To stay profitable and grow, businesses like yours need to take advantage of opportunities to become more efficient. However, spend management – which may be hindered by manual processes or cobbled-together financial tech resources – can be an obstacle to that growth.
Over the last half of 2021, travel, corporate card and expense management software company TripActions spent a lot of time talking to Finance pros at small businesses to see how they were managing their spending. Among the issues your peers said they were concerned about:
- Controlling budgets and ongoing expenses
- Reducing process inefficiencies and time involved in closing the books
- Improving the visibility of spending across the company
- Reducing delays in expense report submissions
- Managing out-of-policy spending, and
- Reducing expense report processing costs.
Hardest spend to manage
A specific spend management category that involves all the above areas, and has become the most difficult to manage for your peers, doesn’t involve payroll, benefits, real estate/leasing or web and software subscriptions.
According to the TripActions survey, a third of your peers said their No. 1 spend management headache is T&E, despite it being only the sixth-largest chunk of company operating costs.
Some top drivers for that frustration:
- Finance leaders can’t get a comprehensive picture of spend until the end of the month.
- A/P teams have to manually reconcile transactions. (53% of survey respondents said they don’t have a dedicated T&E expense management solution.)
- Managers must approve employee expenses, often without knowing if they were necessary or work-related.
According to the experts at PYMNTS.com, another spend management trouble spot is silos that have come about from different departments and systems used to submit, approve, track and pay for expenses. These silos make it difficult to figure out exactly how much money an organization owes at a given point in time.
Inefficiencies, combined with a lack of spend management control and visibility, mean that employees are getting bogged down with handling paper receipts, card statements, expense reports and invoices.
Spend management solutions
TripActions found a distinct lack of automated spend management solutions at the businesses it surveyed. For example, just 12% were using a tool for automatically flagging out-of-policy transactions, and an even lower 10% used an automation solution to flag misuse of their corporate cards.
In addition, 18% had automated reconciliation of transactions, and 16% had a tool that freed up Finance staffers from having to handle reimbursements.
To best optimize resources and efficiency, businesses are going to have to at least consider full digitization of paper-based processes, such as expense forms, and retroactively approving business-related expenses.
Spend management solutions offer companies many beneficial features, such as smart virtual and physical corporate cards with built-in policy controls. They help firms eliminate paper expense reports, and they’ll automatically approve employee expenses that aren’t flagged. These solutions also automatically reconcile transactions, minimizing the manual calculations required by your Finance team.
The case for automation
Spend management automation can help save time, cut costs and help Finance leaders build better, stronger companies by using algorithms to track claims, invoices and other forms.
It reduces paper filing and the risk of human error, provides real-time insight into cash flow status, and relieves A/P’s duty to police company spending while keeping employees within company policies
When spend management gets automated:
- the CFO gets more visibility into, and better control over, all company spend, therefore gaining better insight for accurate budgeting and forecasting
- accounting teams can cut the time spent on month-end closing
- managers only have to review any expenses that are flagged by the system, thanks to proactive spend policies tailored to your business
- reimbursements happen much faster, and
- employees no longer have to save receipts or manually provide expense report data.
When it comes to specific tools to help streamline your spend management process, PYMNTS recommends something that makes your entire travel and spend management process seamless. “Any solution chosen should be integrated, digital and usable across various departments and payment processes,” it said on its website.
Ask about …
Because you’ll want a solution that will grow with your company, here are some questions to ask your prospective software vendors when shopping for a spend management solution:
- Will your solution work with my existing ERP system?
- What are the solution’s auto-categorization, amortization, payment scheduling and general ledger syncing capabilities?
- How would my Finance team members access approvals, receipts and email chains?
- How quickly can users access spend data?
- Because not every employee needs access to the same funds, can I make spend rules specific to certain departments?
- Fraud protection is a top priority, so how secure is the platform?
- How fast is the reimbursement process?
- Are there mobile capabilities for capturing expenses on the go?
