Like a drafty farmhouse in winter, a company can lose profits through a hundred cracks and crevices. And few things are leakier than expense reports.

Although employee reimbursements are mostly related to travel and entertainment -- airline tickets, gas, restaurant meals and such -- they can also cover purchases of other items, from a pack of legal pads to an emergency car towing. One of the few things that every business owner will agree on is that they add up fast. The Aberdeen Group, a Boston-based research and consulting group, reported recently that "employee-initiated expenses can account for one in five operational dollars a company spends."

If you're like most entrepreneurs, your gut says at least some of this money is squandered, either on expenditures of dubious necessity or on goods and services that could have been acquired more cheaply with a purchase order. But like the department store pioneer John Wanamaker who observed that "Half my advertising is wasted, I just don't know which half," you haven't a clue what to do about it.

Don't give up! The answer lies with -- you guessed it -- technology. More than half a dozen companies, including Gelco,, OneMindConnect and Microsoft Business Solutions, sell or rent software to rein in employee expenses and let more money flow to the bottom line.

Tighter enforcement of spending rules is only part of the story. By eliminating one of the more inefficient and aggravating rituals of corporate life -- hoarding receipts and writing numbers in tiny boxes -- these systems can easily halve the time spent on creating and processing expense reports. Employees can get reimbursed twice as fast so they have less to complain about. Tidy and easily accessible records keep IRS auditors happy. And the computerized data can be endlessly sliced and diced to spot inefficiencies and strike better deals with vendors. And the cost -- as little as $5 per month per employee for a Web-based hosted solution -- won't eat your savings. That's about as close as you're likely to get to a free lunch.

Expense management is more than electronic forms. It involves four discrete activities:

Reporting is the process of capturing transaction data, putting it into report form and obtaining management approvals. Typically, an employee uses a desktop, laptop or handheld computer to fill out the form online. In some cases, employees record expenses as they occur. A few systems even detect when a company credit card is swiped, be it at a hotel, restaurant or office supply store and fill in the blanks automatically. Once a report is filed, the system automatically reviews it, comparing it against travel policies, business rules, and spending limits, then emails department heads requesting online approval.

Payment and reimbursement. Approved reports are automatically channelled into the accounts payable system, which makes a direct payment to the company credit issuer or electronically transfers money to the employee's bank account -- often within three days.

Compliance is a second, closer look at the approved and paid report to insure that items are properly documented. Original receipts may be scanned and stored so that they can be easily produced in an audit.

Analysis involves consolidating and sorting data and looking for useful patterns in products purchased, routes traveled and establishments frequented. This information can help spot wasteful practices and strengthen your hand when negotiating with airlines, hotels, car-rental agencies.

An important consideration is how well the solution you choose interfaces with your company's accounting system. OneMindConnect's Expensable, for example, is designed to work well with Intuit's Quick Books.

Microsoft expense-reporting solutions work well as standalones and fit seamlessly into other Microsoft products. eExpense, a browser-based application typically accessed through a intranet running Microsoft Business Portal, works perfectly well on its own, but it is also designed to function as a module for the Microsoft Business Solutions for Human Resource Management Self Service Suite. It can also interact with versions of Microsoft's Great Plains accounting system. Microsoft also markets a Time and Expense component for another popular application, Microsoft Business Solutions Project Accounting - Solomon.

Employee-initiated expenses can add up fast, but getting a handle on them can be just as quick. The right software can better manage and streamline the process, while helping you spot inefficiencies that are draining profits from your business.