What Every CFO Should Know About Employee Spend

Spending is ramping up and it’s inevitable that business travel will increase. In fact, during an intense period of change, many companies had their expense category ‘Other’ grow by 58% from 2019 to 2020 (source: SAP Customer Data). Do you know what’s in your ‘Other’ category? 

As new categories of spending emerge, so does the need to adjust those categories and evolve the policies around spending. Employees are spending more money across more spend categories, using more payment methods than ever before — even in the wake of the pandemic. Are you ready? Contactless cards, ghost cards, cryptocurrency, checks, cash, and P-cards are all reasonable in a virtual economy. Yet, most of these payment methods likely don’t connect or share data across your organization. Employees are buying desks, office chairs, computer monitors, and expensing everything from their children’s daycare to wifi and door delivery services. 

So, what should CFOs and other senior finance leaders do to get full data visibility to meet financial goals? Here are three questions every CFO should ask their teams:
 
1. Does our travel and expense solution easily connect to other financial systems either through native integration or pre-built connectors to provide up-to-date financial data?
A first step in getting better insight and control over employee spend is to review your current travel and expense system set up. Does it connect or integrate directly with your ERP? Or does it require several steps and teams to bring the data together? Get a “quick win” by revisiting your travel and expense processes and technology, ensuring your data is centralized, processes are streamlined, and financial information is secure in the cloud. Many travel and expense management (TEM) vendors are highly experienced with integrations for most ERP or financial management solutions. There are also financial connectors that can integrate your travel, expense, and invoice data with your ERP, CRM, HR, and accounting systems. Integrating this data is helpful for getting a complete, accurate, and timely financial picture while maintaining the ability to easily improve policy or pivot compliance controls to meet regulations.
 
2. Are we making it easy for employees and their managers to comply?
Many organizations are adopting permanent remote or hybrid work schedules for their employees. In fact, according to an EIU research report, “Eight in ten executives expect their company to increase reliance on remote work to meet business goals.” Additionally, business travel is making its return, so it’s important to ensure booking travel and submitting expenses is easy and accessible from anywhere (mobile) – especially in places where tracking spend becomes tricky, such as value-added tax (VAT) reclaim. The easier it is for employees to capture, track, and report spend, the more likely they are to follow processes and comply with policies. This leads to less turnover, less mistakes, and less resources and time needed to correct mistakes – all positively impacting on the bottom line.  

3. Are we keeping track of “rogue” spend?
Rogue spend is spend that falls outside your organization’s traditional preferred suppliers’ or managed payment channels – and there has been an increase in this category since the start of the pandemic. For example, in a recent EIU research report, almost 75% of US respondents reported that they experienced an increase in rogue spending by employees. Investing in a cloud-based connected spend approach can help you keep track of rogue spend in various ways – whether it’s gaining visibility through integrating card feeds, encouraging mobile receipt capture, or flagging reoccurring, noncompliant spend as a signal that it’s time to update policies or provide employee training.

Increase Visibility in Employee Spend with SAP Concur Solutions

SAP Concur solutions integrate spending from virtually any source into a single, digital process to help eliminate inefficiencies that slow down business and pile on costs. Pre-purchase approvals improve cost control and safety, while AI and Machine Learning can review all expenses, speed up processing, and take on everything from VAT reclaim to tax and payroll issues. 

Ready for more? See the key spend trends and risks you can’t afford to ignore.