Top CFO Mantras To Ensure A Profitable Year Ahead
It’s that time of the year when CFOs have finally unearthed themselves from the piles of bills and expense submissions that they were buried in. The past couple of months of expense filing and investment submissions witnessed them being drawn right into the eye of the storm called year-ending. Although travel related expense management is the second largest controllable expense, it is the most overlooked function in an organization.
As a matter of fact, T&E management is generally viewed as a hassle, both for employees collecting receipts, filling out expense forms, and trying to get reimbursed, and for accounting departments attempting to gain visibility into how much is being spent each month so it can close the business’ books. Some of the challenges associated with travel and expense management are man-made, some arise due to the nature of the process, some trivial, and some serious. Whatever the cause, these challenges can have an adverse effect on the organization’s bottom line.
The new financial year spells relief for CFOs on one hand and calls for a round of introspection, on the other. The crucial question – ‘What could I have done better?’ – haunts a majority of these individuals as they embark upon a fresh year filled with more travel and expense as the economy slowly but gradually grows healthier. Here are some ways to plan for a more efficient, productive and profitable year -
1. Increase visibilityAccording to research from the Aberdeen Group, 51% of companies identified lack of visibility into spend as the top T&E management challenge. CFOs needs to have holistic visibility of all expenses at the start of the financial year. This is in order to gain actionable insights that enable companies to drive greater compliance to policies, to stop bad spending decisions before they happen and to manage, plan and forecast more accurately right at the beginning.
Expense data from all structured and unstructured formats will aid CFOs with dashboards and reports that provide complete insights into spends, with the ability to distinguish inevitable from unnecessary and have control over expenses. Additionally, it enables CFOs to provide accurate, real-time financial information to CEO’s with regard to expense-related activities and curb fraud/errors during claiming expenses. Visibility into cost is a crucial element in guiding CFOs as the company makes important decisions around strategy, operations and investment priorities.
2. Automation is crucialAutomation is the key to controlling and reducing operating expenses and eliminate avoidable paperwork. For many companies, expense tracking is managed through Excel-based travel expense reports and piles of paper purchase orders, requisitions and invoices. These manual, paper-based processes provide little or no ability for spend policy enforcement. Manual expense control processes can result in other operational expense problems such as -
- Late expense claim submissions- No spend visibility especially for rogue spending- Difficulty consolidating expenses to negotiate better pricing with vendors- Over spending- Too much time getting approvals- People-intensive expense analysis and financial reports on expense management
Using an automated travel and expense management solution, on the other hand, has been proven to cut booking fees by 79% and saves as much as 41% of time spent on completing expense reports.
3. Focus on MobilityEmbrace technology. It is important to for CFOs to give employees the tools to submit their expenses using mobile to process things faster and increase convenience remarkably. Adapting mobility will not only reduce time-to reimburse but also help employees recover their expenses quickly. Additionally, this will also free-up their valuable time spent on expense claims towards month end and benefit in gaining work productivity. Technological advancement has led the way to automated expense management systems that have made expense management quicker and error-free.
4. Motivating employeesApart from the above measures, travel managers and finance teams can establish clear deadlines for expenses to ensure employees are regularly filing instead of putting off expenses until the end of the year. Timely reminders to comply to these deadlines well in advance might prove as triggers to ease the entire process. Additionally, awarding an incentive for employees that meet the deadlines, encourages people to file expenses early or on time.
The adoption rate of technology for T&E expense management in enterprises is a cause of concern. As per Concur report titled “Asia’s Journey to Optimized Travel and Expenses Management”, only 13% of the Indian companies have deployed an automated T&E system. One of the reasons for this is the reluctance of CFOs to adopt new technologies owing to the additional cost involved and the resistance to change from the traditional system.
That being said, the community is looked upon to champion a few carefully chosen technologies for making bold, farsighted investments in areas that are directly linked to profits. The solution lies in an advanced Travel & Expense management system can be a CFOs partner of choice in controlling costs, ensuring compliance and reducing expenses to positively impact the bottom line. This will have to trickle down to the individual employees as a user-friendly, productivity-boosting tool. These benefits will boost adoption of technology-enabled, automated expense filing.
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