With 9 out of 10 companies considering a hybrid work model that incorporates remote employees, finance teams have to keep up by simplifying the expense management process.
It can, however, be challenging to control and track spend with a distributed workforce. Approximately 86% of all occupational fraud cases involve employees stealing or misusing corporate funds. How do managers build a culture of trust while empowering employees?
Businesses need to re-evaluate existing expense management processes and address threats to cash management while effectively coordinating with remote, hybrid, and on-site teams.
Take a look at the following ways to stay ahead of employee spend:
Implement Proactive Controls
A reactive system relies on employees complying with expense policies and finance teams or managers retroactively checking compliance. Although the traditional expense system has lived this long, allowing employees to make unwise spending decisions poses significant risks. Senior auditors fear that eroding organizational culture may trigger additional risks, including fraud.
Rather than reiterating written expense policies, businesses can now integrate spend policy into existing spend management systems to automate compliance.
With intelligent spending policies, employees have clear guidelines at the point of purchase through easily accessible tools such as a mobile app instead of hidden in an employee manual. Armed with spending limits and embedded guidelines, employees will know whether they can pay for that online subscription or buy hardware for a home office setup.
Customize and Update Flexible Policies
An effective spend management tool allows customizable, flexible controls based variables like roles, spending categories, and business circumstances. For instance, managers can tie spending policy to a project—complete with guidelines on travel expenses, advertising, and consulting costs. Simple, customizable spend controls assign rules to specific user groups and manage policy at scale.
Another crucial feature of modern spend management is the ability to change policy settings in real-time to reflect company policy amendments. During the pandemic, companies needed to implement remote work and spending policies as quickly as they were rewritten. Introducing these changes directly to a spend management system reduces the workload of finance departments, increases compliance, and allows auditing teams to detect red flags without digging through paperwork.
In addition to employees no longer struggling to find or align with policies, managers also save time on trivial expense management. For example, admins only need to create a single company-wide policy for travel meal expenses and can enable client entertainment policies for the sales department instead of support functions. Immediate access to updated spend management settings allows full compliance from day one.
Automate Approval Workflows
Out-of-policy spend can slip through the cracks when teams deal with hundreds of purchase requests every day. With the traditional process, either the firm or the employee gets stuck with a non-compliant purchase.
Modern expense management allows businesses to approve all types of employee spending before the transaction happens. Built-in controls automatically approve compliant transactions quickly and the software immediately flags any exceptions. Spend management systems that automate approval workflows reduce reliance on manual approval. While the system still assigns approvers, managers only need to intervene when the platform detects unusual or non-compliant transactions. For example, trips to strip clubs or improper personal expenses are flagged without a manager making a judgment call. This auto-approval of compliant expense requests leads to fewer bottlenecks and shorter purchase order cycles.
If finance teams have access to a clear audit trail, rogue spending is less likely to happen.
Gain Real-Time Spend Visibility
Navan research revealed that 40% of CFOs do not have real-time insight into their company’s travel spend. Achieving greater visibility into cash processes is crucial in order for finance leaders to optimize cash flow.
Unfortunately, for large companies relying on manual reconciliation, completed reports could take weeks, making it impossible to provide expense data in real-time. Manual and complex processes are not enough to manage large volumes of expense requests at any point in time. Finance teams require flexible and automated controls to achieve accuracy and efficiency.
Charging expenses to virtual corporate cards linked to intelligent spend management software sets the stage for real-time visibility. Intelligent systems reduce second-guessing when tracking costs and simultaneously support the information needs of finance leaders.
Automation simplifies employee spend management while reducing the sizable workload of finance teams. Companies can fully automate 42% of finance functions with current technologies. A streamlined spend process ultimately reinforces effective cash flow management and strategic decision-making.
Navan Expense takes the frustration out of enforcing spending rules by simplifying expense management for improved compliance and greater spend visibility. Book a demo today.