No matter how small or large a business, cash flow is critical to its operations. In other words, how effectively cash flow is managed is a deciding factor in the success or failure of a business. Therefore, it’s something that small businesses, in particular, just have to get right. Why? Because small businesses often have thinner buffers than larger businesses and are hence more susceptible to sudden financial strain. In fact, even profitable businesses have been forced to declare bankruptcy as a result of mediocre cash management.
T&E expenses tend to get out of hand
On one hand, steady cash flow is hard enough to establish, and on the other hand, expenses only get higher over time. And for a majority of organizations, T&E constitutes the second largest controllable expense, next only to salaries and benefits. However, if you’re running a small or medium-sized company, chances are that you might not know precisely how much you’re spending on corporate T&E. Don’t worry – most companies don’t.
In fact, about 80% of businesses still rely on manual, time-consuming expense filing systems.
Namaste Credit, a leading fin-tech player in the lending market, realized this as soon as it started out with the intention of having a meaningful impact in the SME lending space. With a strong focus on transforming this space using technology – the company has three patents filed on its core technology – it decided to revamp internal operations the same way to keep up with its exponentially expanding customer base.
It decided to do away with the dated system that required its employees to hold on to their receipts for indefinite periods of time, attach them to physically filled-out forms, and wait endlessly for approvals from managers, the finance department, and HR. This system, by the way, also gave little to no insight into the spend patterns of employees, since it was hard to run an analysis using physical receipts and other documents. Yet another issue with the manual system was that it resulted in poor control and compliance – which meant that it was highly prone to misappropriation and fraud.
Why automating T&E expense management right at the start helps
Besides priming your company to thrive competitively and profitably in a technology-centric era, automation of the expense management process in its initial stages offers an endless array of benefits – the most important of which are as follows:
1. Proactive prevention of cash and time leaks
Adopting a well-integrated, robust, and automated expense management platform right at the start of operations ensures maximized pan-organizational productivity from the beginning when morale and energy are at its best. The perfect expense management system not only makes the entire process easier and faster for employees as well as the finance team, but it also facilitates on-the-go accessibility, single-click approvals, and instant fund transfers – meaning there are no frustrating roadblocks to organizational growth. The best part? No more paperwork! With time savings all around, getting reimbursed is faster than ever before – and happens in a matter of weeks instead of months, leaving your employees with a lot more time on their hands to focus on their KRAs.
2. Real-time spend visibility and monitoring
Automated expense management makes it easy to track employee spend – in real-time. What’s more, you can run a slew of analytics on this precious consolidated spend data (ranging in format from summaries to drilled-down reports of actuals), making it possible to identify and correct leaks, if any, and also to ensure compliance with internal as well as external regulations. With automated spend caps at department, team, and individual levels, compliance is no longer complicated and ceases to be a burden on employees, managers, and finance and admin teams alike. Finally, thanks to all this control, you’re forever audit-ready!
3. Accurate estimates and prevention of fraud
Since there’s no manual entry or physical filing of expenses, the entire process benefits from razor-sharp accuracy. And when it comes time for expense statements and reports, you have actuals instead of estimates to work with. That means accurate current figures, and much more accurate future estimates…in turn meaning no questions, no raised eyebrows, no misgivings. The other thing about dealing with actuals is that you immediately know who’s accountable for which expense, and where you’re overspending – or conversely, need to have more of cash flow instead of wearing yourself thin. For instance, maybe not all cab trips need to be in Uber Black. On the other hand, a slightly higher dinner allowance goes a long way towards fostering a good employee experience.
Is automation a choice?
Theoretically, yes. Practically, no. But as technology-driven companies such as Namaste Credit realized early on in their game, in these aggressively competitive, growth-hungry times, companies can no longer look the other way when it comes to the myriad disadvantages of manual processes. If saving T&E expenses don’t seem like a high priority, all you need to do is consider the following questions:
How much is your actual T&E spend at any given moment? If you can’t put a finger on it, you’re leaving way too wide a margin for human error. And if your system isn’t capturing spend in real-time, you’re not managing it at all.
Do you think that it’s impossible to reduce business spend significantly enough to warrant a process overhaul? Think again. Once businesses know what their actual spend is (which is what a good expense management system does at the bare minimum), they are often surprised by the wealth of insights they gain – such as how much they spend with each supplier, or how many employees spend above the mandated limit. The former data provides a great opportunity to leverage better deals with regular/ preferred vendors. The latter, simply put, saves you the trauma of fraud.
All in all, a solid, automated expense management system works wonders to help your company get a grip on T&E spend, while simultaneously saving time, money, and effort. Worth it? We’d think so.