7 Reasons to automate expense management.

expense managementIt wasn’t that long ago when claiming expenses incurred on behalf of the company were lodged on a form the office junior created. We then progressed to Lotus 123 and then to Excel utilising formula to manage accuracy. Surprisingly today, we see many organisations still using the old excel form to control travel and expense management.

The changes in the global economy have caused many organization to rethink the old way of doing things. This has introduced new and improved methods that allow you to manage your cost. Also allow you to accurately tack the amount of money you spend with a particular supplier. In terms of FBT, the reporting tools available will allow you to choose which method of calculating entertainment will be beneficial to your business. As the information is available quickly and effectively, giving you the choice. These tools will allow you to not only improve your bottom line, but give you accurate insight on where and how your money is spent.expense management

Below are 7 reasons why utilising technology will improve expense management and benefit you and your business

 

  • Compliance - Enforcing expense policy and ensuring that receipts are lodged with accurate information to allow better management of tasks such as FBT and tax compliance has been a problem for many accounting teams. Having said that, have you ever sat down and thought how much it costs for your accounts payable officer to enforce compliance on a movie rental. Creating a set of rules and enforcing those rules will not only save your company money, but it will instill a discipline on all staff to better manage how they spend the company's money. The virtual police are continually monitoring the rules you set to safeguard compliance and inject a level of accountability onto the individual.

 

  • Auditing - As a rule most expense statements have random audits. Where a member of the accounting team screens the report quickly for obvious errors. The majority of un-allowed expenditure seam to still slip through. If we take the above example, the cost of a movie rental is say $10. If we extend that to 30 reps per month per year we are looking at $3,600 pa. This will definitely not cover the cost of an auditor but it will pay for 3 laptop or 9 tablets or even the cost of the Christmas party. Therefore the virtual police has not only recouped the cost of establishing such a system. It has also established a precedent to deter any future claims of this nature to be lodged.

 

  • Business Intelligence - Imagine being able to report on all the expenses incurred throughout the year. Identifying that the Hilton is the favorite hotel of you Sales Manager when he/she travels interstate. Collating such information, you are then able to take this and convert it to dollars saved. By approaching large hotel chains with an accurate per annum spend. Thus generating better buying power to negotiate greater savings through corporate accounts and or daily rates.

 

  • Automation - The key to automation is to move the processing onus back onto the individual. Ensuring compliance on initial input. This will establish that the spend is within the range of allowed expenditure and compliant with the rules set. Not only will this save you time in your accounts team but the technology allows you to manage the input at your leisure. By utilizing the apps available on smart phones. Users are able input and complete expense data while waiting for the taxi, plane or waiting for the coffee to be made at your local cafe. The user is able to take an image of the receipt and allow the accurate OCR tools to complete the rest. No longer having to carry an envelope of receipts back to the office. Then trying to remember where and what the receipt relates to.

 

  • Fringe Benefits Tax - The tax department says "you choose" and in most cases you choose which ever is going to be the easiest to prepare and least expensive. After the FBT return is lodged, you wonder "Am I paying too much Entertainment FBT". Again, by utilising the power of technology, let the Business Intelligence tools built in, give you the most cost effective method to use. Potentially saving thousands of dollars and hours in preparing accurate and compliant reporting.

 

  • Expense Processing - There are many methodologies in calculating the cost of processing an expense form. Some accurate and others not so accurate. Whatever the case there is definitely a cost to be saved. Although this cost may vary between organisations, a recent study undertaken showed the cost of not automating to be approx. $41.12 compared to the cost of automation to be $7.17 per expense statement processed. It is obvious how technology can help you reduce your management costs quite significantly.

 

  • Reporting - Once the data is captured in one place the ability to report that information is effortless. Today Excel can directly connect to a database and manipulate data into so many different ways to provide information which will allow you

                                         i.    to better budget,

                                       ii.    better forecast,

                                     iii.    buy smarter and

                                      iv.    Manage delinquency and dare we say fraud.

 

Technology is changing our lives on a daily basis. New and improved tools are being developed to make our lives easier. Giving us the information to better manage cash, improve buying power and tighten controls to reduce any liability as a result of non-compliance. Having been a CFO for many years, I have been able to experience the pitfalls of preparing accurate and timely financial information. Having the tools at the click of a button will not only improve the ability of your business to better manage your cost base, but allow you to develop a business that can competitively compete in global markets.

 

BHD have been working in this area for many years and we would like to bring our knowledge and experience to your business. To work with you to enable your business to play on the global field with confidence that you have strong financial backing and the ability to tweak your strategies quickly and effortlessly.

 

Contact Us for a quick discussion on how we can help you to implement and use technology to improve expense management as well as other parts of your business that cause you pain.

