By Bill Vergantino, President and CEO of ExpenseWatch
There‘s nothing more exhilarating than watching your business take off. You see all of the indicators of success begin to fall into place: year-over-year top line revenue growth, positive cash flow, an expanding customer base with satisfied customers, and the increased spending to support your growth that follows.
But as you grow, you may find processes can become strained and cause bottlenecks and challenges that slow the business down. Spending processes are a perfect example.
How do you know when your spending processes may need an overhaul? Your employees or vendors become extremely frustrated:
In our last article, we talked about three driving factors that motivate companies to transform their spending processes. By automating with spend management software, organizations can gain visibility and control over all spending, which may be coming from any number of sources, such as expense reports, purchases, or payable invoices (bills).
Your employees and vendors are also directly impacted when spending processes slow the business down. Let’s take a closer look.
Spending Requesters/Expense Report Submitters
As you grow, more employees are spending money on behalf of the organization. Traveling employees become frustrated by how long it takes to complete expense reports with supporting documentation. Submitting reports can be problematic as well, especially if staff members have to mail or overnight their weekly, bi-weekly or monthly expense claims. And, if approvals take too long, you’ll hear complaints when travelers aren’t getting reimbursed for cash-out-of-pocket spending fast enough.
As each department expands, additional employees are tasked with buying offices supplies and goods and services to support their various departments, such as operations, product development, marketing, research, and more. Employees are bogged down trying to keep necessary supplies on hand and end up either over buying or rush-buying to fill needs. Staff members become irritated by lengthy approval times, especially if it slows down their ability to complete their projects.
When bottlenecks emerge, employees either grumble that processes are too painful, or won’t adhere to them because they are too cumbersome to follow. You know you have an issue when employees are more worried about the process to spend money or get reimbursed than they are with executing on assigned tasks.
Managers who Approve Spending
How many times have you heard your managers question how they went over budget, yet again? Better yet, how many calls does your finance department field from managers asking when budget vs. actual spending reports will be available after monthly and yearly financial closes?
Without the right tools, approving managers are not equipped to effectively approve expense reports, purchase requests and payable invoices. As they review spending transactions, they can’t see if spending is in policy or how approving a spend request will impact departmental budgets.
You want your approving managers to be accountable to manage the spending they oversee. When spending isn’t in line with budgets, you want to know why. At the same time, your approvers tell you they can’t effectively do their job if they don’t have the visibility they need to make the decisions that allow them to be accountable.
Finance and Accounting Teams
As spending increases, companies often impose so much oversight onto the employees that they get frustrated. Not only are employees waiting too long to be reimbursed for out-of-pocket spending, accounting spends days going back and forth with employees and managers trying to understand why spend occurred, what was the nature of the spend, was there a client that spend can be associated to, and more.
Then, as more and more paper documents are trying to be processed by those who manage the accounts payable process, your team can start to drown.
Expense reports need to be audited to make sure they are in policy and that each transaction is categorized correctly, receipts are attached, and approving managers have signed off. Purchase requisitions also need to be audited and invoices created and matched to POs if one was even generated. Any chance of early payment discounts go out the door because of the length of time it takes to get the approving signatures. Vendors get frustrated if your company is always late paying for the goods or services they provide and may even withhold services if late payments become chronic.
When the amount of work becomes unmanageable, your finance and accounting teams become over-burdened just trying to keep up. At this point, they may either avoid penalties by paying on time without first gathering the proper approvals or they start asking for additional headcount.
As spending increases and more people spend, you can never be sure policy is being enforced. As a result, you may end up putting more pressure on your finance team to ensure money isn’t going out the door for unnecessary or wasteful spending.
You and your executive management team also need visibility into spending that is in process in any given month, and easier access to spend analytics so you can effectively manage the business. Without this day-to-day visibility you can’t stop spending before it causes serious cash flow problems; nor can you truly analyze spending to evaluate all areas where improvements can be made.
As you can see, anyone in your organization with a role in company spending may provide the catalyst to transform spending processes. More and more, companies are turning to spend management software to automate these processes.
As we’ve seen over and over with our customers, the benefits are tangible—you can see actual dollar savings quickly and gain the visibility and control that has been missing. At the same time, you create a business culture that promotes spending control by empowering employees with the tools they need to effectively and efficiently manage company spending, no matter what role they play in the process.
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HOW SMBS CAN MANAGE COMPANY SPENDING
NEW WHITEPAPER from Ardent Partners. Download now for compelling insights and recommendations on how your small or midsized organizations can best manage company spending.
Plus, we have a lot of other information available to support your business strategy and improve how your company manages spending, including:
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