The future might be ambiguous but one thing is for sure: it will be digital. As a result, innovation and automation are essential to an organisation’s longevity. Rather than making drastic changes that might only work in the short-term, making small incremental changes is the way to go. One of the small ways that businesses can do so is by switching to an online expenses management system. With its high usability and integration with cloud technology, an automated expenses management platform is one of the simplest ways to get employees used to automation. In this comprehensive guide, we explain the benefits and advantages of adopting a digital expense management system – including how it can help you successfully prepare for the digital future.
Here is what you will learn:
Ever since the early years of the First Industrial Revolution, the ‘future of work’ has been constantly changing and redefined. First, it was factories and then computers. Now, it is Artificial Intelligence (AI) and the Internet of Things (IoT). These technologies have automated many processes and tremendously improved productivity. So much so that utilising technology has become a basic expectation for business operations. Subsequently, it is not uncommon to hear terms like ‘digital transformation’ and ‘digital economy’ when talking about the future of work.
Moreover, the COVID-19 global pandemic has also accelerated the arrival of the future of work. Tools such as laptops, cloud-based applications, and communications software have allowed many businesses to seamlessly switch to remote working amidst quarantine and lockdown measures. It seems like businesses might risk losing out to their competitors if they do not digitise their processes.
Most businesses only pay attention to improving team communications and developing better methods of production to meet the changing needs of an increasingly digital future. They often do not realise that automating the business’ expense management software is also another way to ensure their longevity. With spend management software becoming more advanced, businesses no longer need to spend time on repetitive financial tasks and focus their efforts on effectively meeting the ever-evolving needs of a digital economy.
In this comprehensive guide, the benefits and advantages of adopting a digital expense management system will be discussed – including how it can help organisations successfully prepare for the digital future.
From paper-based expense management to cloud-based software, humans have always been finding ways to keep track of transactions and inventory efficiently and accurately. The 20th century saw many life-changing inventions such as the fax machine, the very first accounting software, and Microsoft Excel. These tools helped to automate many bookkeeping and accounting tasks and were able to do so with a smaller margin of error. This was especially true after the introduction of Microsoft Excel. The software’s ability to uncomplicate processes and complex maths problems back then was almost unparalleled. It is still being widely used as a spend management platform by many Small and Medium Enterprises (SME) today.
In the (not so distant) past, financial managers had the tedious task of processing receipts and claims by inputting them into the system by hand. Expense reports had to be generated manually as well – making it fairly common for the finance department to spend many man-hours creating comprehensive reports at the end of a financial year. On top of being inefficient, such a system was also more prone to human error and expense fraud.
With the advent of cloud computing and mobile phones increasing their capabilities, corporate spend management software became more sophisticated. With quicker processing power, the finance department can not only ensure a faster turnaround rate for claims but also reduce instances of fraud as every expense is accounted for.
Given some of the benefits of having an online expense management system, it would seem that businesses should be quickly transitioning to one, yet ground sentiment proves otherwise. In SAP’s 2019 report, it was found that 73% of SMEs do not use an automated expense management system and 41% still use a paper-based system. It may be because SMEs may not think that they are big enough to automate expenses or they think that their current manual system is working just fine.
Efficiency and speed are highly valued in the current fast-paced and rapidly changing world. As such, manual spend management systems – being time-consuming and more prone to errors – may end up costing businesses both time and money.
Here are the three main reasons why businesses should transition to an automated system right now.
Whether it a claimant, an approver, or the finance department, an automated expense management system can accelerate expenses recording and compiling. No longer does the finance department need to chase employees for receipts and manually enter the data. Thanks to cloud technology, employees can now easily snap a picture of a receipt with their phone and upload it onto the application. The software will do the necessary legwork to extract important data and group them accordingly thus improving the accuracy of business expenses and reducing the need to deal with misplaced receipts.
Besides, an automated system does away with the need for spreadsheets – which still require a lot of human intervention such as creating formulas and analysing data. It is also difficult to integrate between different data sets without inputting all the information in another system – widening the margin for error and reducing efficiency. As many online expense management systems include an automated expense reporting feature, businesses can be more efficient in processing claims and reviewing budgets as reports can be generated almost instantaneously.
