One of the biggest predictors of success, regardless of the size of your business, is cash flow management and visibility.
Without a positive cash flow, it’s impossible to meet the business’s debt obligations, pay staff, purchase materials, or invest in future growth. Visibility into cash flow is crucial to drive investment decisions and strategic planning. So it’s no surprise that many businesses focus on maximising income and cash flow.
Managing cash flow depends heavily on having a clear and accurate view of spending. Yet too many businesses still use outdated and manual approaches to spend management, which cost time and money.
Manual handling often means double-handling
Organisations that are more likely to cling to outdated methods like paper-based invoices or expenses claims, a complex workflow, and storage systems that are neither accessible nor disaster-proof are opening themselves up to risk and cost.
Manual handling often means double-handling, which is where errors can creep in. Correcting those errors takes up even more time, while inefficient handling often means companies don’t get the advantage of early-payment discounts.
In fact, these organisations are more likely to be hit with late-payment penalties.
Despite this, and the increased interest in automated systems, the use of spreadsheets is actually growing. The latest SAP Concur ANZ spend management index found that 26% of respondents are still using them.
These businesses are missing a key opportunity to gain efficiencies and cost savings. It also makes it easier for dishonest employees to hide fraudulent activities. The longer fraud goes undetected, the more it costs the organisation in both money and reputation.
Even minor cases of fraud, such as employees claiming reimbursement for expenses they’re not entitled to, can quickly add up and create a culture that suggests this type of behaviour is condoned.
Once this culture is in place, it can be very difficult to weed out the wrongdoers and clean up the system.
Automated systems give better visibility into company spending
By contrast, a dedicated, automated system can deliver outstanding visibility into exactly what’s happening with spending across the organisation, from the largest invoices to the smallest petty-cash expenses. This makes fraud immediately visible and it lets you set up policies within the system that prevent unauthorised spending altogether.
A mobile, cloud-based system can also reduce the chance of errors and significantly reduce the amount of time it takes to process invoices or prepare, review, and approve expense reports.
The index revealed that more than half of the respondents already have an automated expense management system in place. This increased interest in automating expense management suggests business leaders are starting to grasp the benefits and efficiencies that can be gained through automation.
Last year’s index showed that nearly a quarter of respondents had never even thought about automating expenses, so the improvement is encouraging.
A faster return on investment and reduction in costs across the board
An automated expense management solution starts to deliver exceptional benefits when it’s integrated across other business systems such as enterprise resource planning. Businesses can then analyse the combined data and extract insights that inform better business decisions.
For example, it can help you see how much money your business is spending on what, and how you could shave costs to improve your bottom line. It can also illuminate opportunities to reduce costs by changing suppliers or negotiating better deals.
Around half of the companies surveyed in the index analysed their data. Most looked for better visibility into costs and spend, or to understand how expenses impacted the bottom line.
Just three per cent said they analysed data to continuously optimise their business expense policies. This is where the biggest benefits potentially lie, so organisations should consider adding this question to their data analysis.
While data analysis may be some way into the future for some organisations, manual expense processes should be a thing of the past.
Automated expense management systems can deliver a fast return on investment, and can reduce costs and introduce efficiencies across the board.