“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 ControlRich 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
2. ComplianceYou 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.
3. Security“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