With employees not needing to spend time on repetitive financial tasks, their productivity is likely to be improved. Moreover, with a more streamlined expense management process, businesses can easily get a quick overview of spend data and identify areas for cost savings.
It is important for every organisation to have an expense policy so that employees know what is claimable or not – which reduces the risks of fraud. This also ensures that business expenses meet the resident country’s tax regulations and that they can pass audits and inspections. However, with a manual business spend management system, it is harder to enforce expense policy and non-compliant expenses might slip through. Moreover, employees might also forget to claim important expenses – delaying the work of financial managers who often cannot process reimbursements or provide accurate expense reports. The end can result in exaggerated expenses – which loses the business money – and the business failing to pass tax inspections. Neither of which is a good outcome for businesses.
This is why, with an online spend management platform, businesses can enforce compliance by uploading the expense policy clauses and allowing the system to automatically filter out non-compliant expenses. Compliance checks can also be done with a tap of a button, thus making the process more efficient. This also reduces ‘surprises’ when accounting for monthly expenses or at the end of the fiscal year. Besides, any changes in policies or tax regulations can be seamlessly applied to all expenses and any disparities can be raised quickly. Consequently, businesses can easily gain a more accurate picture of their expenses and also meet the prevailing tax regulations.
Recommended reading: Company Expense Policy Best Practices
An online corporate expense management platform can give businesses sophisticated and customisable reports of their expenses. That way, the finance department, and managers can easily monitor and track all employees’ expenses and manage project budgets more efficiently. With the integration of cloud technology, workflows can be accessed and managed from a variety of mobile devices. This is especially crucial for SMEs, where unforeseen expenses can harm them. As such, being able to view their expenses from virtually anywhere will allow them to rectify gaps quickly.
Moreover, spending significantly less time on doing up expense reports allows finance teams to predict future trends in expenditure and forecast for a successful financial year. That way, businesses can successfully budget and be more prepared for the future.
Consequently, the benefits of having an automated expenses management system far outweigh the benefits of keeping a manual system. With many expense management solutions utilising cloud-based software, it can seamlessly integrate into the businesses’ current IT infrastructure and start in no time. The cost might be a little steep, but it is a small investment to reap even larger future rewards. And with more companies going remotes, the above reasons will prove to be very advantageous to ensuring a productive workflow.
No matter how enticing an automated system might be, business owners still need to carefully consider the needs of their businesses and their employees before making the switch. This ensures that the transition is smooth and that the software can successfully meet current and future business needs.
To do this, managers and executives can ask themselves the following four questions:
This question helps define the problems and issues that a business is currently facing that can be resolved by an automated system. Whether it is wanting to reduce time spent on filing expenses or making financial closes less stressful, coming up with goals will help businesses decide which stage(s) of their expense management they would like to improve.
Any good business will consult with its employees before making any large-scale and long-term changes. Businesses should conduct reviews with each department so that employees’ experiences and pain points will be revealed. This way, they can have a clearer picture of what functions their new expenses management solution should fulfill. Being involved in the consulting stage also helps employees have a bigger stake in seeing the success of the new system. As a result, they are more likely to quickly adapt to new expenses management software. Answering this question will naturally lead to the next question.
By formulating the goals and getting employee feedback, businesses can get an idea of the right characteristics for their automated expenses management system. Some popular features might be scalability, being able to sync across many devices and functionality. The last one is often an important feature for businesses as having a well-designed user interface will ensure that filing, monitoring, and tracking expenses can be done efficiently. An expenses management software that can sync across many devices is good for businesses that are going remote and a scalable system ensures that it can meet the financial needs of a growing business.
In times of rapid technological advancements, it may be difficult for everyone to keep up with the changes. Even in small businesses, IT skills can vary greatly from person to person. Transitioning to a new system has its challenges and moving from a manual one to an automated system might be even more difficult. This is especially true for the departments that will be using the new software daily (finance and probably IT) and might be in charge of migrating the data from the old one into the new one. How will the support be provided? Will a department be a single point of contact or will it be through the software’s customer service? All of these factors play a role in ensuring that the business experience a smooth transition to using its new expenses management solution.
