the integrations it will be part of and any regulatory frameworks your business must comply with. Then, take your time to investigate how safety measures in these areas are managed. Most vendors will have this information readily available, while others will be happy to explain it if asked. The red flag is when you receive vague and generalised answers - companies that take security and compliance seriously will be fully transparent about them. Additionally, if you and the vendor are based in different countries, ensure the pre-set standards align with the regulations you follow or can be customised to meet your country’s laws. Finally, never miss the chance to trial or see a demo - this is your opportunity to observe the solution in action, raise concerns, and ask questions.
Summary
Security and compliance considerations are as important as features when choosing an expense management tool, even if they usually come into play at the final stages of purchasing the tool. Pay close attention to integration security to ensure data transfers are not only smooth but also safe. Intercepting workflows could lead to data theft, tampering, and corruption. Additionally, find out how the vendor handles data encryption to ensure its secure storage and managed access.
In terms of compliance, you first need to thoroughly familiarise yourself with the regulatory framework. Different countries have various laws, and if your software provider is based elsewhere, their services might not fully align with your country’s requirements. This can be addressed if the software’s compliance-related processes can be adjusted manually. The same applies to your industry, as some sectors follow specific codes of conduct. If your business belongs to such a sector, it’s best to seek expense management tools that are specifically designed for your industry.
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