Even before 2012, when 78% of small business owners identified rising costs as the ... entering expenses in your account
You’ve already cut costs.
Now what?
CHAPTERS
Introduction Controlling costs Avoiding costs There’s a better way Summary and next steps
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Introduction If you’re like most businesses who’ve weathered the recession, you’ve already cut costs. Even before 2012, when 78% of small business owners identified rising costs as the most significant threat to their company 1, you’re likely to have been closely managing your cash flows and making savings. You might feel you have exhausted the possibilities for managing costs and driving significant savings, and be concerned that more aggressive cost reductions would endanger the long-term success of your business. You wouldn’t be alone. As budgets have become tighter and tighter, the pressures on finance teams to find cost-savings that fortify, not hinder, the long-term success of the business have built to a climax. So what are the smart next steps to cut costs even further?
“Today’s businesses are under constant pressure to reduce costs yet many find it hard to do so in a sustainable fashion.” KPMG, Rethinking Cost Structures, Creating a sustainable cost advantage
THE ANSWER LIES HIDDEN IN PLAIN SIGHT: YOUR COMPANY’S APPROACH TO EXPENSES. One business cost that is frequently overlooked is the category of employee travel and entertainment (T&E) expenses. In most organisations, T&E costs are the second highest controllable annual expense2 — only salaries and benefits are higher. However, as many businesses are still manually processing their expenses, it’s often not possible to get the visibility and control you need to carefully manage this large cost. Striving for greater efficiency and creative ways of doing more with less money has become as much a way of life for Finance Directors as balancing the books. And it is essential to keep an eye on costs and controlling them, rather than being controlled by them. So it is not surprising that companies who take control of their T&E spending can use it to gain business advantages. Alex Clemence, a Concur customer who automated his T&E expenses process tells the story well: “We have enhanced our processes as we’ve grown,” says Alex, “but sometimes it’s difficult to evolve efficiently and dynamically. Historically payroll, expenses and expense management had been very spreadsheet-based, with manual workflows, printouts, email approval and limited management information available at the end3. Now... we’re building up a database with which we can analyse the management information and seek efficiencies within the business.” Read on, as we guide you through a new way of thinking about costsavings, and dig into opportunities you might not have considered or implemented – yet.
“Concur estimates that in 2012, UK organisations paid out over £8.2 billion in employee expenses.” Concur, Employee Expenses Benchmark Report 2013 Executive Summary
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Controlling costs Cost-savings: questions to ask yourself It’s time to get smarter about cost-savings. But before you commit to a change, consider this alternative way of thinking about employee expenses… There is a different between processing expenses and managing them. Savvy businesses know that business is more effective if employees are as productive as possible. But the manual way of processing expenses on printed bits of paper or spreadsheets is labour intensive and limits how much you can control spending. On the other hand, managing expenses using an automated solution gives you control, and frees up time to let your finance team do what really matters to your business, for its continued success.
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Are you processing your T&E expenses or managing them? Here are some questions to ask yourself: • Would your finance team be able to make a bigger impact on the business if they spent more time on high-priority projects and less time reviewing and approving expenses, calculating VAT reclaim, processing reimbursements, entering expenses in your accounting system, and chasing employees to fix their claims? • Could you control your T&E expenses better if you had information at your fingertips about where and how your employees are spending the company’s money? • Would you like to be able to see where employees are planning to travel, and how, to manage it before it even happens? • Would being able to compare your T&E spending with other companies help you set and adjust your T&E policy? • Could you reclaim more of the VAT to which your company is entitled? • Wouldn’t your employees be more productive and more likely to stay within your policy if they could record their expenses on the move, using their mobile phone? If the answer to any of these questions is yes, it’s time to consider automating your expenses so you can manage them rather than just process them.
