Aussie SMEs know the benefits of automating expenses but one-third still rely on paper-based systems.
While more Australian businesses are recognising the benefits of automating expenses and supplier invoices, a significant percentage of companies are still using traditional, unreliable, paper-based methods, according to the 2016 Concur ANZ spend management index.
The index provides an insight into how Australian companies manage business expenses and supplier invoicing. Following Concur’s inaugural index in 2015, some 100 senior finance and management decision makers were surveyed from financial services, retail, food, transport, insurance, utilities, resources, entertainment and other professional services.
Just over half (56 per cent) of those surveyed said better visibility of corporate spending is either very or somewhat important to them, compared to just 26 percent in 2015. However, this has not translated into adoption of automated expense systems to achieve this greater visibility, with 35 per cent of organisations saying they still used paper-based expense reports, up from 27 per cent last year.
Only by consistently and accurately monitoring expenditure will companies be able to tell if the policies are appropriate and working effectively. Also, it’s essential to have a complete view of expenditure to manage cashflow effectively.
This means adopting specific policies and being able to enforce them in a timely way. Knowing who, in an organisation, is authorised to make purchasing decisions is just the first step. Policies also need to incorporate budget limits for authorised employees, preferred payment methods such as company credit card versus personal debit card, and types of acceptable expenditure. For example, paying for meals while employees are travelling for work may be acceptable, while paying for alcohol during those meals may not be.
Once organisations have settled on a set of expense-related policies, they must ensure they have the means to monitor all expenditure.
In 35 per cent of organisations, expense reports are paper-based, with printed receipts and photocopies. A further eight per cent of organisations use standalone spreadsheets to monitor expenses, and five per cent just check the corporate credit card bill.
These methods create extra, manual work, and increase the potential for errors. Employees can easily get reimbursed for out-of-policy spending, whether intentionally or accidentally, when expense management methods rely on manual checks. Results from the index included:
Businesses looking to cut costs should first consider finding a better way to manage expenses, including employee travel and entertainment expenses, as well as companywide costs. By simply managing those expenses in a more streamlined, strategic way, companies can find significant cost savings.
Once organisations have a strong expense management system in place, the benefits will flow through to other parts of the business. For example, employees who no longer have to spend a half-day each month managing their expenses can spend that time adding value to the business. Businesses that can effectively analyse all expenditure across the organisation can identify trends and patterns that can inform policymaking, which ultimately can lead to additional cost savings.
Matt Goss, ANZ Managing Director, Concur