As a CFO of your company, it is one of your primary responsibilities to look for new avenues to increase revenue and cash flow. You become the decision maker, who proactively helps the CEO steer the company in the right direction. While you are on a quest to boost your bottom line and minimize the risks, travel expense management often takes a backseat. Despite being the second most difficult operating expense to control, many companies still don’t prioritize expense control.
We recently conducted a webinar which took a deep dive into the latest trends in travel and expense management. We also conducted a survey, where we found close to 20% of attendees still rely on manual processes to handle their expenses.This could prove detrimental to the health of your business.
In this article we take a deep dive into the strategies a CFO can implement to save money on travel and expense management. Further, we also discuss how a company can benefit from implementing an automated system for travel and expense management.
4 Expense management strategies for CFOs
Expense management often gets neglected, when business huddle to find ways to control business expenses. It is considered synonymous to paper-work and is not seen as an opportunity to save money. Years of neglect could prove harmful to the growth of your business.
But is there an effective solution to help you streamline and manage your business expenses?
This is where an automated expense management software can help save the day. While it makes expense reporting seamless for both your traveling employees and the finance team, it also ensures policy compliance, making sure your employees do not spend more than what is expected of them.
Here are some effective expense management strategies that leading CFOs swear by:
Create a Travel and Expense Policy
For companies that have travelling employees, it is crucial to have clear expense policies. Many a time, companies do not prioritize expense policies. They tend to keep it for the last, mainly because it involves a lot of paperwork and research. However, they do not realize that the lack of an expense policy is doing more harm than good. It is likely that your employees are spending more money than what you’d like them to spend, simply because they are not aware of the spending limits. Such situations highlight the need for a travel and expense policy.
Having a travel and expense policy helps not just in saving money, but also prevents fraudulent behavior.
It is also likely that your employees don’t know about the acceptable spending limits. As a result, they end up creating policy violated expenses. Further, it becomes a headache for the finance team to rectify these errors, which, in turn causes delay in reimbursements.
A tangible T&E policy will educate them on spending limits and the repercussions of policy violations.
Introduce pre-trip approvals
Most of the time, companies consider expense reporting and travel management as two separate entities. Your traveling employees are expected to carefully safeguard airplane tickets or hotel receipts to later compile them into expense reports.. Sounds, exhausting, isn’t it?
To help ease out this challenge, most CFOs suggest using an automated expense management software. They are equipped to reduce the work, both for your employees and the finance teams.
Additionally, they let your employees provide a trip budget before they embark on a business trip. When the finance team approves the budget, they can provide an advance amount to the employees for travel spends. As a by-product, employees do not have to rely on their own pocket for expenses. Many companies choose to introduce corporate credit card programs so that employees do not spend from their own pockets. It also provides them a better control on the travel expenses.
Once the trip is done, the finance department can see all the expenses associated with a trip in a single dashboard. This can drastically help speed up expense processing and reimbursements.
Negotiate for better rates with vendors
Accenture conducted a recent survey to help understand how much companies can save by negotiating with vendors. According to the study, Travel Management Company can help you save close to 40% of the money.
Although the survey includes companies with over 1 billion spendings, it draws our attention to places where we can potentially save money.
For instance, if your employees spend a lot on client entertainment, get in touch with the specific merchants and negotiate for better rates. Most of the time, vendors are willing to provide a discounted rate if your company promises a certain amount of spending with them in a year. This sort of a symbiotic relationship can help you save money, without compromising on the kind of service you provide to your clients.
Pick an expense management software that best suits your business needs
Introducing the right expense management software in your organization is not as easy as it sounds. The difficulty lies in finding the software that meets your requirements. Despite the presence of multiple options in the market, you need to go for something that is truly digital. It has to make work easy, both for your traveling employees and the finance team.
Here are some of the benefits CFOs can derive by implementing an expense management software the right way:
Improve the efficiency of Accounts Payables
A truly automated expense management software is like a blessing for the finance team. If your software handles everything from expense creation to reimbursement, it eases the work of your finance team. This gives them more time to focus on other matters, such as vendor procurement, auditing, budgeting, etc.
Increase policy compliance
Effective policy help foster a compliant behavior. It lets your employees know about the acceptable spending limits. With everything automated in a click. even the finance team does not have to go through numerous lines of an Excel sheet to check for policy violated expenses. Some expense management software have real-time policy checks at every point, letting both the submitter and approver know beforehand whether the expense is policy compliant or not. This enhances policy compliance and helps businesses effectively curb unnecessary spends.
Gain visibility into spending trends
To control spending, you first need to know where exactly you are losing money. That is where analytics comes into play. With insight into the numbers, you will be able to understand spending trends, patterns, frequent spendors, frequently associated vendors and more.
Get notifications on fraudulent behavior
When handling expense details on a spreadsheet, it is a difficult task to find policy violated expenses. Going through numerous rows of numbers is not the right way to find fraudulent expenses. Many expense management software detect fraudulent expenses at the source itself, thereby ensuring smooth and errorless expense reporting.
Fyle helps you take the effort out of expense reporting. Started out as a solution to a common problem, Fyle now helps businesses worldwide with their expense management woes. With instant reporting, effective policy compliance, and seamless approval workflows, you can stay rest assured that your travel expenses are taken care of.