Four Strategies to Solve Expense Management Problems for Enterprise

Cash flow can make or break a business. Whether you are a startup trying to make it big while subsisting on your investment runway or a big business with millions of dollars in revenue and expense, running out of cash can spell the end of your company.

In a previous article, we mentioned that more than eight out of ten businesses fail due to cash flow problems. Responsible cash management is by far the single most detrimental problem that a business can have. And yet, most businesses still struggle with it—even larger ones. In fact, size can often become a contributor to the problems of bloat, information silos, and cost inefficiencies.

It’s clear that expense management is an indispensable part of any business. But such statistics show that things are not as straightforward as they may first seem. Here are four of the most common expense management problems and the strategies to solve them.

1. Gaining a bird’s-eye-view visibility

Enterprises often suffer from a lack of visibility. This is especially true in larger organisations. Larger companies can have multiple departments and offices across various geographical locations. While this may be a great way to expand the market, this can also lead to problems.

Segregated departments in large organisations often face the problem of information silos. Every department is confident it has its proper accounting of expenses. They may not realise how some records might be misattributed or misrecorded. Without a bird’s-eye-view perspective, things can get confusing.

The problem is exacerbated even further in organisations that require employees to do a lot of travelling. Documentation never ends—every single expense needs to be reported and reimbursed. Just the thought of documenting and validating the authenticity of every minutia of employee transactions can give one a headache.

Without clear visibility, these are all opportunities for errors. There will inevitably be missed reports and duplicate receipts, amongst other mistakes. Or, perhaps, “mistakes”. With an unclear oversight, it becomes very easy for employees to submit fraudulent reports.

A lack of visibility is the source of many problems in expense management. Thus, there needs to be a solid strategy to protect the company against this. A cloud-based expense management software can be a great solution. Good software will give businesses a bird’s-eye-view of visibility across all units and geographical locations. Better yet, it updates and is accessible in real-time.

2. Enforcing travel and expense policies

Companies often have certain expense policies in place. This is done to avoid an unnecessary $10,000 lunch meeting, for example. This is especially true for companies that require employees to travel frequently. A company has generally made it clear which kinds of expenses can be reimbursed, what the price ceiling for flights and hotels should be, and so on.

However, enforcing them may prove to be a challenge. It’s very easy for travel costs to get bloated. Often, they increase due to factors outside of the company’s control. The price of airline travel always fluctuates. Hotels can increase their rates at any time. Employees may suddenly upgrade their bookings without prior authorisation from the company.

Even with a strict written policy, many cases of problematic receipts can occur. Receipts get lost. Duplicate reporting can happen. Not to mention fraudulent cases. Pen-and-paper-based systems are very prone to these kinds of problems. However, even with digital systems, it can still be challenging. From data entry, validation, and approval, things can go wrong at multiple points.

The aid of AI can greatly help enforce travel and expense policies. A system that can detect receipt documents and cross-reference them with existing company rules and regulations in real-time will save plenty of hours. Best of all, it will protect the company against potential problems due to reporting errors.

3. Building better approval and reimbursement cycles

Compliance problems and questionable receipts do not always come from ill intentions. There are times where employees would make expense initiatives that would later prove to be problematic simply because the approval and reimbursement cycle takes too long.

Often, this length of time is needed to do proper auditing. Of course, auditing is a crucial part of the approval and reimbursement process. It is required to check the authenticity of submitted receipts and requests for reimbursement.

However, when done manually, auditing can take up so much time. By the time a report is approved, the company is already months away from the transaction in question. And yet, the employee in question may have to wait another month for the reimbursement to be fully paid out.

This long cycle of approval and reimbursement can lower morale for the employees. As we know, low morale can lead to sloppy compliance or even fraudulent reporting. But even when those do not happen, long cycles can cause cash flow problems for the organisation. The company may have an urgent bill to be paid next month—at the same time that it needs to reimburse all the transactions from a business trip last quarter.

All of this can be avoided with automation. A good approval and reimbursement software will be able to validate the authenticity of receipts much faster than a human being could. It can process multiple requests simultaneously, avoiding bottlenecks.

4. Reducing the risk of stress and fatigue

So you have a cloud-based system in place. Your travel and expense policies are enforced by AI. And your approval and reimbursement cycle is much faster thanks to automation software. The important question is: how well do they integrate with one another?

Perhaps the biggest contributor to expense management is human error. Even with digital systems, errors can still happen. Every time data needs to be transferred from one system to another is an opportunity for a mistake to happen.

It gets worse if you are still using a spreadsheet. Manually entering expenses into a large spreadsheet can take a lot of time and prove to be exhausting. Sooner or later, an error is bound to be made. A missed digit or a stray digit can prove to be fatal to a business.

Even without such major errors, stress and fatigue can contribute to many other mistakes. Each error increases the room for fraudulent reports, bloated expenses, delayed reporting, and others. It amplifies the risk of all of the problems mentioned above.

Expense management software is indispensable to the longevity of an enterprise. But the kind you choose matters. A reliable system is one that is comprehensive. It should be able to perform multiple tasks and need little to no manual intervention.

A robust expense management platform is an all-star strategy

A robust expense management platform can really make a difference to the health of an organisation. It gives a bird’s-eye-view perspective to all business units. AI makes it much easier to enforce travel and expense policies; automation saves a lot of precious time by creating better approval and reimbursement cycles.

Humans feel stress and fatigue. Software does not. Using a reliable suite of expense management software allows an enterprise to avoid potentially fatal human errors. A cloud-based, intelligent, and automated expense management software will help you strategise against expense management problems that plague most enterprises today.

SAP Concur is an example of such a platform. It is robust enough to start building all of the above strategies, yet versatile enough to be customised to your needs. With SAP Concur, your enterprise will be on its way towards a better cash flow and more efficient financial management.