As employees resume many business-as-usual activities like sales visits and attending in-person events, this brings with it an influx of expense reports. Companies that are already digitizing their expense reporting processes are ahead of the curve. But because these back-office automation tools will only continue to evolve, companies can remain competitive by continually reevaluating their growing range of capabilities. Refining these processes can ensure their expense reporting management continues to save time and money — even in fast-changing business conditions.
The Current State of Expense Management
As the pandemic took hold, some businesses had to rush into digital platforms. As a result, 47 percent of businesses surveyed by Emburse now use dedicated expense software in 2021, up from 35 percent in 2019. And yet, at the same time, expense report violations rose by 292 percent in 2020. This means businesses are having to get — and stay — savvy about how they manage expenses: not just to streamline processes, but also to reduce fraud and get valid expenses paid more quickly.
Studies suggest digital adoption is one of the biggest COVID-19 takeaways for businesses—and central to how businesses adapt for the future. McKinsey reports that “digital laggards will be substantially disadvantaged during the recovery,” and may find that they are outpaced by rivals who have leaned into digital tools across their business.
Companies have also experienced a noticeable shift in the kind of expense reports being processed. According to Adam Reynolds, CEO of Webexpenses, this is because corporate leaders have had to reallocate employee and company spending in the wake of COVID-19.
"Travel makes up a component of expenses, but not all of them," Reynolds says. "So, what we've also seen is some organizations increase their usage because a greater amount of people are now working from home." That means companies are now processing a higher volume of purchases for new technologies, equipment, and resources that enable employees to work from home. As expense reports begin to take on new complexities, digital expense tools will expand their capabilities for a new era of expense management.
The Next Chapter of Expense Digitization
Because the pandemic forced business leaders to pivot and cover their losses in 2020, many were left with heightened cash flow concerns. As automation evolves, newer tools are becoming more lightweight and can better simplify expense report submission, processing, and payment. Businesses need to continually reevaluate their expense report management tools and processes in order to ensure that, no matter how much the business landscape is shifting, they can mitigate unnecessary costs, maximize their working capital, and reduce fraud.
In a recent Deloitte study, which projects digital finance trends over the next four years, companies are getting a glimpse at the future of expense digitization tools. To maintain a competitive advantage, data shows that business leaders are looking at a few key digital expense management trends which can:
- Improve clarity on processing costs: Expense automation can empower businesses to spend less than $10 to process a single expense report; yet, only 41 percent of businesses with 2,501 to 5,000 employees can keep processing expenses this low. Because the odds of overspending on processing costs are so high, business leaders are leveraging digital reporting tools that ensure their cost-per-report remains at a low, pre-set amount.
- Bring cycle time to real-time: To optimize cash flow, large companies are looking for ways to set shorter reimbursement periods. While some current automation tools can process expense reports in as little as one day, forecasts predict expense tools will eventually process payments in real-time. This will allow companies to improve the accuracy of their working capital and inventories.
- Forecast cash flow ahead of time: By evaluating these digital expense reporting tools, companies can better predict their financial future — even in today’s unpredictable business conditions. As these conditions change, current systems may not be as adept at predicting cash flow and leaders will need to evaluate and move away from these limitations. Real-time payment processing can give companies a more accurate look at their current cash flow, which can ultimately paint a clearer picture for the future.
Communicate with other digital tools: Automation tools can integrate into your existing cloud-based enterprise resource planning (ERP) setup to make it easier and more efficient for general ledger (G&L) teams to process and reimburse expense reports as employee and business needs change. As automation tools expand their capabilities, companies are looking for new ways for their digital tools to integrate with others, thus streamlining and automating tedious work. Learning and Growing Through Digital Disruption
2020 created unique challenges for businesses, many of which are net-new to the global economy. The ways in which businesses have reacted are varied, and companies that were already technologically advanced adapted quickly. Others that might have held back on adopting tech were caught flat-footed.
Now, with nearly two years of major economic disruption in the rear-view, many business leaders will continue to learn and grow through tech disruption. Companies that continue to evolve with the latest automation tools will create savings, encourage user adoption, and help distributed and remote teams work together smoothly.