Today’s Chief Financial Officers (CFOs) face a growing challenge. As businesses grow and expand, more and more spend is happening to support business growth, and a significant portion of this comes in the form of employee spend.
CFOs must safeguard the financial health of the business, down to the last dollar, but a lack of visibility into spend across the business can result in reduced efficiencies and lost profits. A particularly challenging area for CFOs and their finance team is travel and expense, which accounts for roughly ten per cent of an organization’s budget and is considered the second-most difficult operating cost to control.
For CFOs to effectively do their jobs and manage company cash flow, they must evaluate how they can empower their finance teams and adjust their strategies and solutions to gain more control over employee spend across the entire organization.
Tech-proof employee expenses
Organizations are seeing more employee-initiated spend than before, from airfare and hotels, mileage, transportation, meals, client entertainment and beyond. But these days, these purchases are being made in a variety of payment methods, often managed by multiple systems that don’t connect to share this important data across the organization. This leaves finance managers with a significant blind spot, and it increases the risk of duplicate expense processing and even intentional expense fraud.
Cloud-based tools can capture travel and expense spend into a finance system quickly and accurately, providing granular visibility into these purchases where and when they happen. Having consolidated data in one place increases policy compliance, mitigates fraud and puts an organization in a better position to negotiate payment terms with suppliers.
Halifax-based IMP Group has experienced the benefits automating its expense management has brought. This aerospace and defence company has grown significantly through acquisition, and is now made up of a diverse set of business divisions serving several industries. Imagine the level of complexity of managing manual spreadsheets printed out with paper receipts attached for an organization as large as IMP Group.
Across the organization, consistency, accuracy and visibility were a challenge. Since implementing Concur Expense, the finance team has been able to get a full view of company T&E expenses as a whole for first time. This visibility has enabled IMP Group to identify patterns like frequently booked hotel chains, which has allowed the finance team to negotiate better pricing and terms with these vendors for the whole company.
Ensure compliance
As they look to build better control over employee spend, CFOs should revisit spend policies and ensure employees are being compliant. Most organizations have policies in place for employees to follow when making purchasing decisions, such as guidelines for booking flights and hotels. However, expenses are not always visible until after the spend has been incurred.
When it comes to business travel, almost 20 per cent of travel and expenses fall outside of policy. This can be difficult to track and manage for finance teams and travel managers which suggests an opportunity for a better process.
For organizations accountable to shareholders or Crown corporations like the Business Development Bank of Canada (BDC), transparency and compliance within company spend is even more important. BDC opted to automate expense management through technology, and now finance managers can put guards in place to prevent non-compliant spend, such as booking an out-of-policy five-star hotel on a business trip before it happens.
CFOs should consider if their policies are up-to-date and adjust them to include any new solutions or technologies that have been adopted to improve spend management. Having strong policies that are communicated to and understood by employees is a key step in ensuring CFOs have an accurate picture of company spend.
Collaborate across the organization
C-suite roles are evolving. Now, it’s critical to use collaboration to solve various business challenges in ways senior leaders didn’t need to before—and the experience of the CFO is no exception. As CFOs consider new and evolved ways to manage employee spend, internal buy-in from other areas of the business is key. Particularly when it comes to automated spend technologies, CFOs should work in tandem with their Chief Information Officers (CIOs) to bring in these new solutions. As they look to build better control over employee spend, CFOs should work with their Chief Human Resources Officers (CHROs) to address the changes with employees. Collaboration between these roles brings each team’s expertise to solve challenges and drive successful transformation.
Just as C-suite collaboration is key for CFOs to be successful in implementing new policies and procedures to manage employee spend, so too is partnership with others who have more front-line visibility into employee spend, like travel managers. When employee travel is a key part of business growth, travel managers often have direct line of sight into the spend required to conduct these business trips. Travel managers will play an important role in enforcing policies set out by the CFO designed to create more oversight and visibility into where and when spend is happening.
With digital tools, updated policies in place and collaboration with leaders across an organization to ensure alignment, CFOs are opening the door to much more visibility into employee spend, a necessity if they want more control over it. With clear rules and easy to use tools, employees are empowered to make the right purchasing decisions and capture their spending as it happens. As the business landscape continues to shift and change, these automated tools allow CFOs to have a clear down-to-the-dollar view of their organization’s finances and control over employee spend.