“When calculating the potential return on investment for new technology, it’s important to consider the financial costs of doing nothing.” Concur, 5 Reasons Businesses Don’t Automate Their Expenses
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Things to stop doing Expenses are expensive. Realise how much they really cost - in both time and money - so you control them, rather than letting them control you. “Failure to control costs can place serious strain on your cash flow… You could also be throwing away money you could instead use to develop your business4.” For example, cutting your expenses by say, 15%, might free up enough cash to employ an additional salesperson which might, in turn, let you grow your sales by 15%. It’s a virtuous cycle. But some expenses are a necessary part of doing business. Face to face meetings, for example, can be cut back on – but this might not be a good idea. According to research by Concur, 86% of sales executives in the UK believe that increasing the number of business trips to meet with potential new customers would allow them to increase their sales5. But how can you tell whether business trips actually do bring in the sales? Over a third (41%) of those polled in the same survey did not keep a complete record of the impact their trips have on driving sales, so they have no way of knowing.
Stop putting data in silos One easy way to track and then analyse travel and expenses costs is by moving away from a paper- or spreadsheet-based system (where the details of expenses live separately from other reporting systems) and putting all the data into a single, automated system. For example, if you could tell whether some industry sectors seemed to close just as well if your reps had face-to-face meetings, or if they just exchanged phone calls and remote demos, it might make you re-think how you do business with these groups.
“Over 9% of the average UK-based company’s overall budget is tied to travel and entertainment expenses.” Aberdeen Group, A Travel and Expense Management Guide for UK businesses
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Seamless integration – for real business insight You’ve likely already implemented automated tools like Enterprise Resource Planning (ERP) or Customer Relationship Management (CRM) software, such as Salesforce. Automated expense management solutions can be integrated with those tools –so you can combine the data to demonstrate the real cost of expenses for each business opportunity. The result is real business insight with less effort. Combining the right data, and being able to report on it, gives your business knowledge that can be used to generate insights about how you do business, and where you can do it more efficiently. Picture this scenario: if you can analyse your expenses spend down to the level of each expense category – and see who your top spenders are and where they’re spending money – you can consider whether to re-focus some of your sales efforts in different territories. Or you could keep a closer eye on the expenses of those individuals who are pushing the limits.
“The automation of T&E expense management can enable organisations to reduce their expense processing costs by 50%-to-60%” Aberdeen Group, A Travel and Expense Management Guide for UK businesses, November 2012
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Avoiding costs Saving money. It’s about more than just reducing current costs: it’s about finding solutions to prevent future spending – otherwise known as ‘cost avoidance’. That’s when the real benefits start.
Cost avoidance defined Cost avoidance is defined as “action taken to reduce future costs, such as replacing parts before they fail and cause damage to other parts. Cost avoidance may incur higher (or additional) costs in the short run but the final or life cycle cost would be lower.”
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Business is good. Make it even better. Avoiding future costs is a good business strategy. Since it looks like we’re finally coming to the end of the recession – Deloitte says that as the economic forecast improves, “business optimism among small enterprises has hit a 25-year high”6. Now is the time to invest in solutions that will build a basis for future business growth. Research by KPMG suggests that there is “a massive opportunity for those organisations that are able to significantly raise the cost efficiency bar by examining more strategic options for cost-cutting, fundamentally changing their business and organisational models, and instilling a costconscious culture throughout their workforce”7.The key to gaining this kind of insight is by reporting on how much you’re currently spending on everything – both fixed and variable costs, and using the insight gathered to drive future spending. This insight cannot be gained by interrogating spreadsheets – at least, not without hours and hours of dedicated analysis and brain-power. The benefits of knowing what you’re spending, where you’re spending it, and then assessing how you can reduce that spend are clear. “Research by Yorkshire and Clydesdale Banks showed that, in 2012 SMEs which regularly reviewed their regular costs saved, on average, £11,385.8”
“Research by Yorkshire and Clydesdale Banks showed that, in 2012 SMEs which regularly reviewed their regular costs saved, on average, £11,385.” Unum, The Practical Guide to Cutting Small Business Costs
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Top tips for avoiding costs: Time is money • When it comes to expenses, it’s not only the items themselves that are a cost to your business. The human resource in the back office who processes them is also a cost. Why not automate, and let them take on other projects in the business instead? You don’t have to employ more resources to process all those receipts. You can control costs and improve productivity simply by automating the expenses process. But automating your expenses means doing more than putting intelligent calculations into Excel; it means taking out a whole layer of processing – which actually makes life easier.
