You may not realize it, but as you file an expense report, you are participating in a commercial transaction with roots going back many thousands of years. Early civilizations may not have had employee expense handbooks, but our current expense reporting processes can be traced back through the financial systems that have evolved as our world has changed over these many years.
Historically, financial record keeping, and to some extent, expense reporting are closely linked to the development of human society and commerce that has taken place over the past five and a half thousand years. The origins of money and number counting have been traced back to civilizations around 3600 BC.
Historians and archaeologists have found evidence of ancient records on stone and clay tablets. These described trade between tribes in and around Mesopotamia, as well as early forms of auditing systems.
Egyptians and Commodities Distribution
Ancient Egyptians developed several advanced systems for commodities distribution, in which large quantities of goods were stored in warehouses and disbursed as needed over periods of time. It was the most sophisticated accounting system the world had known at that time.
By the time of the Roman Empire, there is evidence Emperor Augustus had access to detailed financial information. One group of scribes was responsible for recording the amount of goods that were brought into the warehouse and another group of scribes would record the outbound goods — keeping careful records of where goods were at all times, and what had been consumed. There may have even been a third set of scribes that functioned as auditors who compared each set of records, checking them against any remaining quantities of goods in the warehouse.
It was in 14th century Italy where accounting systems were developed that resemble those we use today. This was in part due to maritime trade and banking, where wealthy merchants needed to keep accurate records of all their financial transactions. This enabled Italy to become Europe’s banking capital and one of the wealthiest countries on the continent.
Developed in medieval Europe, accounting transitioned into a serious profession in the early to late 19th century, with the Institute of Chartered Accountants in England and Wales formed by the year 1880.
Much the same was happening in the U.S., where the American Association of Public Accountants was established in 1887. By 1896 New York State passed the first law recognizing Certified Public Accountants.
In 1913, Congress passed the first Revenue Act, which along with increasing complexities of pre and post War taxes, created a high demand for accountants.
In the United States, a typical expense reporting record looked like the 1929 receipt (left)
Another turning point in the accounting profession occurred when the June 1932 issue of Fortune magazine (right) devoted a major article to profiling the largest accounting firms of that time – Ernst & Ernst and Andersen, DeLany & Coto among them. The article described the growing importance of the accounting profession.
In 1936, the organized profession consolidated when the two rivals, the American Society of Public Accountants and the American Institute of Accountants, became the American Institute of Certified Public Accountants (AICPA).
The first cash register was invented in 1882, which automated accounting accuracy, helping businesses better track their expenses and profits. The invention of business computers in the 1950’s and, especially, the personal computer, in the 1970’s and 1980’s, helped companies manage their inventory, purchasing, and invoice verification automatically. This reduced human error, making expense management much faster and more accurate.
By the 1990’s, as the desktop computer became an essential business tool and accounting software programs like Microsoft Excel and Intuit QuickBooks were introduced, paper and ledger based accounting and manually created expense reporting became a burden. Accounting was automated on desktop software systems, and companies developed spreadsheet forms with pre-set calculations to record expenses. Employees would submit these forms with the receipts attached, mailing or hand-submitting expenses for reimbursement. The approval process could take weeks before employees could be reimbursed for expense spending.
In the early 2000’s PDAs and cloud computing further simplified the way business works and organizations began to migrate from the spreadsheet and paper based expense reporting systems to automated online expense management systems.
ExpenseWatch is one of the early vendors offering online expense management solutions, when SaaS offerings sprung onto the market. Founded in 2000, we released the first version of our spend management service in 2003. Then and now, our software manages everything from expense report creation and approval through to reimbursement, reducing or eliminating the need for paper. It also offers solutions to automate both purchasing processes and payable invoices (bills from vendors).
The advent of the smart phone in 2007 brought about a new era in expense management. With the latest technology and tools professionals everywhere in the world can track and manage their expenses directly from their smartphones.
Today, we are putting the final touches on our all new ExpenseWatch Mobile App which will take expense reporting to the next level. Expense Report submitters will be able to create, view, edit and submit expense reports and approvers will have full visibility to approve any spending transaction type including expense reports, purchase requests and payable invoices (bills). The all new rapid-fire-receipt capture lets you snap pictures and upload receipts into the ExpenseWatch system to use when building expense reports in the mobile app or online – a real time saver.
Stay tuned here for news when the new ExpenseWatch Mobile App is ready for download, as well as ongoing information about how expense reporting and other spending processes continue to transform making it easier and easier to manage company spending.
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HOW SMBS CAN MANAGE COMPANY SPENDING
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