Cash Flow Creates Options for Your Business. So Why Let Uncontrolled Company Spend Steal Them Away?

As the finance leader of a business, what’s keeping you awake at night right now? Chances are you have much more on your plate these days – weighty stuff such as:

• How are we going to make payroll next week?
• What bills can we afford not to pay right now?
• Can we afford to keep so many employees on the books right now?
• Do we have the cash flow to fund higher production to fulfill an unprecedented increase in orders – before we actually get paid?
• Is it time to reduce our overhead for warehousing, staff, and more?
• Can we afford to purchase our main competitor?
• If high demand continues, should we expand in-house manufacturing or outsource it?

There’s no quick answer to most of these questions. They require wisdom, business and customer insight, and a firm grasp on actual spending relative to cash flows, budgets, and liquidity. Note the emphasis on actual spending – because with company spending so decentralized today and tracking often manual, budgets may not reflect what’s really happening on the spend front. Employees are making purchases for items such as monitors and digital cameras using personal credit cards and expensing the costs and tracking mileage using handwritten records. At the same time, vendor invoiced purchases often come into accounts payable as paper invoices, which can take weeks to process. This means you, as a finance leader, are always at least a month away from knowing what has been spent, by whom, and on what. Manual finance processes also drive up costs, frustrate employees (have you ever lost a receipt and can’t get a purchase reimbursed?), and hinder your ability to forecast spend and redirect budgets to where they are needed most.

So as the finance leader of a business, perhaps the most pressing question to answer is this: What’s the state of our finance processes – in particular, the processes we use to track and manage discretionary spending? Because if you digitally transform your finance processes, you can intelligently automate how you manage travel, expense, and invoice management. As a result, you’ll be better positioned to respond, adapt, and survive in an uncertain business climate—whether that climate brings stormy weather or fair skies.

What if you’ve already begun to digitally transform how you manage company spend by automating expense tracking and reporting, or how you pay vendor invoices? Then you’ve already taken an important first step, your visibility of cash flow has improved, and your employees are enjoying a faster, more mobile process that saves the time and hassle. But there’s more work to be done to gain full control of spend. Until all aspects of employee spend are automated and controlled, there’s always hidden spend leakage – purchases that aren’t strategic or simply unnecessary, add up quickly, and deplete vital cash flow that creates options for your business. How you answer the questions asked above are heavily influenced by your cash position.

So more than ever, it’s important to keep optimizing your spend management program. Are there areas of spend that are still handled manually? Automate them. Have troublesome areas of spend like mileage tracking? Deploy a GPS-based mileage tracking solution that takes the pen and guesswork out of tracking. Want to harness your spend data to make better business decisions? Employ expert services that compile spend data and generate actionable reports, or have an outside audit performed to detect hidden issues.

Next Steps

By continuously improving your spend management capabilities, you’ll gain full control over cash flows – and be even better positioned to respond, adapt, and survive in today’s uncertain business climate. To help you along your journey, SAP Concur solutions offers seven recommendations. Here’s the short list: 

1. Focus on what matters most.

In today’s unpredictable business environment, look beyond growth-oriented metrics to those that reflect the current state of the business. By digitally transforming spend management processes, you can capture more data on exactly where and on what expense types money is being spent on today, which gives you the insight and control needed to make informed decisions.  

2. Get visibility into your costs – both current and future.

With digitally transformed travel, expense, and invoice management processes, you can monitor all spending in real time and understand how it will impact your budget and financial projections now and in the future. You can even implement budget tools that alert budget managers when overages or even under-spending may occur – a key to proactive spend management.

3. Use automation to increase staff efficiency.

During periods of economic uncertainty, you may need to cut some hours or enact a hiring freeze – or scale up quickly to meet increased sales needs. Continue to look for ways to replace inefficient, paper-based processes that can easily bog down limited resources.

4. Update and clarify your expense policy.

Make sure your expense policy is to understand, easy to follow, and up to date so that it takes current economic conditions into consideration. These policies can be built into the controls of your spend management solution and customized for your individual business situation, making them easier to implement, manage, and control.

5. Cut costs carefully.

When cutting costs, don’t hack away; make smart, strategic cuts. Automating processes and reporting ensures all data is captured accurately so you can mine it to find ways to strategically cut expenses that add less value to your business and direct money towards the vendors and expenses that fuel operations.

6. Spend smarter.

Organize your spending to be more advantageous to your business – for example, so that it favors vendors that can offer discounts or longer payment terms. You can also use these insights to consolidate category spending from many vendors to a handful, which can then give you the buying power needed to negotiate better prices and terms.

7. Keep your eye on mileage.

Use a mileage tracking app with point-to-point GPS tracking. It makes life easier for busy employees and ensures accurate mileage reporting so you can reduce potential mileage overages.

Access the full recommendations

To learn more about these recommended steps and how they can benefit your business, read the article from SAP Concur solutions, "7 Ways Your Finance Processes Can Help Future-Proof Your Business."