What You Can Do to Cut Down on ‘Rogue Spending’
Companies that adopt cloud-based expense trackers often see a reduction in overspending in certain categories
Spend of all types—travel, employee out-of-pocket, vendor-related—too often involve opaque, antiquated, cumbersome, and time-consuming processes. Even many of the best companies have yet to adopt cloud-based systems for tracking and analyzing expenses, says Rebecca Sheehan, senior director for business development at SAP.
Resistance to the adoption of dedicated software is often related to the perception that doing so would be too expensive.
“Companies often think that it’s too cost-prohibitive to adopt a software solution to address this need,” says Sheehan. “They may be on a manual system, using spreadsheets, and taping receipts to a piece of paper, and submitting it to finance. And for that manual process, it’s often perceived as free. But if you tally the time it takes for employees to go through the effort of actually pulling all of their expense documentation together, and filling out a manual expense report, it’s not free.”
While focusing on T&E and vendor expenses may not be a top priority for growth-minded private equity investors, the fact remains that these are the second-most controllable expenses, behind payroll. In the particular case of travel expenses, the price points are so varied, and the methods for booking travel so heterogeneous, that companies without strong controls often suffer from a culture of employees constantly bending or ignoring company guidelines.
One telltale sign of a chaotic travel expense system is “employees spending inordinate amounts of time just trying to research the fares, the hotel rates, and not necessarily making the right decisions,” says Sheehan, who manages the Concur Private Equity partnerships for SAP. “Without proper tools and software, it’s really challenging to know what your risk is, what people are spending, where it’s being spent, if it’s the right spending. That lack of visibility can really hurt a company.”
Adds Sheehan: “When companies are more efficiently and effectively capturing spend through an integrated, cloud-based system, they gain greater visibility into that spend. These insights can then drive broader improvements across the company—from increased compliance and operational efficiencies, to streamlined, accurate management of working capital and better overall financial health.”
And if you believe time is money, the time-saving benefit of an online expense solution, which connects to mobile devices, is warmly regarded by those who adopt them. “Your finance team can be focused on more strategic initiatives,” says Sheehan. “There’s less time being spent on, for example, getting an expense report approved. You’re not having to shuffle it all over the office—it goes through an online approval. And that is super time-saving.”
As online expense tracking systems proliferate, it is unlikely that there will be nostalgia for the days when employees needed to tape receipts to paper expense reports. (But there may be nostalgia for rogue spending).
Companies that adopt cloud-based expense trackers often see a reduction in overspending in certain categories.
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