The date for Brexit has now finally arrived, with the UK set to leave the EU this Friday (31st Jan). While many economic markets have lately rallied in response to greater political certainty in the UK, there are still plenty of unknowns for businesses about how the Brexit deal will pan out over the following months and how it will affect them. Add to that the looming US elections, and it’s not surprising that organisations remain cautious in their business decision-making.
In this climate, keeping a tight rein on non-essential expenditure, such as business travel and expenses, could seem the most logical tactic. But in practice, it might be the very worst thing you can do. Imposing blanket travel bans means frontline staff, like commercial teams including sales and marketing, can’t do their revenue-generating jobs effectively. Rejecting expense claims further serves to frustrate other staff to the extent that they lose focus on vital operational tasks.
Clear and consistent expense policies are therefore important, but they need to be applied in context of business needs. 39% of respondents in our recent survey told us that business travel and expense spending is the most unpredictable cost for their business. But 70% don’t have any way of accurately forecasting expenses, and half can’t relate these travel expense costs to ROI.
So how do you know which expenditures are actually essential to sustaining revenues and business growth? How do you make sure your policies are proportionate and designed to support profitability?
This is where intelligent expense management helps you control and prioritise spend to ensure that business travel expenses are a financial driver, not drain, especially in times of economic uncertainty. Here are five ways it can help.
1. Forecast potential spending problems
Expenses management systems that tie spend to customer and revenue data such as that held in your CRM give you comprehensive analysis of all expenses data. As a result, you can make more accurate financial forecasts on how much it costs to acquire and retain customers. You can also monitor ROI against sales forecasts and drill down into team, customer and employee data to understand how costs relate to revenue, adapting policies and spending limits, if necessary, in response to business priorities. You can pinpoint teams and projects where overspending is an issue and focus on improving profitability.
2. Better still, prevent overspending – and then educate
The same intelligent expenses management technology should enable you to automatically track, report and analyse all expenses management data in real-time. With instant visibility of spending, when patterns of overspending start to occur, corrective action can be taken to minimise financial risk. Dynamic expenses policies based on tangible business outcomes should also be in place to address the root causes, preventing further overspending. You’ll also know if you need to find alternative suppliers or routes in response to changing organisational requirements or whether it’s a question of educating employees to make smarter choices.
3. Reduce losses to finance and time
Automated expenses management also eliminates the human errors that often lead to financial losses such as overpayment or miscalculation from manual expenses data handling. In addition, a single source of truth for simplified expense management means there’s no need for rekeying and data exports that can undermine reporting accuracy. An example here is VAT reclaim. Companies are missing out on over $30 billion of potential VAT refunds every year, due to improper receipt capture and VAT processing.
You also reduce the amount of time your finance team spends on processing employee expenses. With less mundane admin, your people are more productive and can focus on higher value work. Fewer staff can achieve more increasing productivity levels in the long run.
4. Improve compliance
Set and automate limits and rules within your expenses management system. That means you can easily flag any non-compliant requests. If they’re justifiable, you can quickly enable an expenses investment with a clear understanding of the potential ROI, so you don’t undermine or delay business-critical sales efforts. If non-compliant expenses requests don’t support ROI, you can intervene to reject them and recommend compliant alternatives.
Legacy expense processes often mean employees record their spending on spreadsheets, which are amalgamated and reviewed by the expenses team. As well as taking a lot of time, this increases the opportunity for fraud through errors in approval, corrections and reimbursements.
5. Support revenue generation
Steering a course of prudent travel and expenses management in the context of customer deals helps protect your organisational finances without cutting off the flow of sales opportunities. With intelligent analytics in a unified travel and expenses system, you can understand customer acquisition costs and model the number of visits typically required to close a deal. You can set expenses policies to allow for these vital customer engagements to take place, with full visibility of the projected ROI.
The travel bans referred to earlier are a kneejerk reaction to tough economic times: they slash costs but they also cut off the opportunities and sales that are needed to sustain performance and growth.
SalesTrip attributes every travel expense to a business outcome and delivers trusted insight into ROI immediately. It helps you manage expenses proactively, meeting live business needs for individual employees and management whilst being vigilant to block overspending and responsive to valid expenses investment that drives business growth. To find out more, a good starting point is to try and find out what your potential is to reduce costs by using our calculator.