The aim of technology has always been to improve the ways humans live and work. Nonetheless, the rate of which technological advances happened in the past 10 years has been virtually unmatched by the preceding 50 years. As such, it is to be expected that there will be a learning curve for certain groups of people.
If organisations want to learn how to successfully navigate through a highly digitised space, they will need to take note of the following five challenges and address them accordingly:
This can often be the biggest challenge that businesses need to overcome whenever they are implementing new technologies. Whether it is cloud computing or using AI, technology gets more complicated as it advances – making the skills gap bigger. From a psychological standpoint, humans are also less likely to trust something if they are unable to understand it. This is especially true when it comes to finances as employees are more likely to be afraid that a small mistake might cause an accidental loss of money. Businesses can combat this challenge in two ways – by training existing employees and hiring new employees who are familiar with the technology.
This challenge is more likely for businesses that are switching over to new software or platform after using another system for many years. As humans are creatures of habit, even if the new system can vastly improve productivity, there might an initial stage of resistance. Besides, it is likely that employees might need to change the way they work – creating even more resistance. For example, an automated business expenses management system might cause change throughout the entire business. As such, all of the departments will need to work together to ensure that the change happens successfully. If a business is not used to working that way, those in higher management have enforced this new way of working if they want to implement an automated system.
As a result, businesses need to gather feedback from employees at every stage of the transition process. From there, they can co-create solutions that will help employees adapt to the new technology more easily. Besides, when those in higher management express and provide continuous support for embracing digital change, employees will be more empowered to do so.
If employees having the right skills can be seen as the ‘software’, having the proper infrastructure is the ‘hardware’ or the foundation that supports the business’ new digital processes. If an organisation that hosted their digital services on-premise and did their processes manually, it would require a complete overhaul of their systems if they are moving to an automated platform. New technologies that have been integrated with AI, IoT, or cloud computing require an adaptable infrastructure that can both host them and support them for the next few years. Consequently, businesses would probably need to do away with their legacy IT systems if they want to effectively transition into the digital future.
In business terms, it means that employees – or management, do not see a clear Return On Investment (ROI) when it comes to employing a new system – especially a digital one. The fact is that digitalising processes require money and those in charge of approving new systems will need a clear picture of how the new system will benefit the organisation. Even for switching to an online corporate expenses management system, if it is not budgeted carefully, it may end up costing the company more money than it is worth. As a result, businesses should set down the criteria based on business goals and a timeline of what the new technology should accomplish and by when. This will also ensure that that the business introduces change incrementally and the software can seamlessly integrate into the processes.
This may just be the biggest barrier for businesses to overcome. As the world becomes more digital and more data gets stored in the cloud, it also increases the risks of cyber-crimes. Many businesses have listed cybersecurity threats as their biggest concern. While digital services offer greater connectivity and convenience, it may also offer more entry points for cyberattacks to slip through. This may potentially hinder employees from wanting to switch over to an automated system as they are afraid of potential breaches causing their sensitive data to be stolen. To ensure that their IT environment is less vulnerable to such risks, businesses should carefully evaluate the security of their new digital products before implementing them. Providing training in proper cybersecurity habits for their employees can further ensure that the integrity of their digital landscape is maintained.
As mentioned earlier, the COVID-19 global pandemic has caused many organisations to either accelerate their digital transformation initiatives or begin using digital services. With no clear end to the pandemic in sight, many experts have begun to call this period the ‘new normal’. In the new normal, as many people rather stay home to reduce infection rates, they have begun engaging in digital services and frequenting online shops. Cashless payments and mobile wallets are also getting increasingly popular.
More businesses are engaging in remote working and utilising digital technologies to continue meeting consumer demands and creating revenue. Nonetheless, while many business processes have been automated, finances are still one such area that organisations are reluctant to automate. Especially in the Asia Pacific region, close to 40% of employees still have to manually fill out expense forms. This results in employees and managers spending a combined 10 hours per month just on repetitive financial tasks. While it may not seem like a lot, it has the potential to seriously add up and cost money. It has even been calculated to cost Asia Pacific businesses close to 21.5 billion US Dollars in GDP revenue every year!