Let the system pull the data on your spend • Get the data and insight you need to understand your costs so you can control your spend, moving forward. If the data is all in a single system, it’s possible to get reports run automatically, scheduled in advance, sent to the relevant inboxes of the people who need to know. There’s no need to run monthly reports by hand – simply the human eyes to assess them. More on this later…
Get your VAT reclaim right • How much VAT are you paying to the tax man unnecessarily? Do you know? If you did, the chances are that you’d be able to claim more of it. Companies who combine automated expense management systems with VAT refund solutions are recovering huge amounts of VAT on travel and entertainment expenses each year. And those who use automated expense solutions secured receipts for 95% of their reclaimable VAT9! Some expense management solutions can guarantee that your expenses are compliant with HMRC requirements too, so you don’t have to worry about costly HMRC audits. The result: an efficient and risk-free VAT reclaim process.
“By reclaiming VAT on our travel expenses we have managed to save approximately 20% of our total European travel spend.’’ Cris Rocchio, Director of Finance, AMCI Global, VATit and Concur customer
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Communicate clearly and efficiently • If you already have an expenses policy, make sure everyone knows what’s in it. Clearly communicating the contents of the policy helps you avoid unexpected bills. It’s also advisable to clearly communicate with managers about what should or shouldn’t be approved, too, and how long they should take to approve expenses10.
Compare yourself with other businesses • New innovations in travel and entertainment expenses not only provide full visibility of the entire cost of a business trip. With TripLink from Concur, you can actually see the comparisons to show how you stack up against your peers11. You can then use this price-to-beat to incentivise employees to save money for the company – or even reap the rewards themselves!
Don’t re-invent the wheel • Just because you’re new and innovative in your space, doesn’t mean you need to re-invent the wheel. Rely on others who’ve done things before. The same applies to implementing a new system. A lot of software companies think that the easiest or best way to do their expenses in an automated way is to build a system to do it for them. And many of them have come to Concur precisely because they know that the secret of success is in focusing on what you do really well, and relying on experts to do the things that can distract you from your key goals. Outsourcing expenses to Concur is like having a whole team of expenses, tax, HMRC compliance experts and auditors at your disposal, without employing them yourself, or costing you a fortune. When it comes to preventing costs, automation is key. It’s the very definition of cost-avoidance and future-proofing: spending now, to save (much more) later.
“When it comes to preventing costs, automation is key. It’s the very definition of cost-avoidance and futureproofing: spending now, to save (much more) later.”
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There is a better way Why an automated expense management solution is better You get faster, more productive processes using a mobile app. • With a mobile app, your employees can do their expenses in minutes, not hours. Using a smartphone, they can take pictures of receipts and automatically create expense claims (and throw the receipts away, but check with your local tax office first). Managers can approve payments from their mobile phones without hassle. The result: finance teams can check claims easily, and employees can be paid more quickly.
“We’ve seen real, tangible benefits from implementing Concur and we’re very, very pleased with the system.” Garry Cook, Group Accounting Director, Gamma Ltd
You get better data visibility – which means better business decisions. • To quote a popular management saying: “if you can’t measure it, you can’t manage it.” An automated solution lets senior management see exactly who’s claiming what, when, making it easier to monitor spend levels and trends across the business.
The tax man will be happy. • HMRC likes processes, guidelines and receipts. An automated process gives them confidence that you’re keeping track of employees’ expenses and complying with the rules.
You can improve productivity and employee morale. • Think how your business would change if each of your sales employees spent 4-5 hours12 more every month generating results. Keeping them focused on business, and not doing their expenses, makes good business sense. They get more time back in their day, and can follow an audit trail to see when they will be paid. The result: happier employees, and improved productivity.
