Here are four ways businesses can deal with today’s uncertainty through improved spend management.
No other year in recent memory has lived up to the old adage that ’the only constant changes’.
Businesses have had to deal with huge disruption as normal life is upended by the lockdown measures imposed by governments around the world to help curb the spread of the coronavirus.
Angelique Montalto, Regional Sales Director at SAP Concur, believes companies will need to create certainty where they can in order to effectively deal with today’s uncertain times.
“While you can’t control everything, the good news is you don’t have to. If you focus on just one key aspect of your business – employee spend – you can maintain a healthy bottom line and create some stability while the world around you recovers.”
20% of employees have at least one non-compliant purchase on their expense claim. Those costs can add up quickly, making employees spend a universal part of any business, but keeping track of how every rand and cent is spent can be immensely tricky.
“Companies need to have an accurate, real-time view over their total spend to ensure they can make good decisions,” said Montalto. “Improved cost containment can help maintain healthy cash flow and give business leaders the flexibility to redirect spend to high-value areas as needed. With the best in a class technology platform, companies can also automate many of the tasks associated with employee spend management, freeing up valuable internal resources for more high-impact work.”
( Also Read: Steps for Spend Analysis in Financial Management )
4 Ways to Create Certainty in Employee Spend
According to Montalto, creating certainty in employee spend during these uncertain times comes down four steps:
Consolidate all employee spend in a single place
Effective spend management requires that companies are completely clear over all the types of employee spend, wherever they are: at home, at the office, or while traveling.
“You have to see it to control it,” said Montalto. “Businesses need to ensure they have all employees spend in a single place and that the data is accessible to all parts of the relevant business lines.
When you democratize data in this way, everyone in your business is armed with the appropriate tools to effectively manage company resources. Ideally, the system should seamlessly integrate data from multiple sources and streamline the steps between spend and reporting in order to reduce errors and latency.”
Maintain your budget
Each year, organizations and their various departments undergo extensive budgeting processes to guide spend for the next year.
However, too often there is a gap between budgeted spending and actual spending.
“One reason for this is that companies don’t apply the same effort to managing their budget as they do in the creation thereof,” said Montalto. “The challenge is not to overspend and equally important is not to underspend leaving elements of the business without the resources needed for productive growth. Knowing how much money is available at any point in time is vital to navigating unexpected events and taking advantage of unforeseen opportunities.”
“Companies need to relook their end-to-end invoicing systems from purchase order creation through to vendor payment,” advised Montalto.
“This is an area that requires special attention to the more error-prone aspects of invoicing, for example, automated invoice matching, purchase orders and goods received. Using a technology platform that can help digitize the traditional manual processes can help eliminate these errors whilst also identifying and uncovering areas for improvement.
For example, by paying vendors at the optimal time, you maximize your cash flow while also creating opportunities to take advantage of early-payment discounts which can save money and build strong supplier relationships.”
Mine data for insights
To control spend effectively, organizations must first understand their spending data and then put it to good use.
Montalto recommended that companies conduct regular and dynamic spend analyses throughout the business to determine which spend management approach works best for each department.
“Different teams are likely to have different priorities, some may want to track spend by category, others by employee, or vendor – whatever makes the most sense for the business,” said Montalto.
“Flexibility is critical and allows companies to view and leverage spend data based on priority and timing. Having a holistic view of spend data helps decision-makers understand trends that may point to opportunities for improved cash flow and cost containment.
In the long run, this type of flexibility gives companies a welcome competitive advantage, which is even more important now that businesses are under strain from the global economic downturn.”
For further information visit www.concur.co.za