An expense and cost recovery system (ECRS) is a specialized subset of "extract, transform, load" (ETL) functioning as a powerful and flexible set of applications, including programs, scripts and databases designed to improve the cash flow of businesses and organizations by automating the movement of data between cost recovery systems, electronic billing from vendors, and accounting systems.
Expense and cost recovery system
ECRS is an area of ETL most applicable to consulting businesses, accounting agencies, and law firms, companies that bill back clients for time and costs. As such, the terms "disbursement", "expense", "cost", and "charge" may be synonymous and can be industry-specific. Sometimes the terms refer to the state of a transaction as it is extracted from the vendor data, transformed in the ECRS and then loaded into the accounting system. The term "transaction", in an ECRS, is generally referring to a single record of a one-time business exchange incurring debt on the part of one company with a vendor. It is assumed that the company will pass on those individualized debts as line-item or summarized charges to its own clients or customers.
An ECRS reduces the amount of manual and administrative effort required to exchange data between those vendors and the clients' bills. An ECRS also minimizes delays between the capture of cost transactions and electronic billing for various expenses as well as processing automatically into accounting databases.
Once costs are appended to accounting or billing tables, the detailed transactions from an ECRS may be "rolled up" to higher-level totals for movement to invoices, statements and bills. However, the detailed transactions can remain in interim ECRS tables or files for subsequent reporting. Retaining the detail transactions minimizes the number of transactions that need to be loaded into the accounting system, but still allows access to the detail for auditing purposes, or for justifying certain types of expenses to clients, customers or bill recipients.
Retaining details
An ECRS usually includes a database, set of tables or flat files to retain detailed transactions received from cost recovery systems that control devices such as photocopiers, telephone switches, fax systems, and electronic billing for services such as courier services, postal services, credit cards, legal research, etc.
Correcting exceptions
An ECRS normally receives and retains all transactions from the source system or electronic bills. This includes valid transactions where all data is correct and invalid transactions that have invalid or missing elements. (Note: an ECRS can accept transactions into its database that have all fields valid or a minimum number of valid data elements.) Interactive portions of some ECRS packages allow review, updating and correction of individual costs.
Transactions with invalid data in some columns are held for subsequent correction, transformed based on "business rules" or rejected, dictated by industry—and individual company—policy. Only transactions considered valid may be moved along to be loaded into a business' accounting application. The ECRS might include an on-line function to easily review and correct detailed cost transactions prior to passing them on. Reviewing and correcting transactions already in the system is much easier and faster than the traditional method used by non-ECRS practices such as printing out rejections and then manually entering them directly in the billing application.
Non-ECRS processes typically import valid transactions only and generate an exception list of the invalid transactions. The exception list is then printed and distributed to users who correct the invalid data elements by annotating the report. When the annotated reports are completed and returned to the billing or accounting department, the entire transaction must be manually input into the billing system. Using an ECRS eliminates this costly and time-consuming procedure.
Transactions received into an ECRS are identified with information about the source used to create the cost (i.e. telephone, photocopier, delivery service, outside reproduction, etc.) and the employee who created the transaction. An on-line correction feature can allow users to display the transactions for which they are responsible, and to easily correct invalid transactions (e.g. invalid dates, time of day, etc.) so they can be processed into billing. Security features are sometimes available to control access by the user to only those transactions they are directly or indirectly responsible for correcting (e.g. a secretary responsible for a department, supervisor managing sales reps, etc.).