It’s a well-known fact that Chief Financial Officers (CFOs) are the top number crunchers in every enterprising company.
They are the spearheads of the companies’ finances, responsible for the direction of their financial goals, which is to ultimately be profitable and financially successful. CFOs are required to know every detail of company spending, down to the last number, and they must understand the financial workings of their company — and the entire industry — better than anyone, since they hold a vital role in a company’s leadership and financial decision-making.
In light of this crucial list of responsibilities, it is no wonder that many CFOs turn a critical eye on travel and expense management, because it holds a significant amount of weight to the company expense and budget. When the travel and expense management of a company is done properly, it can do more than just save a buck, especially for companies that intend to drive cost reductions; it can ensure that the projection of financial resources are appropriately directed towards important strategic investments.
This is why monitoring employee spend is important. A survey by JP Morgan has revealed that travel and expense is the second largest operating expense for many entities, so continued unsupervised travel and expense can lead to many employee overspending and sometimes even cultivate an opportunity for fraudulence.
To mitigate such unwanted occurrences, here are 4 important things every CFO must know about employee spend:
1. Spend visibility is important
Spend visibility means more than just keeping track of spending. It goes well beyond that by providing a detailed and overall view of how the money flows through the company.
Where is the money going, how is it being spent, and is it moving within the constraints of the company’s travel policies? These are the top three questions that should be answered for 100% spend visibility. When there is less than 100% spend visibility, then a CFO cannot hope to be fully successful in controlling employee travel expenses.
In addition, this also leaves the organization vulnerable to intentional or unintentional fraud. With the shift in technology, transportation and services, employees now have to spend more money across various spend categories, and the availability of different payment methods, such as credit cards, checks, cash, P-cash, and ghost cards, make it difficult for finance and travel managers to manage and control employee spend, as they are more likely backed up by different systems that don’t allow the connection or the sharing of data.
By implementing a system that provides complete visibility over employee spend and expenses, spending behaviour patterns of waste and misuse can be easily identified and appropriate action can then be taken.
2. Collaboration with travel managers is critical
Good collaborative practices with travel managers is an important part of making company travel policy improvements. While CFOs make the big financial decisions, travel managers do the grunt work, so to speak. They are the ones who actually put those grand ideas into motion, on top of being responsible for contract management and travel and savings behavior.
Travel managers also work directly with the traveling employees. They are expected to foster good connection with the traveling employees, and they are the enforcers of the company travel policies during a business trip.
CFOs should commit to fostering and maintaining a positive, data-driven collaboration with their travel managers to make the workplace more effective and the administration processing more efficient. Regular meetings and a good travel and expense management solution can go a long way towards boosting the efficacy of a company’s travel management.
3. Stressed employees are more likely to overspend
Overspending seems to be a huge recurring problem for many companies, because while fraud is rare, the abuse of travel expenses happens more frequently than most organizations realize.
Why is this so?
Travel policies are difficult to implement, more so when a company does not employ an operational travel and expense management technology. But there are also many different factors that can cause overspending on a business travel, such as unexpected costs and emergencies. However, more often than not, employees are more inclined to spend more than their company budget would allow when they are stressed, confident that, at the end of the day, their expenses will be reimbursed.
Unhappy employees are unproductive employees, and traveling employees have to deal with many stressors while on the road, such as the pressures of management, the mental strain of leaving behind friends and family, and the challenges of being in a new environment. These situational burdens alone can greatly hinder productivity.
This is why ‘bleisure’ travel, or the practice of adding personal and leisure activities to the business agenda, has grown in popularity in recent years. Studies have shown that incorporating leisure time to business trips increases not only productivity and morale, but also value to the work.
4. Using Travel and Expense Management Solutions make the travel and expense approval process more efficient and cost-effective
Business travel is such a common practice these days, but the approval process that come with it hosts a wide array of challenges in and of itself. Before the emergence of travel and expense management technology, employees towed around paper receipts and spreadsheets, and occurrence of backlogs in backend administration and delays were common. Productivity was also painfully slow.
Many companies have begun to recognize the benefits to be had by integrating the right travel and expense management solution to their organization. Effectivity and efficiency is chief among them, as travel and expense management systems have the ability to streamline travel bookings and expedite the travel approval process. Any new information about the business travel can also be updated to the database in real-time.
Travel and expense management technology has become a practical solution to mitigating the risks of overspending and fraud. Pixmettle’s Travel and Expense Management System is specifically designed to not only help manage travel expenses and diminish all the spending risks involved with business travel, but it also provides managers and employees all the tools they need to boost the company’s cost-effectivity and efficiency, as well as the compliance of the company’s travel policies.