As a business leader, it’s crucial that you have a complete handle over company-wide spend. Only then can you better manage cash flow and make smarter spending decision. The problem is you can only manage what you can see. And for many companies, employee spend is far from transparent.
A complete view of your outgoings is vital because it lets you respond to changing market conditions quickly and scale your operations when you need to. And it’s even more important in today’s post-Brexit environment. Uncertainty reigns supreme and survival rates among small to medium-sized businesses continue to fall.
The temptation for many companies is to sit back and see how a post-Brexit economy shapes up. But doing nothing is the most risky strategy of them all. As Article 50 has now been triggered and the details continue to be hammered out, companies need the ability to adapt quickly to fluid market conditions. In fact, it could be the difference between success and failure.
There’s never been a better time to take control and prepare for whatever the market can throw at you. With this in mind, below is what I consider to be the five best ways you can better manage your employee spend.
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- Capture spend as early as possible: Despite the fact that society continues to make advancements in technology, many businesses today still handle their finance processes with a combination of paper receipts, forms and spreadsheets. This is fine for a very small business. But as a company grows, so does the administrative headache – leaving you with little visibility into your outgoing spend until it is too late.Ultimately, manual processes are slow and cumbersome, meaning finance teams only get a view of spend weeks or months after it’s occurred, making accurate accruals almost impossible.
Rather than manual processes, firms should automate their expenses and invoices. With automation, spend is captured much earlier. If workers are using an app to handle expenses, then they can submit their claims during their business trip, not three weeks later for example. And even if employees don’t submit their claims immediately – you can use data to anticipate future spend, giving you instant and accurate insights.
- Reduce errors and duplications: Manual processes are also error prone, because after all when people are involved, mistakes can happen. Therefore, you need to constantly look for steps in the process where you can remove the risk of human error. Research by Concur and Vanson Bourne revealed that many finance teams are spending a whole day a week just on admin tasks. With time-consuming and repetitive tasks such as data input, the chance of mistakes slipping through dramatically increases.
Machines, however,don’t get bored and don’t make human errors. Technology can streamline the process and save you time by automatically reading data and inputting it with a high degree of accuracy. One of the most costly mistakes made is duplicate invoice payments. A third of UK finance leaders admit to having paid a duplicate invoice. An automated system can stop this in its tracks by checking every single receipt and flagging a duplicate, saving you time and money.
- Detect and stop fraud:The lack of checks and balances in many manual finance processes makes them a natural target for fraud, both from within and out. In fact, in recent years many high-profile cases of exaggerated expense claims have highlighted how big an issue it is – just take the current Conservative election expenses scandal. It’s almost a cultural norm, and one in five(20 per cent) of employees believe it is acceptable to exaggerate their expenses.
And it’s not just internal fraud; it’s also common for scammers to submit fake invoices hoping they’ll slip through the cracks. However, there are intelligent online tools that can help. For example, built-in mileage trackers can accurately track travel expenses. Or an automated invoice service can flag invoices that don’t match purchases. These early warning systems create transparent processes – meaning you can keep a closer eye on your money.
- Comply with HMRC regulation:An HMRC investigation can be a big worry for many businesses. However, the secret to satisfying the tax inspector is to have a fully traceable and accurate audit trail underpinned by robust policies. They will want to see that spend is within policies and supported by the right documentation. This is difficult if it’s spread across spreadsheets and shoe boxes of receipts. But, with an automated end-to-end spend process, digital copies of your receipts and invoices can be found in one place. Get your processes right, and you’ll have the ability to report all of your spend, ensuring your business complies with government regulations.
- Use spend data to drive better decision-making: With manual processes, valuable decision-making data is locked in silos on spreadsheets and even on loose paper. Analysing it, and spotting trends, is time-consuming and difficult. However, if you’re able to aggregate data from multiple automated sources means you’ll be able to get meaningful insights, spot trends and take decisive action.
Ultimately, in today’s economic and geopolitical environment, finance leaders are playing an ever important role in ‘steering the ship’, helping businesses to make the right decisions. It’s not enough anymore to keep the business ticking over with old processes – they simply don’t provide you with the crucial visibility you need to maintain control over spend.
By adopting technology now and shining a spotlight on your finances, you’ll be helping to play a crucial part in future-proofing your business and ensuring its success moving forward. And what greater role can a finance leader play?