With fewer errors you have less frustrated employees and finance teams. • Expense claims are automatically created based on a travel itinerary, so employees don’t need to manually type in information. With more accurate information in your systems you get less human error, and a finance team who doesn’t have to query indecipherable claims as often. The result: happier finance teams, less hassle for everyone.
Cloud solutions make your business more efficient. • The automation of T&E expense management can enable organisations to reduce their expense processing costs by 50-60%13 and cut processing times from 15 days down to 3 days14. Data lives on the cloud, so it’s stored securely and easily accessible. The result: lower costs, faster processing times.
“Approvals can now be done very, very quickly; I can process 50 claims in half an hour, previously it took 20 minutes per claim.” Nicole Kruggel, Accountant and Concur Administrator, Alfresco Software
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You get insight into spend as it happens. • Without having to wade through spreadsheets and do manual calculations you can get instant reporting, as it happens, or scheduled in bursts that appear in the relevant inboxes, as if by magic. The result: accurate, timely data that informs smarter decisions to run a better business.
CONCUR FURTHER BRINGS THE BENEFITS OF: • A salesforce connector (so you can analyse sales ROI through the power of the cloud) • Exhaustive understanding of what travel and expense policies should contain, based on hundreds of UK SMB deployments • Deep data warehouse for reporting – and we have a service that will run reports for you so you don’t need any knowledge of how to create your own reports. Don’t wait to make your life easier. There’s a better way – which will keep your employees, finance team, business leaders and the tax man happy – all at the same time.
“If you don’t want to keep paper receipts, but want to free up your accounting team, make your whole payments process more efficient, and if you want your workers to do what they’re paid to do and not spend time filing expenses, then you should be looking at Concur. I could not give Concur a higher recommendation!” Debbie Gormley, Financial Controller, Huddle
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Investing in a cost-saving expenses solution: 7 helpful tips When the time comes to consider investing in a new solution; remember these seven helpful tips:
1. Put your employees at the heart of your solutions Regardless of whether you see employees as your most valuable resource, or a source of your greatest travel and expense costs, the fact remains that a satisfied employee will be more productive. So give them the tools that they need to make their job easier. • For example, give employees travelling for business a mobile app that lets them do their expenses on the move. • There are solutions that allow managers to approve expenses while out of the office too. • Some expense automation apps can even read your receipt for you, from a photograph, and automatically input the details themselves. • Employees can even book flights and hotels from their mobile phone, send their itineraries to an email address that pre-populates their expense claim and have the data from their corporate cards automatically populate their claim too.
2. Try new options It’s good to evolve, to innovate, to change for the sake of business improvement. A good place to start is to look at the technology you are using and make sure you have the correct features for your business. For example: think of the mobile phone. If you’ve got a fixed fee and go over your minutes there could be a high penalty in it. Or purchase unlimited minutes for £10 more a month. You end up saving money by thinking smart.
3. Keep your eyes on the prize – not the shiny object Technology is evolving so fast. It’s sometimes hard to know which option to choose. Even though there’s a new software tool available almost every month, don’t go for the latest shiny object simply because it’s available, but consider investing wisely in true time-saving software that will demonstrate a long-term return on your investment, like CRM systems or expense management solutions. For example, look at the current technology you have to check that the solution you buy will add value to your existing purchases. Expense management tools often integrate with other software like Salesforce, Sage and QuickBooks.
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4. Consider your current needs – and what you don’t need Is the way you’re doing expenses today ‘good enough’? Is ‘good enough’ actually good enough? Or could it be better? Before Ford mass produced the car, if they had asked their customers what they really wanted (not what they ended up needing) they probably would have asked for a faster horse. The same goes for expenses: for many companies, a spreadsheet is “good enough” to manage your expenses. However, while expenses may seem like a small part of your business, it’s actually one area that can have an impact on many others. Don’t try and duplicate your manual expenses processes in an automated system. It’s automated for a reason – because it may be a different way, but more often than not: it’s a better way.
