Inadequate expense management processes have businesses wasting time. Procuring goods and making one-off purchases is taking too long, says a new report from Soldo, but it’s not the only time-wasting procedure. Financial executives are taking time to manually sift through transactional data in an effort to find out which employees spent company money, and on what.
The report, “U.K. SME Spend Management Report 2018,” is the result of the corporate spend management solution provider’s examination into how businesses track and manage employee spend. After commissioning YouGov to survey 2,000 U.K. employees and 2,000 financial decision-makers among small and medium-sized firms (SMEs), Soldo uncovered a range of ways businesses are losing money and visibility into expenses.
“From overspending and missing receipts, to remnants of travel budgets not being returned to businesses, and the writing off of unfathomable purchases, the report also highlights a significant opportunity for businesses to empower employees with the autonomy to undertake spending independently,” Soldo stated in its report.
One common denominator across many of the points of friction, resulting from a lack of adequate expense management procedures, is wasted time.
In the purchasing process itself, researchers found, one-fifth of mid-sized companies spend between two and four hours to purchase something. Nearly two-thirds of finance executives said purchasing takes up to an hour, but 12 percent of mid-sized companies said the process takes more than eight hours to complete.
After purchasing, financial professionals then waste time digging through expense reports and financial data to gain a clearer picture of the purchases being made, by whom and why. More than one-third of survey respondents said they are forced into “unnecessary financial detective work” each month to uncover this information. It’s a problem found in both spend categories of employee expenses and procurement of goods, like office supplies and software.
Soldo’s survey found more than one-fifth of mid-sized companies spend between two and four hours on this financial detective work as well; 5 percent say they spend more than eight hours on it.
“Finance departments frequently waste time undertaking detective work to uncover its employees’ expenses that are seemingly impossible to identify,” the report stated. “Time that could be eliminated with the adoption of technological solutions.”
It appears that financial managers without these solutions are not always willing to take the time it requires to manage expenses. Soldo’s report found nearly one-fifth of medium-sized companies are willing to leave as much as 10 percent of company spend unreconciled and unidentified at the end of every month, and 30 percent of businesses overall say they do this with some percentage of company spend each month. Seven percent of companies say they’re willing to leave as much as 20 percent of company spend unreconciled.
Managers and executives aren’t the only ones forced to spend significant periods of time on spend management processes, though. The employees themselves are forced to wait longer than necessary to be reimbursed for their company expenses: Nearly half of SME employees are expected to pay for expenses up front and be reimbursed at a later time, causing an administrative burden that takes time to file, process and reconcile employee expense reports.
One-tenth of employees said it takes longer than one week to be reimbursed. Less than 10 percent of companies provide their employees with money to make purchases on behalf of the company, a strategy that would save time and resources on the expense report filing and reimbursement process. Financial decision-makers are aware of this missed opportunity, with half of these respondents agreeing that the use of spending cards would benefit their firms and increase trust within the enterprise. According to the employees themselves, more than one-fifth said it takes an hour every month to build their expense reports.
The data reveals “a clear case for leveraging new technology, particularly in the form of accounts that allow the control and visibility of multiple cards in order to streamline and efficiently control company spending,” Soldo concluded.