It’s a known fact that even the most structured organizations are prone to committing errors. Unfortunately errors are not only inevitable, they also have a major impact on the business. No matter the scale of the error, the impact can be multi-fold and cost an organization dearly. It can have direct implications in the form of revenue loss OR
It can have direct implications in the form of revenue loss OR intangible consequences like damage to company reputation or dip in employee morale. From the best managed large MNCs to emerging enterprises CXOs have a constant threat of errors disrupting business functionality.
For CXOs to sustain profitability over long-term, they need to constantly innovate, build new products, and explore markets. However, there are additional factors that determine whether an organization achieves high growth or leads to failure. Factors like achieving operational excellence, cost restructuring, managing expenditure & resource are within an organization's purview to not only reduce errors but also drive growth. In today’s competitive economy, it is just not enough to drive profitability, the need of the hour is to control cost by reducing expenses.
The key to any expense management is to deeply have a holistic view of all the possible outlets of spend. When CXOs See More they can Save more. This entails in-depth understanding of where the expenses are made, how much it returns and then learn to best budget the expense in advance. One such opportunity is managing expense related to business travel.
India is one of the largest business travel markets in the world. According to the GBTA’s (Global Business Travel Association) report “GBTA BTI™ Outlook – India, Prospects for Domestic & International Outbound Business Travel 2014-2015, India spent close to $ 26.2 billion on business travel in 2014. With T&E being the second largest controllable expense, even minor errors and delays in reporting can have major impact on company’s financial performance.
Travel & Expense management by its nature can be complex and unpredictable, especially for organizations which have not yet automated their processes. For example, employees making their expense entries are subject to data entry errors.
This can be dramatically reduced, once electronic corporate card transactions automate the accurate entry of expenses. The system also can automatically validate manual entries based on lists or other parameters set by the organization. Users are guided through the expense entry process to ensure that all relevant information is entered properly.
Complex tasks like proper coding of expenses, itemizing hotel bills, and allocating expenses to multiple cost centers is automated and entries are checked for accuracy and completeness. An automated T&E management system integrates directly to the company's accounting, payroll and HR systems so that potential keying errors are eliminated.
Lack of automation can lead to organizations committing errors that have various impacts on various functionalities:
Excessive Reimbursements: Employees often end up filing duplicate expenses or in good faith submit expenses that are non-reimbursable. Additionally, vendors also make errors that eventually result in overcharging. All these errors can lead to excessive reimbursements resulting into incorrect audits and mis-projections of actual expense claims resulting in bad financial projections
Loss of Employee productivity: One of the biggest challenge managers and back-office staff face is on reviewing the reimbursements errors. Valuable time and effort is spent on making adequate correction. Additionally, processes which are not automated require paperwork to re-submit expenses. This results in loss of employee productivity in creating more transactions than actually required.
Regulatory Compliance: In the increasingly demanding regulatory environment, errors can have major impact on organizations credentials and reputations. If all important transactions, cost center approvals, compliance, expense claims and travel approval are captured into the system automatically will result in lesser financial risk and enhanced probability of not damaging corporate image
Frauds & Financial control: When business travelers do travel booking outside of company policy, it creates disorder for finance team to manually manage all the transactions and reimbursements. Correcting false receipts, matching expense claims and correcting other errors can be an overwhelming task for the decision maker. These can have severe impact on company reputation and the cost of error can have permanent repercussions which are beyond repair.
Financial errors can be paradoxical. Whether forced or unforced, human or technical, it is critical for decision makers to anticipate and remove the error before they occur. If errors are not rectified on timely basis can lead to severe business repercussions.
In large busy companies it can be hard to keep track of travel expenses and if the company has not yet adopted the automation process, it can be even harder to know the difference between legitimate and fraudulent travel expense payments being made. An automated T&E management system is the first step towards reducing errors related to business travel and leads an organization to drive productivity, saves valuable dollars and builds corporate reputation.
Ramesh is the Managing Director at Concur Technologies, India