5. Weigh up the cheapest vs. best for your bank balance Beware of false economy. Buying something that’s cheap but will fall apart soon and simply need to be replaced – or something that is ‘good enough’ but doesn’t have the ability to grow with your business may save you pennies now, but the long-term cost in frustration (not to mention replacement costs) could be far greater than you think. It’s the same with expenses – it doesn’t pay to get a system that your employees hate using so much that you end up replacing it in a year. User satisfaction is an important part of choosing the right software.
6. Consider that time costs you money Control your costs by putting systems in place that help you save more than just money. Remember that both and time and money are costs to your business. For example, when it comes to expenses – it’s not just the money that your employees spend on taxis, meals or train tickets: there’s a cost for the resources that process and analyse those expenses. Automation is the norm. No-one does payroll without an automated system these days. No-one should have to do expenses using a spreadsheet either. Automating expenses makes life easier for employees who claim expenses, and for the finance team. Automation generally frees up time for overworked employees - and enables you to keep headcount constant rather than increasing admin heads as your business grows.
7. Find your ‘good costs’ There’s such a thing as ‘good costs’. For example, the trip your Business Development director takes to meet an existing client that wins you new business is well worth the effort. The best way to get an in-depth understanding of good costs is to link your sales activity with the expenses, thereby demonstrating the ROI of sales travel.
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Summary and next steps Summary According to the Deloitte CFO Survey, “the top priority for CFOs in 2014 is expansion”6. But expansion requires investment – and investing in solid infrastructure has, historically, been known to take time. Interestingly, in 2012 CEOs identified technology – rather than market forces – as the biggest driver of change for the first time17. This year, CEOs again ranked technology first. Believing the impact of emerging technologies on their organisations will be profound.
The answer lies in investing in the right technology – technology that might even cost a lot less and take less time to implement than you imagine.
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Concur, 5 Reasons Businesses Don’t Automate Their Expenses… and why they should.
Future-proofing your expenses (spend now to save later) “Nearly two thirds (63%) of the 400 UK companies surveyed for CompTIA’s Trends in the UK IT Industry study said they intend to invest in technology over the next 12 months to help them reduce costs and overhead; improve staff capability and productivity; find more effective ways to reach new customers; and address other business priorities.18” There’s a better way to control the costs of employee travel and expenses now, and to predict (and restrict unnecessary) future spending by investing up-front. Control costs now and save money later by doing something that’s less difficult than you might have thought: automating your expenses.
The answer: invest in a cloud-based solution It’s time to invest in business automation. There’s no better way than putting your expenses data in the hands of an expert and keep it easily accessible in the cloud. You won’t be alone. Concur is a perfect way to harness the power of the cloud to reduce current expenses costs, avoid future unnecessary costs and have full visibility of employee expenses. After all, managing expenses is about more than just balancing your budget. It’s about • efficiency and cost control; • knowing where your money is going, • understanding what your employees are spending to bring in new business, • and being able to identify where you could reduce costs. All of which is fully visible with an automated solution. It’s time to say goodbye to out-dated and painful manual ways of analysing your spend.
“For the majority of industries cloud offers access to better software, cheaper storage and better security than most companies would ever invest in.” Graeme Gordon, Operations Director in Cost Control and the Cloud
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There is a better way. Most companies have automated their employee payroll process, yet still use a manual one to manage the second largest controllable cost to their business, namely: expenses. Why is this the case? If a cloud-based automated solution is right for payroll, why is it not right for expenses? The answer: it is. While most people think spreadsheets are good enough for expense claims, they’re not. We often wonder why 16% of senior finance leaders are still using manual processes to do expenses, and 58% are using spreadsheets, when there’s a better way 15. But it’s like a lot of things in business — too often our actions are defined by momentum, not by conscious choices. We have a lot of processes that seem good enough, but the truth is, they really aren’t and they cost us more than we might think. Expenses are one huge example of that inaction. Business owners spend more in this category than in any other, so it’s a priority to find a better way to manage it. Sure, you’ll be asked to improve the productivity of your employees. You may be asked to cut costs. You’ll definitely be asked to help improve the bottom line. And you’ll be expected to predict future costs and budgets. But the one thing you are very unlikely to be asked to fix – expense management – is one area of the company that can have a huge impact on the others.
