How to Gain Visibility and Control of Employee Spend

Serge Kogan | 11-19-2018

Employee-initiated spend refers to spend instigated and controlled by the employee, in support of their role or job function – such as the typical travel and expense categories – in addition to other types of spend that contributes to business operations. It’s not just travel and expense, but all categories of spend and employee buying behaviors that have shifted.

With this shift, a more pressing focus on accruals and timely recognition of expenses is here to stay.  Recognition of the expense within the appropriate fiscal period, leading to voluminous generic accruals in most cases, can be overwhelming and lead to inaccuracy of your financial health measure. The timing between when a purchase is made and payment disbursement (when suppliers and credit card companies need to be paid, and employees reimbursed) can vary depending on employee reimbursement of the transaction activity across expense report submittals and utilization of corporate tools for purchasing (e.g. use of a corporate on-line booking tool, use of corporate credit cards or P-cards, etc.).

This challenge is often grouped into the accrual category but spreads quickly into budgetary and margin control. While most adhere to strict reconciliation timing policy, many don’t understand the implications of untimely processing of expense activity. The downstream impact can be detrimental to an organization who operates strictly to the budget or one that manages to very thin margin. Financial reporting requirements are also a factor in that tardiness can lead to extensive accrual journal entries to then be reversed the following period, which leads to confusion of actual expenses. 

There are various ways in which finance departments can gain better visibility into and control of this impact:

  1. Through dashboards that report multiple aspects of current-period spend
  2. Receiving alerts as actual spend approaches budgeted spend for the period
  3. Reviewing daily or weekly corporate credit-card transactions
  4. Integrated travel data set, providing insight into upcoming spend
  5. All of the above

Below we will explore how SAP Concur can assist your organization. 

 

Concur Expense provides dashboards and a suite of over 100 standard reports that finance and accounting departments can use to facilitate expense monitoring, contributing to more control. 

Dashboards can show in a single view at a high-level, inclusive of spend KPIs such as:

  • Period spend by department
  • Top spend by category
  • Top exceptions to compliance policies
  • Expense accruals
  • Spend forecasts

Additional details can include spend by employee, spend by department, accrued credit card transactions, air travel bookings by department, expense exception detail, period-to-period spend comparison, hotel negotiated rates vs. actual charged, approval cycle time by manager, reports approved but receipts not checked, and more. 

A complete listing of reports available to SAP Concur users can be found here. SAP Concur customers that wish to further customize their reports can either do it themselves, or through Consultative Intelligence services from SAP Concur.

SAP Concur also offers its customers a tool that alerts them as spend approaches a set amount or budget per period. Budget by SAP Concur is a service that enables financial executives to compare departmental spending by period against a projected spending limit, and alerts designated department heads as actual spending approaches the established departmental budget. If anything looks unusual, the department manager can take action that will enable them to better control spend. As we aggregate across the entire company, the net result is better control of spend across the organization.

Use of corporate credit cards and purchasing cards (P-Cards) is another way for the finance and accounting departments to obtain advanced smoke signals of accruals or any other spend challenges. P-Cards are a dominant payment channel for employee spend, enabling employees to act quickly without hinderance.  Transaction data is consolidated in a statement-like format within the Company Bill Statement function, supporting the visibility necessary to understand spend while it’s happening. Similar to that of Expense and the corporate card payment type, P-Cards must also be controlled. Timing of these cards is particularly important as most P-Card programs are established as Corporate Bill, Corporate Pay (CBCP). This means that your organization is required to pay the monthly bill in full to the card provider, regardless of reconciliation status. Without proper tools, most CBCP programs roll with significant accruals.   

Another typical employee behavior that impacts visibility of spend, and thus accrual entry, is when employees book and/or pay for travel without using their organization’s corporate on-line booking tool, approved travel agency, or corporate card. For example, when hotel reservations are made using the corporate on-line booking tool, the finance department – through the KPI reporting and dashboards discussed above – has visibility to upcoming spend. However, when employees reserve a room using the hotel’s reservation channel, or when they pay using a personal credit card, the organization loses insight to the upcoming expense. It isn’t until later that the expense transaction is visible, when the employee manually enters the expense. This could be weeks or months out; disabling the organization’s ability to report on the transaction in the proper fiscal cycle, drastically impacting budgets.     

In order to capture the amount and timing of this anticipated spend, SAP Concur has developed the following:

  • Relationships with major hotel and airlines to interface with their frequent traveler systems.
  • Concur Triplink, a tool that enables hotels, airlines, and other service providers such as car rental companies, Uber, etc. to:
    • Apply to the reservation or the charge the organization’s corporate-negotiated rates
    • Send to SAP Concur electronic receipts, using the employees’ frequent traveler or user IDs as the identifying link. This not only benefits the organization by enabling it to see spend before it is reported in expense reports, but it also benefits the employees by allowing them to get frequent traveler points while reducing the need for the employee to detail and itemize where and how much they spent on their travel.

According to the Global Business Travel Association (GBTA), 37% of hotel reservations and 15% of air bookings are made by employees outside of corporate channels. The expenses associated with bookings carried out through these external channels is what we refer to as invisible spend. Using Triplink, organizations that use Expense can capture this invisible spend, enabling them to have more visibility and control of cash flow needs.

When you combine spend-reporting dashboards, alerts on actual spend vs. budget availability, use of corporate card, and integration of feeds from external-spend channels, organizations gain more insight to employee spending behavior for accurate budgeting and forecasting, thereby protecting your company’s financial health.  

The SAP Concur Value Consulting team is available to SAP Concur customers to review current processes related to timely spend capture and reconciliation. Establishing a baseline of best practices and uncovering additional value will be largely impactful on the customer’s business and improve the performance in these areas. 

For more information, please contact your SAP Concur representative.