As of today, thousands of businesses have been negatively impacted by the pandemic, and we still can’t clearly see the light at the end of this tunnel. None of us can predict with confidence, how this is going to unfold. As immediate reactive measures, numerous businesses out there have deployed new processes and reforms to fight the daunting effect of COVID-19 pandemic.
Business travel and employee spend is accounted for the second-highest spend incurred by companies. Businesses have to bear these cost overheads even though business travel is currently on hold. These costs are going to be here, fleeting from one bucket to another. Hence, business leaders need to devise new processes, protocols, and policies to smoothly run the business remotely with full visibility and control.
In my last few blogs, I have been pondering over the expected trends that can help CXOs to fight this financial conundrum and emerge as a winner. In this edition, I have collated all five trends that I have predicted in my previous blogs.
At the beginning of the year 2020, India was gearing up to record an estimated $46 billion in business travel spend and become the sixth-largest business travel market in the world (according to a report published by KPMG). With the pandemic starting to spread its tentacles from one country to another, the world is staring at a dramatic reversal of fortune.
Such was the speed of deceleration that the same consulting agency in its April report predicted that the COVID-19 crisis is a more significant threat than earlier ones such as 9/11 and the financial meltdown of 2008-09 and India’s tourism and aviation sector faces questions around its very survival.
As these and numerous other dynamics change the business expense landscape as we know it, rather than reeling under the unexpected pressure of seemingly spiraling costs, it’s time to peek into the future and stay prepared for what’s coming ahead. Here’s a rundown of the top five trends you can expect to see in the second half of 2020.
1.Growing focus on employee safety & Contactless experience
With social distancing becomes the norm, Contactless data capture is the next big thing in employee experience. The manual bill submission process will no longer be sustainable due to the fear of virus transmission. Travel and Expense reimbursements in manual submission mode involve a minimum of 6 to 8 physical contacts. It may prove to be fatal to the health of the employees and therefore, the organisation. As work-from-home (WFH) employees have increased in the workforce, expense management solutions will have to follow suit. Some activities done only on office premises have to be changed – such as claiming bills, preparing vouchers, getting reimbursements done or getting sign-offs from the managers.
Systems equipped with OCR and other new age automated expense capturing features are going to be more prevalent. With the adoption of advanced technologies such as direct import of data from email inboxes/SMSs, seamless integrations with travel apps or TMCs, the overall reimbursement process will shrink to a matter of two weeks at the most – leading to high employee satisfaction.
2. Partial automation will no longer hold water – if it ever did
Seems like just yesterday when ‘Automation’ was a buzzword and now End to end integrated systems is the new order of the day. Integrations with the existing HRMS, Accounting, and other IT systems make it easier for employees and finance teams to initiate, approve, pay, and post each transaction in the accounting system thereby making it seamless without involving any manual intervention.
The tedious, time-consuming, and manual nature of traditional claims processes has long been a significant challenge for many a CFO. What’s more, the use of mere spreadsheets is inefficient and ineffective (and thus expensive) for businesses of any scale – particularly for large corporates and medium-sized enterprises, where inaccuracies can have a magnified impact on the bottom line. And adding more people to solve the problem won’t get you anywhere. The only real solution here is the complete automation of the spend management process. It not only eliminates all the above issues but will also enhance overall end-user experience and free up employees for more core responsibilities.
3. Greater visibility into and control over fraud via Artificial Intelligence (AI)/ Machine Learning (ML)
It is all about visibility and thanks to technologies like AI/ ML we are able to have real-time visibility in each dime spent.
Corporate fraud is among the most critical and growing challenges that companies have faced over the past few years, with misappropriation of funds being a leading cause. International studies have found that one in every five expense reports is misrepresented, which is in itself an indicator of the sheer magnitude of the problem. Even more surprising is the fact that our benchmark study revealed that about 49% of CFOs interviewed were unaware of this frequency.
Thus, there’s a growing demand for much tighter monitoring and regulation of expense management – for which it is essential to make the process transparent, real-time and automated. AI-powered, automated expense management will enable companies to automatically and instantaneously identify, flag and weed out any anomalous entries, leading to 100% compliant, error-free processing. While eliminating fraud is an ongoing process, the adoption of advanced technologies such as AI and ML will help companies enforce accurate reporting at scale, thus helping them achieve compliance and minimise revenue leaks at one go.
