I’m fascinated by startups that remove inefficiencies from real world tasks. Abacus, one of our newest investments, does exactly this. But most people don’t quite understand why yet.
At first glance it’s just another useful app for streamlining business expenses. TechCrunch did a good overview of the service when it first launched a couple of months ago, but I don’t think they quite captured the essence of what Abacus is doing.
There are a whole class of “software-meets-reality” startups today that are successful because they remove pain from a real world activity. Sometimes people didn’t even quite know that the pain was there.
Uber is a perfect example. After using it for the first time people realize that it isn’t really about the nice cars. It’s about getting a car whenever and wherever you need it. That’s a service that taxis are supposed to provide, but they don’t. Anyone who has stood endlessly on a street corner waiting for a taxi, or who scheduled one for a ride to the airport but it never bothered to come, understands this. Uber fixes the taxi mess and makes life more enjoyable.
I’m not going to say that Abacus is the uber-for-expenses because it isn’t. But I apply the same thinking towards analyzing what Abacus does as I did when we invested in Uber.
First, like other apps Abacus makes it a lot easier on the user to keep track of business expenses. Take a picture of a receipt or let it interact with your email and you’re basically done.
The key differentiator with Abacus, though, is that it takes a (very painful) batch process of dealing with employee business expenses and removes pain at almost every point along the way.
Here’s how the old expense system works:
1. Employees gather expenses and file reports periodically to the company.
2. The company goes through an approval process, enters reports into accounting software and then either cuts physical checks or integrates into payroll. They need software for all of this, and more software for communicating with employees. lots of back office employee time is spent dealing with all of this.
3. Employees get paid eventually, but it may be 60+ days after the expense.
4. That means employees have to float the expense for a long time on their credit cards. If they can’t handle the delay they have to do things like borrow the company Amex to pay for bigger expenses, which adds further complexity to they system.
Here’s how Abacus works, eliminating pain and busy work along the way:
1. Employees use the app to get expenses into the system as they incur them.
2. A manager uses the app to approve expenses immediately (or every few days, whatever they want).
3. Abacus auto-syncs with the companies accounting software, makes a same day auto-payment to the employee’s bank account, and handles all communication with the employee.
Again, I want to highlight that the main feature here isn’t “taking pictures of receipts.” It’s about eliminating the need for employees to float expenses for weeks or months, and about removing a ton of back office manual process pain while doing it.
That means a company looking at Abacus is going to see a lot of happy and want it immediately. The fact that it’s very reasonably priced makes that decision even easier.
Not only did we invest in Abacus, we’re going to use it ourselves at CrunchFund and recommending all of our portfolio companies take a look. Once a startup has even a few employees, Abacus makes a lot of sense.
Big hopes for this one.
Any substantial reason i should move away from expensify to this?
I’m one of the founders of Abacus, so admittedly biased, but by eliminating the need to create expense reports in the first place, your employees can submit in realtime and literally get reimbursed the next day via direct deposit. No other employee expense system, including Expensify, can do this.
With Abacus, this actually ends up creating less work for the back office because Abacus syncs nightly with your Quickbooks / Xero, issues the payout and updates your employees on the status of their reimbursement, so you don’t have to. This translates into realtime visibility into company spend without any of the manual effort.
Some of our customers just wanted to eliminate their corporate card programs – Abacus gives you the power to let your employees make purchases without requiring them to float the company for a month.
Another one of our customers was looking for a better way to reimburse interview candidates because they had 40 engineering candidates per month requiring a quick and seamless payout for recruiting expenses incurred.
There are lots of reasons customers prefer to use Abacus, but would love to learn more about your specific needs, so we can see if we’re the right fit for you – just ping me at omar at abacus dot com.
@NextCaller uses Abacus, it’s crazy easy to use and setup 🙂
The thing that needs disruption is the fact that US businesses can demand employees to finance their business. You need a law that makes it illegal and – boom – problem solved. Either you give employees company credit cards or pure old cash in advance.
Two things you may find surprising:
1) Most companies don’t really mean to float the business on their employees’ backs – it’s just that pre-existing employee expense systems were built to mirror old manual reporting processes that were too cumbersome to do more than once per month… we work with businesses that are looking for a way to delight their employees with quick reimbursements
2) Many employees actually prefer spending on their own cards given the rewards, as long as they don’t have to be out of pocket for months at a time
We use it at Preact. It does the trick, much better than Expensify. Good choice.
I have 4 employees going to a conference this week and I expect them to each incur 20+ expenses each. I could be reading this wrong, but am I expected to individually approve 80 expenses instead of 4 reports? How is this an improvement? If I can bulk approve groups of expenses, how is this different than an expense report?
Not really seeing the difference or improvement from Expensify. Never used Abacus though so please let me know if I’m off base here.
Here’s how we make it faster for each of our 3 key user groups:
Employees: Geotagging, auto-categorization and card transaction import mean it’s faster than ever to submit in realtime.
Managers (what you were alluding to): With Abacus, you set auto-approval limits, so all of the transactions that are insignificant enough for you to gloss over on a report will similarly be auto-approved in Abacus. Now your attention is focused on the expenses that should require your attention – these, you can swipe away to approve right from your phone the same way you would archive an email.
Administrators: Accounting auto-sync, integrated payout and automated employee communications means finance has the time to switch from a support role to more of a strategic insights role. While we extrapolate away the concept of the expense report from employees, we still allow the administrators to leverage the metadata to dynamically generate more relevant / insightful reports after the fact.
Would love to learn more about your business and see if Abacus can help make life better for you and your 4 employees heading off to the conference 🙂 My email is omar at abacus dot com.
Still a few bugs here and there. The website initiated a chat but nobody is actually replying to me. + need to be able to export the receipts to a dropbox account (where we keep all our invoices & receipts). Will come back later.