“Great leaders of organizations run after problems, make their footprint bigger than their foot, and always strive to find the truth—because you have to get the truth to be excellent.” – Anthony Noto, CFO of Twitter
Over time, many CFOs have inspired executives to set and meet financial goals. They aspire to new levels each year, and the success of a company hinges upon the CFO’s ability to balance risk and reward. You approve budgets to grow the company and implement policies to minimize overspend and waste. One way to get those gears in place has taken off in the last few years in the form of expense management platforms. In a 2016 survey of 500 CFOs, 50% of companies use a manual process (spreadsheets, pen and paper, homegrown systems), where 35% of businesses have switched to web-based processing, and 15% use an ERP software, with manual users changing to web and cloud-based systems every day.
As manual expense management goes the way of the dodo, you may want to look inwardly at your current process. It may be time to evaluate whether using an automated expense management platform fits your business goals. The average processing costs of a single expense drops from $26.63 to $6.85, with non-subscription based companies like Divvy lowering the price even further. So what are the immediate benefits, what is the short term and long term cost, and why will manual expense processing exist in the annals of history and hopefully never in an office again?
Switching to a simpler expense management platform improves many facets of business, so let’s get to it.
1. Transparency and Control
Rich Veldran, CFO of Dun & Bradstreet, believes that the three pivotal roles that CFOs must perform include:
- Making the right investment decisions to drive growth
- Turning revenue into strong earnings and cash flow through smart resource utilization and cost management
- Optimizing capital structure in order to make smart, strategic use of generated cash
“Underpinning this all is the need to maintain a rock-solid control environment and to build and develop a top notch, highly energized, and committed team.”
Part of developing a solid environment includes the ability to control the allocation and approval of funds. Setting up an automated system lets you indicate those in your organization that need access to funds. The best automated expense management platforms allow you to indicate the dollar amount that each tier of leadership can approve without getting an override from a manager above them. It also gives managers the ability to directly monitor the spending trends of their directs through generating reports or at-a-glance KPI dashboards.
You can ensure compliance with company policies and regulate adherence to the policies by automatically disapproving or flagging out-of-policy purchases that require a special override. Compared to manually auditing expense reports, the average mid-sized company sees a savings of $40,000 annually without error and fraud sapping valuable resources. Since you can easily monitor the spend of every individual, department, and business as a whole, it’s simple to see areas of overspend and course correct before overspending turns into a blown budget. You can receive notifications when individuals or departments get within a certain percentage of reaching budget capacity and either allocate more funds, or temporarily freezing spend if necessary.
With greater transparency into daily, monthly, and yearly spend, you can begin to manage spend proactively, rather than reactively. We call this Proactive Expense Management (PEM) or Spend Management. PEM translates into greater control over every aspect of expense reporting, from approving expenses on the go to raising and lowering limits according to your business’s needs. No more waiting for the end of the month or the end of the quarter to course correct. When driving a Ferrari, you definitely want power-steering for tight turns, but you also need to make sure that you have an alarm installed just in case.
“Revenue growth and disciplined expense management will generate the cash a business needs to invest, seize growth opportunities, and return consistent value to owners.” – John Stephens, CFO of AT&T.
A disciplined expense management policy is only as good as the employees who uphold it. With an automated system, the policy gets worked right into the approval process, greatly reducing the possibility for fraud and abuse. It also recognizes and limits overspending, whether intentional or unintentional by flagging large purchases, or approvals that put a person/department over budget. With automated checks and balances in place, the financing team will not need to spend painstaking hours making sure every report follows protocol and has the correct approvals in place.
Rather than issuing physical company cards that could get lost, borrowed, or stolen, Divvy allows you to issue temporary, virtual cards for an approved amount and vendor, making fraud much less likely. Another fantastic safety measure, some automated platforms allow an immediate freeze on spend if the card becomes compromised in any way, and simply will not work if the purchase doesn’t meet pre-approved parameters set by the admin. This is all great, but ease of use plays a large role in user adoption.
4. The Convenience of Simple Spend
“I always try to balance short and long term, being mindful of the famous short-term quarterly pressure. There is a need to be very responsive but also consistent in time, especially in a brand-building business.” –Gilles Bogaert, CFO of Pernod Ricard
Here’s a list of how companies simplify spend and save money through automating expense reports:
- Improved efficiency in expense reporting process
- Reduction in processing costs (less paper, postage, storage, etc.)