“Imagine a world where inputting, submitting, paying and analysing expenses is completely painless – a world that’s better for managers, senior executives, finance teams and expense claimants. It’s possible.” Concur, Imagine if… there was a better way of doing expenses.
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Take a test drive You can see how easy it really is to do your expenses online. Go to www.concur.co.uk/free-trial and get started now!
Why Concur? Concur makes doing expenses less painful – for businesses and employees. We’ve got a suite of really cool tools that live online, in the cloud, to help employees get through the process painlessly; let finance teams streamline processes and payment; and to give managers and senior leaders full visibility of who’s spending what on expenses, where. With no up-front fees, no extended tie-in and the closest thing to a plugand-play solution available on the market, Concur brings 20 years of experience of automating expenses for companies of all sizes to a bestpractice, templated approach that can literally be up and running in days, or even hours.
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REFERENCES & HELPFUL RESOURCES 1. http://clearbridge.co.uk/2012/01/small-business-ideas-cost-management-through-outsourcing/ 2. http://en.wikipedia.org/wiki/Corporate_travel_management 3. Alex Clemence, Finance Director, Blue Chip Data Systems, https://www.concur.co.uk/casestudy/bluechip 4. http://www.sage.co.uk/documents/guides/discover-guide-controlling-costs.pdf 5. https://www.concur.com/en-uk/media-resources/press-releases/05-01-13 6. http://www.deloitte.com/assets/Dcom-UnitedKingdom/Local%20Assets/Documents/Research/ CFO%20Survey/uk-insights-cfo-survey-2013-q4-full-report.pdf 7. https://www.kpmg.com/UK/en/IssuesAndInsights/ArticlesPublications/Documents/PDF/Advisory/costboomerang.pdf 8. http://www.cipd.co.uk/pm/peoplemanagement/b/weblog/archive/2013/10/21/ebook-the-practicalguide-to-cutting-small-business-costs.aspx 9. Concur, Employee Expenses Benchmark Report 2013 Executive Summary 10. https://www.concur.com/sites/default/files/a-best-practice-expenses-policy-template_concur_ uk_2014.pdf 11. http://www.prnewswire.com/news-releases/new-concur-triplink-solutions-introduce-end-to-endbooking-visibility-and-control-for-corporate-customers-tmcs-218414411.html 12. E-Payables 2010, Aberdeen Group 13. E-Payables 2010, Aberdeen Group 14. Aberdeen Group, Expense Management: for a New Decade, 2011 15. Getting to grips with Expenses – Concur research by QuoCirca http://assets.concur.com/whitepaper/ uk-quocirca-full-report.pdf 16. http://www.cloudpro.co.uk/saas/5750/cost-cutting-small-businesses-benefits-cloud-approach/ page/0/1 17. http://public.dhe.ibm.com/common/ssi/ecm/en/gbe03579usen/GBE03579USEN.PDF 18. http://www.comptia.org/news/pressreleases/12-12-20/UK_Firms_Turn_to_Technology_for_ Efficiencies_Cost_Containment_and_Customer_Acquisition_New_CompTIA_Study_Finds.aspx
About Concur Concur is a leading provider of integrated travel and expense management solutions. Our adaptable cloud-based and mobile solutions help companies and their employees control costs and save time. Concur’s systems adapt to individual employee preferences and scale to meet the needs of companies from small to large. Learn more at www.concur.co.uk ©2014 Concur, all rights reserved. Concur is a registered trademark of Concur Technologies. All other company and product names are the property of their respective manufacturers. Specifications and other details listed are accurate as of printing, but may change without notice. WP WHAT NOW GLO 2014/03
