How Finance Teams Spend 42% of Their Time

Tracking non-payroll spending is a widely known drain on company’s time and resources to the point where getting this niche, costly corner of the accounts payables process under control has become a top mission for many businesses.

In a PYMNTS “On the Agenda” conversation, Airbase Vice President of Business Development Dan DeVall listed a litany of ways that lack of clarity into non-payroll spend is gumming up the works for accounting teams. But it’s fixable.

Diving into primary pain points, DeVall said, “It all starts with errors. As errors become more prevalent they need to be identified and corrected, and the hassle of manual processes around addressing those errors [creates] a ton of time wasted with reconciliation.”

This includes the ability to automate and enable reconciliation “to happen naturally,” removing pain points around things like a change in a recurring card payment when an employee leaves, and worse yet, the fraud issues that pop up around non-payroll expenses.

“When you think about payments and fraud being very common these days but going undetected,” he said, “how do you create processes that ultimately can help alleviate or [acknowledge] and recognize the fraud as it’s happening, or before it happens?”

Add to this the days that manual processing brings in time to close out monthly expenses, and the platform automation route starts looking better as these issues tend to get worse.

Where to start? The finance team is an obvious answer, but DeVall told PYMNTS that for non-payroll expense tracking, “There’s no longer just one owner and stakeholder. For finance and accounting to get a lot of the things they need to manage finances and accounting operations, it starts with the end user, it starts with the recipient, the requester, the person who needs to drive a buying process to go and buy something on behalf of the company.”

That means capturing the right data and “articulating a process” companywide that centers on lessening complications and ideally using automation as part of that process for optimal results.

See also: Managing Non-Payroll Spend Takes AP Teams 17 Hours per Week

Gaining Clarity and Control

Examining this in the study “The Financial Performance Quandary: Leveraging Automation To Better Manage Non-Payroll Spending,” a PYMNTS and Airbase collaboration, data shows that a lack of visibility and control of non-payroll spending is costing SaaS firms roughly 4% of their total expenses. Showing the scope of the issue, over 90% of SaaS firms reported not having full visibility and control over non-payroll spending, either before or after it happens.

By embracing automation offering compliant approval workflows and real-time reporting, DeVall said, “You can lean on integrations to be able to capture and store and ultimately share data across the entire business. You can also smooth out a compliant process. You can also drive hard dollar savings around cash benefits.”

This in turn allows accounting departments to optimize card spend and increase things like cash rebates to the business. It also helps with subscription redundancy which gets costly.

Time to value (TTV) is an important metric in SaaS investments, and DeVall said the efficiencies and cash benefits of automating non-payroll spend tracking lets companies “start to optimize and have visibility around how do I eliminate wasteful spending? How do I now see what should be unwanted or unnecessary spend?”

It’s an effective approach to so-called “zombie spend” which happens when employees or contractors sign up for services of various kinds that are billed on a recurring basis but sit unused, or that continue to be used by people no longer working for the company.

Calling this by its other name — maverick spending — DeVall said, “Bringing those benefits together is what’s making this whole spend management ecosystem so exciting. It’s not just about helping the end user or helping finance. It’s really about collaborating the whole business and allowing some of these processes and benefits to happen along the way.”

Get the Study: The Financial Performance Quandary: Leveraging Automation To Better Manage Non-Payroll Spending

A Spend Management ‘No-Brainer’

The migration to remote work and the use of contract workers are making a complicated matter more so, and company size tends to play a role in the progress being made against the problem.

“Right now, what we’re seeing is a shift in the business market,” DeVall said. “Slower, larger, more complex organizations typically have time to think about some of these problems and address them, and the impact can be massive, for even a small change.”

While smaller operations may have fewer resources, taking an automated approach to non-payroll spend management early on has benefits that scale as companies grow. “There’s the opportunity of being able to educate around this whole architecture and almost helping enable them to put the transactional workflow in place to help create efficiencies of scale,” he said.

With one of the marquee findings of “The Financial Performance Quandary” study being that AP teams allocate roughly 17 hours per week for employees to manage non-payroll — equaling 42% of one full-time AP employee’s time — platforms that consolidate spend management bring this time and resource misuse under tighter control, with greater visibility as a bonus.

He called this a “no-brainer” adding that it’s often a tell-me-more moment when companies are confronted with this inefficiency and offered the digital tools purpose-built to manage it.

“I want to be able to take any one employee and make them that much more efficient, and if you’re telling me it’s because I’m not giving them the tools to be able to automate some of these processes of managing this non-payroll spending, I think that’s a huge opportunity.”

This brings greater clarity by creating a rules-based approach to non-payroll spend management that is enforced by the platform.

“It becomes a much more transparent way of managing spend,” he said, adding that “embedding the approval workflow itself into a multidimensional hierarchy” drives increased transparency into users, purchase categories and more, so “you can start to see ways in which you can shift and shape these approvals as needed within the business.”