- Mobile accessibility
- Increased employee productivity
- Elimination of payment for duplicate expenses/reports
- Travel booking control (pre-trip authorization, airline exclusive deals, etc.)
- Reduction in fraudulent expenses
- More accurate mileage tracking
Some expense management platforms have hidden costs, not to mention a very involved implementation and training period that slows the initial adoption of the program, but also causes a disruption in the day-to-day operation for employees. Depending on the size of your organization, the initial cost of a new expense management platform, coupled with monthly, per-user subscription fees could add up to a pretty penny. Most companies advertise their system costing anywhere from $8-$30 per person, per month, not accounting for the supplemental costs of implementation, training, technical support, and additional admins. The higher the cost at the outset, the longer it takes to achieve ROI.
5. How Divvy Accelerates ROI
Divvy stands apart as the first free and fully automated expense management platform. Setup quickly with the online wizard, and begin using the system in a matter of minutes. No drawn-out implementation time, and no upfront, monthly, or hidden cost. To begin, input your information as the system prompts you, indicate policy notifications, and set your spending limits, then start utilizing the technology to simplify spend management. It allows you to see purchases made by your teams in real-time, allowing you to dive into the world of Proactive Expense Management without worrying about disruption to your workforce.
Once the automated system starts working its magic, employees can spend more time on their actual job, rather than coding receipts and filling out spreadsheets. Department heads can generate and easily create KPI reports and snapshots of their budget to monitor overspend, and find ways to better utilize company money. The finance department can fulfill their core responsibilities instead of pouring over reports in search of errors and fraud, or searching out employees for missing receipts. As CFO, you can start working on your next money-saving venture. Fortunately, Divvy makes the magic happen immediately. With other platforms, achieving ROI can take quite a bit longer.
6. Expense Management Systems and ROI
“As an organization, we have a maniacal focus on ROI. We built our organization globally by keeping this at the center of every investment and decision and now it’s just part of our DNA. My best piece of advice is to look at what your organization needs and don’t be afraid to take chances, but balance risk with success, only increasing the former when the latter goals are being met.” – Olivier Bisserier, CFO of Booking.com
With subscription-based expense management models, companies report a return on investment ranging anywhere from 6 months to 36 months. After incurring the initial starting costs listed above, return takes more time based on the size of the business, the number of users and admins, the amount of reports generated, and the amount of support needed in case of technical difficulties, etc.
Utilizing a free service without a subscription model, implementation costs, training, and supplemental fees will contribute to realizing ROI much more rapidly, if not immediately. The benefits of the investment manifest not only in eliminated redundancies, overspend, and errors, but in saved time. With the automated system, employees can divert the hours per week that they previously spent filing and re-filing expense reports to their core job description. The efficiency and simplicity of the system yields greater returns in the short and long term.
7. Company Culture
“Operating a global business in a fast-changing world, you have to be grounded real-time in the external environment, have complete transparency, be fact-based, and working with a great, collaborative team.” – Bob Shanks, the CFO of Ford
Automating spend removes many common pain points and allows people to improve efficiency on a day to day basis. Some common pain points include employees losing paper receipts, failure to submit reports on time, the time it takes to reconcile, review, and approve reports, policy violations, errors, and the time it takes to reimburse employees for out-of-pocket expenses.
Eliminating these pain points removes a large amount of stress from all parties involved in the process. The simplicity of automating expenses, and the faster reimbursement time improves the quality of life for employees. Quick and easy approvals, with greater visibility into spend paired with mobile access translates into happier managers. Less red tape, more control, and better security along with reduced (or non-existent) onboarding cost, and more efficient use of company assets equates to happy executives and investors.
Using Divvy’s free expense management platform not only eliminates risk, it also provides all of the benefits of a web-based system and greater visibility into spend. We currently own truly agile financial visibility in the expense management space, increasing your ability to make proactive decisions and ditch the reactive expense model of the not-too-distant past.
We dug deep to create the world’s first free, fully-automated budgeting and expense management platform, and it gives you instantaneous visibility into company-wide spend. Born from loathing a truly broken process, Divvy turned that legitimate dislike into the catalyst to reinvent. Not even innovate: burn to the ground, salt the earth, and build something that works on new ground—from scratch.
Divvy is the first free and fully automated spend management platform. We’re pretty excited about a future without expense reports.
Get a free demo to learn more.