How To Make The Best Use of Expense Analytics
by Mohana Madhurakavi, on Aug 2, 2017 12:18:25 PM
Analytics like numbers and trends help you make informed and confident decisions. With the technology that we currently have, the amount of analytics available to companies is huge. Adding to this, data that used to take months to compile, clean and analyze can now be collected in real time, and organisations that use these analytics strategically tend to have a competitive advantage over the rest.
Expense analytics enables businesses to compare expenses with budgets and ensure that they are not overspending or indulging in wasteful expenditure. These expense analytics reports give finance teams and C-level executives better and real-time visibility into:
- Employee expenses like corporate travel bookings and credit card reconciliations.
- Project-specific, vendor-specific and region-specific insights.
- Number of reimbursements and cash advances given out that month.
- Statistics and trends relating to expense reports and policy violations.
However not all companies are harnessing the power that comes with a T&E analysis. In fact, research shows that 59% companies still rely on spreadsheets to make expense reports and manually accumulate and consolidate expense data. 51% of these companies state that this method gives them poor visibility into employee's spendings. Analytics gives organisations a lot of advantages including:
- More Transparency: Providing the approvers, admins and company heads with more transparency and clarity into behavioural changes in employees.
- More Data: These reports stay with the company and act as historical data for decision making in the future.
- More Empowerment: They empower the finance staff and auditors to make strategic decisions with regards to budget cuts and changes in policies and guidelines.
How to make the best use of Expense Management AnalyticsCheck for fraudulent activities
It is unlikely that with synchronous policy checks one can miss out on fraudulent activities, but it is better to be safe. Drilling down the expense data to an individual level will allow you to view every employee’s expense habits. Data reports will give also you a brief on:
- Employees who spend frugally vs ones who don’t
- Policy violations by each employee.
- The spend vs return ratios on business trips.
This way companies can make informed decisions on offering incentives or rewards to strong performers, which will encourage employees to imbibe smart spending habits and saving tips. Below is a screenshot of an analytical report generated by Fyle.
Expense analytic reports can also give you a clear view on policy-violation trends. If in case, many employees have violated the same policy, that guideline probably requires more clarity. In some cases, you may also consider tweaking it a little. For example, if you notice employees are finding it difficult to stay within the upper limit of $60 on food each day, consider amending the guideline, in this case setting the upper limit at, say, $70. Ensure reasons for these changes are made clear to employees.Gain vendor insights
Expense data gives finance teams useful insights on preferred vendor relations. This includes how much money is being paid out to the same company/merchant and how often. If the amount is large and the payments are being made frequently, companies can consider negotiating a discount or subsidy with the vendor. Most often, organisations negotiate deals with cab companies or global hotel chains if in case their employees use the service frequently. This way organisations can cut down on costs and it helps them increase their networking and have better relations with suppliers.Gain categorised spend insights
Categorise your expense reports department wise, region wise or project wise. Let’s look at region wise spendings. It is obvious that costs are different in different cities. If your company has branches in various cities, be sure to analyse how each departments in each cities is spending and if the amounts are similar in any way. If they are not, try and understand what that particular department is doing differently and how they are spending lesser money. Similarly, project wise spend analysis can help companies understand what they did differently in comparison to previous projects they took up. This can further act as historical data for the company when shaping budgets for other projects in the future. Companies grow stronger as they inculcate good practices from other departments or branches.
Make strategic HRMS decisions
Expense analytical reports give companies evidences of behavioral changes in their personnel. These behaviours can guide decisions that affect the human resource management as well. For example, if there is a particular expense employees are claiming every month, say, phone bills or fuel, then consider talking to the HR department and integrating these expenses as a component of the employee’s salary structure. This will not only help optimise the payroll structure but also help employees reduce their tax liabilities.
37% companies using an automated expense management system have claimed that they have had better view of travel and entertainment spends. These key operational metrics help organisations have better control on unnecessary spendings and reduce costs. By acquiring powerful statistics through a coherent and interactive expense analysis dashboard, companies can gain maximum benefits from an end to end automated expense management system. With such a powerful tool, organizations can ensure their bottom line stays strong.
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