4. Proliferation of Mobile Reporting, BYOD and Platform Convergence
Here I would like to focus on 2 aspects of why Proliferation of Mobile reporting, BYOD, and platform convergence is the new normal.
Firstly, millennials are accounting for a more substantial part of the country’s workforce, they’re expecting the same level of technology sophistication at the workplace as well. Employee experience being a crucial factor of organisations these days it is implied that Mobile expense reporting will gain pace from the current 9% due to the rapidly growing adoption of smartphones and other mobile devices
Secondly, While T&E expenses remain a top contributor to business expenses, they are incredibly sporadic in nature. It can take any form, and even crop up at any time. Whatever the time, location, or nature of business expenses, it’s critical for you to ensure that they’re all recorded on a single, centralized platform.
It’s common knowledge that businesses regularly incur expenses to keep their wheels rolling, and these expenses are necessary to support and expand their operations and meet increasingly ambitious goals. Therefore, as companies grow, their spend (and spenders) naturally grow as well. A unified expense management solution will not only make life far easier for employees, managers, and accounts personnel but in today’s efficiency-driven and environmentally conscious economy, it will prove to be an indispensable tool to operate successfully at scale.
Under the WFH and COVID-19 scenario, companies may invest in creating the extra bandwidth for it- be it in terms of Wi-Fi connections or virtual collaboration tools or the physical setup. These are not budgeted expenses. Added to these are some ad hoc purchases of disinfectant wipes and gloves, which would also increase the Admin costs of companies categorised under essential services or buying Zoom subscription and other tools to smoothen remote working.
Another unstated benefit of this change is in the form of audit support. Audits are often very painful for many organizations, as stated by 55% of the CFOs, retrieval of past data was too time-consuming and people-intensive. Thus, mobile booking, expense submission, and reporting will not only help control expenses but also ensure compliance and more accessible data retrieval for the future.
5. Compliance Beats Profit, for the New Age CFO post COVID-19
COVID-19 had a direct impact on CFO’s priorities. For the first time, the serious topic of the cost of non-compliance took center stage in boardrooms across not just the EU, but globally. It only serves as a tiny reminder in a domain as inherently high-risk as accounts and finance.
Compliance in any organisation — whether a start-up or a large enterprise — is an ongoing and long-term commitment. There’s no industry or country in the world where it’s an option. Basic compliance is mandatory regardless of area of operation or individual preferences and is necessary to ensure the smooth and fair running of businesses. Therefore, investment in a supportive infrastructure is not just vital but also valuable and cost-effective in the long run.
What’s most important, it’s the only way to ensure sustainable revenue and profit growth over the years — something that’s essential for any business to survive and thrive.
In a bid to deal with the growing pressure to keep up the Business continuity plan, organisations are increasingly looking up to CFOs, causing them to shift from their merely analytical, autopsy-like roles (that dissected the past) to more strategic advisory roles that inform smarter decisions for the future.
CFOs already have access to plenty of business data – as well as their analytics. Since the current situation is more about survival instead of growth it is even more important to keep a strict check on compliance and control. As CFOs have evolved from stewards to strategists, they are spending less time drawing up and analysing past expense reports, and are instead leaning towards supporting future investment decisions.
In such a scenario, it is advisable to have the right tools to keep track of compliance when it comes to Employee expenses.
Today, businesses, all over the world, are battling the impact of COVID-19 global pandemic, and one of the primary concerns include- ensuring business continuity in this challenging phase while maintaining seamless employee experience. This crisis may not be a one-off scenario; we contingency plans for many things that are unknown. Going forward ‘Duty of Care’ outside the home becomes critical. In Medical emergencies during the tours, employee welfare is paramount (especially with visits to COVID-19 hotspots). Systemic controls whenever travel to such regions will start is something which HR teams will now begin to focus on.
Be ready to challenge our paradigms and our existing IT systems, the new normal being remote work, WFH and technology rethink to enable it. The bottom line is, technology is progressively transforming business expense management just as much as it’s transforming any other business process, business, or industry as a whole. As it becomes increasingly automated, it’s affording end-users the opportunity for more convenience, flexibility and self-service – all of which are vital priorities for today’s workforce.