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How others see you

How others see you – A quick test

“Perception is someone’s reality”

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Q1 When do you feel your best? a) In the morningb) During the afternoon and early eveningc) Late at night
Q2 - You usually walk a) Fairly fast, with long stepsb) Fairly fast, with short quick stepsc) Less fast, head up, looking the world in the faced) Very slowly
Q3 When talking to people you a) Stand with your arms foldedb) Have your hands claspedc) Have one or both of your hands on your hipsd) Touch or push the person to whom you are talkinge) Play with your ear, touch your chin or smooth your hair
Q4 When relaxing, you sit with a) Your knees bent with your legs neatly side-by-sideb) Your legs crossedc) Your legs stretched out or straightd) One leg curled under you
Q5 When something really amuses you, you react with a) A big, appreciative laughb) A laugh, but not a loud onec) A quiet chuckled) A sheepish smile
Q6 When you go to a party or social gathering you a) Make a loud entrance so everyone notices youb) Make a quiet entrance, looking around for someone you knowc) Make a quiet entrance, trying to stay unnoticed
Q7 You're working very hard, concentrating hard, and you're interrupted. Do you? a) Welcome the breakb) Feel extreemly irritatedc) Vary between these two extremes
Q8 Which of the following colours do you like the most? a) Red or Orangeb) Blackc) Yellow or light blued) Greene) Dark Blue or Purplef) Whiteg) Brown or gray
Q9 When you are in bed at night, in those last few moments before falling asleep, you lie a) Stretched out, on your backb) Stretched out, face down, on your stomachc) On your side, slightly curledd) With your head on one arme) With your head under the covers
Q10 You often dream that you are a) fallingb) Fighting or strugglingc) Searching for something or someoned) Flying or floatinge) You usually have dreamless sleepf) Your dreams are always pleasant

 

The Evans Group LLC

 

Industry experience

Industry experience, is it important when hiring outside of the business

 

For many years I have always wondered why employers place more emphasis on industry experience rather than professional experience when recruiting for an Accounting role. Accounting as a profession is very generic in that 80% of the functions performed are the same whether you are building 20 storey skyscrapers or providing car rental services. The debit is always on the left and the credit is on the right. So why is there such a distinction in looking for that new Accountant for your business? ChangeHumanSide

If I had a dollar for every time someone told me “I have a unique business” or “We work in a unique industry” I would have been richer than Bill Gates. These terms may be relevant for an engineer or a sales person but for an accountant? I know I am being very simplistic here but, sometimes you have to wonder, why employers and/or recruiters are looking for particular industry experience when hiring new staff from outside the organisation.

 

So why does a candidate have to have industry experience to be employed in your business?

 

Let us for a moment accept that industry experience is important. Looking deeper into some industries you will invariably find poor practices and bad habits. Is that something you want to bring into your well run efficient company? History shows and a number of studies in human behaviour in organisation have also shown that employing from within the same industry has a negative impact on your business. In a recent article published by Wharton University of Pennsylvania titled “Hiring from Outside the Company: How People can bring unexpected pain” it clearly states

 

“the relationship between prior related experience and performance may not be wholly positive. Indeed, despite the common assumption that prior related experience will improve performance, past research findings have been mixed about the effect of work experience on performance.”  (Wharton 2008)

 

In saying that why do we continue with this bad habit?

 

Industry experience is not important. In fact it should be the last item on your check list, as the only positive it brings to your business is the ability for the new employee to understand the industry jargon. I believe the first place employers should be looking is within the business and if that search is not successful, then move out to the big wide world. By promoting within you keep history, knowledge and experience in your business. This will result in a propensity for employees to stay within the business longer climbing the corporate ladder instead of job hopping from one company to another to achieve the goals of a corporate career. Over time this will create a pool of people that can take on the senior roles with little training as they have matured and grown with the business. The term is succession planning, something that we don’t do a lot of in these tough economic times.

The authors of the article go further to say that employing for industry experience can be a substitute for training as time restraints and lean teams no longer provide managers with the ability to train a new employee. Nancy Rothbard states

“when companies hire employees with experience, they tend to rely on that experience as a substitute for training “Maybe they pay more for those people and invest less in training, but we suggest that might be a mistake.” (Wharton et .al, 2008)

The gift of hindsight tells us that industry experience is only relevant for the first three months of an employee’s tenure within an organisation. Meaning the longer an employee is employed within an organisation the less relevant that person’s history is of any value to that business. Rothbard reiterates this point by saying;

“Over time as individuals become socialized into the new firm, the amount of prior work experience they brought with them matters less for the skills they demonstrate on the job,”

There are going to be pros and cons for whether industry experience is relevant or not, but based on my findings, it all boils down to, a training program each and every business should develop for all new recruits. An induction program that introduces topics such as, the core values, mission statements, industry speak as well as what the business does better than industry norms. What makes it unique and how it differentiates from its competitors. Invariably if done well, it should only take a day or so to bring that new employee up to speed. Therefore killing the need for industry experience and placing more weight on skill, cultural fit and the ability to bring professional experience to further enhance the business.

 

Are the executives of the 21st century simply not willing to train? Or is it cost related? Whatever the reason, there seems to be merit in bringing back a training levy which could alleviate this problem and solve a couple of others along the way. No matter what the reason it is my opinion that the difference between having industry experience and having professional experience is three months.

 

BHD can provide resources in recruiting your next accounting professional or developing an induction training program. For a confidential discussion click here