Most employees want business processes to be more efficient so that they can spend more time doing meaningful work rather than on repetitive tasks. The same can be said for businesses – with more efficient processes, it may translate to better productivity and earnings. If most processes can be automated to be more efficient, including finance, it stands to reason that businesses should not have much issue switching to a digital expenses management system. Especially when it can ensure both time and cost savings, employees can focus on being more productive and thinking of ways to capitalise on new opportunities.
When businesses can successfully automate all of their processes, especially expenses management, it shows that they are adaptable and agile. These are key qualities in creating a resilient organisation that can tide through the crisis and is prepared to meet future challenges.
Recommended reading: Guide to Managing Company Spend in the Remote Workplace
At the end of the day, switching to an online platform for corporate expenses management requires businesses to be comfortable living in a very digital world and keeping up with rapid changes. Not only that, but a business’s digital processes should also contribute to reaching business goals.
A 2015 joint study conducted by MIT Sloan Management Review and Deloitte revealed that almost 90% of respondents believed that digital trends will disrupt their businesses but less than half of them thought that their organisations and prepared for the disruption. This shows that businesses need to work much harder to adequately address the challenges of a digital future.
To do that, businesses need to take a macro overview of their digital transformation and business goals and see if they can be aligned as much as possible.
This can be done by ensuring the presence of the following two things:
Using digital services is not just about having the technical knowledge but also about the soft skills like being willing to embrace change and learn new things. If businesses want to be a part of the digital future, they will need the cooperation of their employees. The best way to do so is to foster a culture where digital tools are part and parcel of the work-life.
Deloitte’s research has shown that businesses that have strong digital cultures are usually more risk-taking and collaborative with a less hierarchical structure. Organisations can start by having initiatives that encourage innovation and even reward employees that exhibit such behaviours. A common fear that many employees have is that automation will threaten their job security. Organisations can assuage such concerns by investing in their digital training and in employees who would like to attend courses that will further hone their digital skills. With highly-trained and talented employees, a strong digital culture can be achieved.
To successfully meet the challenges of the digital economy, businesses will need to develop clear and effective strategies. This requires constantly evaluating business goals and seeing where digital services can enhance them. Digital trends have completely different impacts on different industries, and businesses will need to prepare accordingly. More often than not, businesses may find that their business model needs to undergo a serious change so that it can be agile enough to tackle fast-paced market changes.
Nonetheless, when an organisation has a strong digital culture, it will be easier for them to brainstorm strategies and engage in future forecasting by analysing data. With a macro view, they are also able to align digital strategies with company goals and have a plan for achieving them. While businesses can prepare adequately for disruptions, being flexible will ensure that they are willing to change strategies as they see fit.
As these two qualities work hand in hand to properly prepare an organisation for the digital future, organisations should devote an equal amount of resources to them. Without a digital culture, strategies that tackle disruptions might fall flat as employees may not know how to utilise them effectively. With no digital strategies, an organisation’s digital development will be stagnant and they might lose their talented employees to other businesses that can better nurture their skills.
Recommended reading: Keep Calm And Let Finance Automation Kick Out Chaos
The future might be ambiguous but one thing is for sure: it will be digital. Considering the rate of technological advances happening right now, no industry can say for certain that they might not become obsolete tomorrow. In 1958, the average lifespan of an S&P 500 company was 61 years. In 2018, that has reduced to 18 years – another proof of the quick-paced changes brought about by the digital revolution.
As a result, innovation and automation are essential to an organisation’s longevity. These 2 qualities help to simplify processes and improve performance tracking, through which organisations can use to rise to challenges of a digital world.
Rather than making drastic changes that might only work in the short-term, making small incremental changes is the way to go. One of the small ways that businesses can do so is by switching to an online expenses management system. With its high usability and integration with cloud technology, an automated expenses management platform is one of the simplest ways to get employees used to automation.
Achieve higher efficiency and productivity when your business uses Volve! Big or small, we aim to provide corporate expenses management solutions for all types of businesses. Contact us here to find out more!