As companies embrace flexible work arrangements, employee-initiated spending is now more common than ever. One side effect of this evolution, however, is that these distributed workforces make expense management more challenging.
Companies with international branches deal with additional challenges when empowering staff to make spending decisions. While it can be difficult to find the right balance between authorizing employees to make purchases globally and retaining spend control, the process becomes simpler when companies address the top pain points in spend management.
Pain Point: Overwhelming Amounts of Information
Understaffed finance teams have trouble keeping up with employee-initiated spending—even if it speeds up decision-making.
After all, large companies deal with voluminous data sets, and finance teams often rely on manual processes using incompatible systems. Differences between existing rules and currency adjustments for each geographic area further complicate the process.
As companies look to empower more employees to make purchases, most spend management processes require an upgrade. Global companies need a support system that provides appropriate autonomy and is accessible to all users. By leveraging intelligent spend software, finance teams automate repetitive mundane tasks like expense approvals and remove the headache of manual reconciliation.
Automating key processes reduces the time that finance teams spend by 30%–40%. Ideally, your spend management tool connects processes in order to automate expense approval, integrate business and ERP systems, and accommodate different currencies or regulations.
Pain Point: Reducing Exception Rates and Enforcing Updated Policies
A 2021 spend analytics report revealed that policy violations increased by 125% compared to 2019. As travel resumes, companies are seeing an uptick in out-of-pocket expenses, while shortages and last-minute changes may lead to additional spending. Reports also revealed increased out-of-policy spending for hotel and restaurant purchases, which may also be due to rising prices.
Constantly changing market conditions make it impractical to reliably cap travel costs and update expense policies on a regular basis. And relying on finance teams to check every policy violation puts companies in reactive mode. For multinational organizations, slowing down the approval process compounds the time and effort required.
Global companies process thousands of expense reports. Rather than relying on people, agile companies invest in smart technology to approve spending based on dynamic policies.
Offering employees smart cards tied to a spend management system is a key part of the solution: It ensures compliance without restricting necessary spending. For example, an intelligent system automatically calculates fair market value for hotel rooms or airfares based on current prices to calculate a reasonable price range for employee-initiated spending. In-policy expenses receive automatic approval, while employees receive alerts for charges beyond the allowed limit.
Straight-through processing for employee-initiated spending improves financial and operational efficiency. When finance teams customize controls and configure built-in policies in demand, they eliminate the stress of implementing new or updated policies.
Pain Point: Integrating Multiple Platforms for Spend Management
The average company uses 88 apps for business operations; large enterprises use as many as 175. The shift to remote work further increased that number. To be sure, businesses require multiple systems to address specific needs, such as spend management, when their ERP systems lack needed features. Unfortunately, fragmented systems designed to solve immediate information needs tend to isolate information.
When this happens, employees may have to input duplicate information, which hinders collaboration—especially when other employees are unsure if they are working on the latest version.
Since most ERP systems do not address spend management, large companies need to explore better solutions. In global companies, a business unit operating in one country may favor different finance systems because of unique currency or local regulation support. Businesses growing through acquisition also struggle with multiple systems, since acquired companies have an existing process that requires integration with the acquirer's system.
International businesses should leverage a spend management solution that supports many integrations and multiple configurations to address the needs of every territory. The best solution is a cloud-based spend management system accessible to every employee that also supports language requirements. A centralized system ensures transparency to make collaboration easier.
Pain Point: Limited-to-No Analytics
Analytics should look beyond spending data and incorporate information from other departments like finance, sales, and operations to gain actionable insights. Linking spend data to other functions allows companies to evaluate costs from multiple perspectives to avoid strategic errors.
Unfortunately, issues like fragmented and messy data limit the progress of about 35% of companies that invest in analytics. Because companies often store data in different locations, finance teams can’t get a holistic view of spending or tie spending to ROI without enterprise-wide access to all information. While ERP systems gather a wealth of information, many companies still lag in spend analytics.
Global spend management solutions allow users to integrate data mined through the application. Providing a self-service API enables companies to generate and share captured data with authorized users and analyze the information using the company’s own ERP, BI, and other analytics tools.
Addressing technology gaps that hinder efficient spend management is a priority for companies aiming for growth. Technology creates scalable solutions for spend management that enable cost management without hurting ROI. Even better, improved insights support strategic initiatives.
Navan Expense cuts down the time and effort required to manage spending, drive compliance, and manage costs for employee-initiated spending in multinational organizations. Schedule a demo today.
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