As recession fears grow, companies must adapt to mounting pressures. This is forcing finance departments to increasingly focus on maximising productivity and find cost-saving opportunities to build business resilience.
Inefficient spend management practices have created unnecessary and costly burdens for finance teams, affecting their ability to react quickly and become better strategic partners to the business, says Tim Baker, co-founder at Kloo, an all-in-one spend management platform.
In fact, recent industry research shows 51% of companies agree that time spent reporting expenses negatively impacts their ability to accomplish work.
At present, most companies operate their spend management framework as a “patchwork of tools”, says Baker.
“Business current accounts offer a very narrow range of features around spending money and executing payments, either with cards or bank transfers, but they don’t offer a layer of features around the actual control of the spend.”
To address this, companies have layered different tools on top of their bank accounts, such as approvals and receipt management, that add needed functionality to their spend management frameworks. According to Baker, this has left finance teams with a “complex stack of tools” that have their own variable pricing and are not integrated with each other.
This runs the risk of both under-spend and over-spend, where key expenses may not be approved in time or spend is approved that should not be.
The quilted framework is no longer efficient as finance teams require greater control and real-time visibility of transactions to manage company spend holistically.
“The finance team want to have real-time visibility of all transactions so they can see spend happening live, analyse where it is coming from, and maintain consistent control,” says Baker.
Insufficient visibility over company spend can make it more challenging for senior finance leaders to reach strategic decisions and runs the risk of hampering growth and profitability.
The pandemic placed an unexpected strain on company policies, bringing to the fore hidden pain points in the spend management framework. This impacts the autonomy of the whole business and adds unnecessary friction within the company’s departments, says Baker.
According to a newly released survey, since the shift to remote working, the most time-consuming expense reporting tasks for teams are ensuring expenses are accurate (64%) and manually reconciling and entering data (55%).
Adding to these challenges is the rise in the number of Software-as-a-service (SaaS) subscriptions billed to company cards. Finance teams are struggling to keep track of the high volume of subscriptions for SaaS services, and they in turn run the risk of paying for subscriptions that are no longer in use.
Having a clear picture of the company’s subscriptions is “one big win”, says Baker. “We suggest collating function or departmental subscriptions under one card and putting them in the name of the budget holder. This makes ownership clearer, which makes teams less likely to pay for unnecessary or redundant services.”
Kloo has developed an all-in-one platform that gives finance teams the much-needed ability to manage company spend holistically.
“Kloo integrates payments and bank transfers with the spend management features of live reporting analytics, approvals, and accounting integrations,” explains Baker.
“The benefits are clear in that you can decide on the balance you want to strike as a business between control and autonomy. You can set that up in the platform so that when it comes to company spend, you are secure that appropriate approvals are in place and expenses are visible in real-time.”
The intuitive platform allows finance teams to manage all aspects of company spend as requirements evolve including altering approval flows or changing card limits.
“The key is having cards, invoice payments, and employee reimbursements – all of the ways in which you can make payments – in one place and have that integrated with your accounting software. This allows you to drive more efficiency within finance and for the wider business,” says Baker.
Unlike other platforms, Kloo specialises in the onboarding process. To maximise the likelihood of a successful implementation, Kloo first creates a spend report for each client with a recommended spend framework. They then assist businesses to get set up on the platform and provide training for finance teams on how to maximise its benefits to the business.
To learn about how Kloo’s free customised spend analysis can help your business with its spend management strategy, click here