Talk of “friction” in the payments industry is mostly about removing obstacles to consumer transactions, and how easily (or not) those payments get processed on the backend by merchants and banks. But there are other types of unwanted friction in finance.
Big corporations and small to medium-sized businesses (SMBs) all struggle with expenses, and must address leaks and mishaps before they become accounting nightmares. An employee’s accidental use of her corporate card to pay for groceries isn’t a crime, but it does fall under the heading of “friendly fraud,” which creates friction for the accounting department. On the other hand, an employee exploiting weaknesses in a paper-based T&E reporting system by submitting fake receipts is a crime, and represents another vexing scenario for accounting.
SMBs and owners often serve as both CEO and CFO, which means everything is their problem. When it comes to solutions, the latest Workforce Spend Playbook, a collaboration between PYMNTS and Bento for Business, is a compilation of the best spend management approaches currently available.
We may be a long way from ending corporate waste and fraud, but spend management systems are the technology of choice for treasurers and accountants who are working to make it happen. They’ve had it with the futility of managing an increasingly complex mélange of paper and digital invoices, disbursements, payments and reconciliations. The ability to set spending controls on corporate cards, monitor usage in real time, and enable or disable card functions and limits instantaneously are among the benefits of digital transformation for adopters.
Disrupting Paper-Based Systems
It’s a new year in a new decade of the 21st century, but paper expense reports, paper receipts and paper reimbursement checks are still with us. PYMNTS research found that 42 percent of B2B payments were made via paper check in 2019, for example. Not only is that error-prone, but it’s out of touch with a youthful workforce that has no use for ink-stained “olden banking.”
The latest Workforce Spend Playbook details a number of diverse and compelling use cases where platforms are replacing legacy accounting and introducing new spend management programs, with promising results. One high-profile pairing involves Uber and American Express, where paying Uber with an Amex corporate card now accrues points for free rides, eats and more.
Weddings and events are another sector experimenting with card-based spend management efforts. AE Events, a respected Boston-based event planning firm, is using one of the major card brands to empower field managers in the kinetic events industry. From large trade shows to intimate conferences, organizers and event staff often have to make on-the-fly purchases of goods and services that are unforeseen. But setting a half-dozen staffers loose with no-limit corporate cards in, say, Las Vegas has been a leading cause of premature aging among corporate managers, accountants and treasurers for decades.
That’s one of many familiar scenarios where spend management is having a massive impact. Bento for Business is one of the leaders in the space, offering dashboard views and discrete control over individual cards – days the cards can be used, spend limits, restrictions on purchase type and other functionality – and the platform integrates with popular accounting software including Intuit QuickBooks, Sage Intacct, Wave and several others.
The question of disrupting operations to link spend management with older legacy systems need not apply to a spend management upgrade, according to Paula Bachman, chief financial officer at solutions provider Bento for Business.
“You can start by choosing one primary area of pain and then look for tools that are flexible and that integrate into your accounting system,” Bachman told PYMNTS. “Businesses can continue to make incremental changes to their expense management without upending their infrastructure that way.”
Tax Time, and Time as a Commodity
When tax season approaches, it’s a good time to go through the spend management checklist and make sure that up to 25 percent of your time isn’t being spent in paper-based payroll and bill settlements. That’s not unusual for SMBs and paper-based operations, as recent surveys have shown.
Complications arise with billing and payments – it’s generally accepted as a fact of life. What fewer companies of any size should accept, however, is managing those complications with the same medium their grandparents used – paper – and its many drawbacks. There’s a digital path forward in spend management, and more companies are taking it as the benefits become clear.