In today’s world, chief experience officers (CXOs) need detailed and accurate information about expenses, in a timely manner, in order to take decisions that are often highly time sensitive. Financial reports and data are crucial for financial decision making, and poor visibility severely hampers the quality of this data.
It is of paramount importance for top management to have access to data that is completely error free in order to ensure that decisions taken are guaranteed to have a positive impact on the organization.
Barriers to Expense Visibility
The marked lack of progress in the expense visibility area for business organizations is baffling considering that it is one of the most important aspects of a company’s decision making process.
In the absence of expense visibility, the financial reports and data received by CXOs is deeply flawed. There are numerous sources for financial data ranging from expense reports filed by employees to reports submitted by department heads, who in turn generate data for their respective departments from reports submitted by managers.
It is currently a hugely cumbersome and ineffectual process that provides no real time visibility, and to top it all off, most of this data is not accurate, as they are manually reported and submitted. Manually filed reports are vulnerable to human errors and the information sourced from them is unreliable, which proves to be a major impediment in informed decision making.
Issues Due to Poor Expense Visibility
Lack of Control on Expenditure:
It becomes impossible to effectively track how much is being spent, and on what. . Department heads and managers are left in the dark leaving the organisation susceptible to unauthorized or unnecessary expenditures which has a direct negative impact on bottom line numbers.
Formulation and enforcement of policies are also affected by a lack of good expense visibility as there are no reliable data and framework to establish the expense policy. This in turn leads to more unauthorized expenditure, creating a highly toxic cycle.
Difficulties in Optimal Planning & Budgeting:
How do you plan for something when you have no idea how much you can actually spend? Lack of visibility in expenses and the amount remaining in allocated budgets, becomes an impediment in planning – i right from a relaxing corporate retreat to a crucial marketing campaign.
How can a company decide on budgetary requirements or validate that requirement in the absence of an insight into the expenditure of a current quarter? It becomes a company-wide budgeting issue that is very difficult to resolve in a timely manner.
Lack of real time visibility also makes it impossible to identify cost saving opportunities and act on them quickly and efficiently. By the time decision makers get access to the data needed, the opportunity is long gone.
On the other end of the spectrum, poor visibility can lead to unused budget because of a fear of exceeding the allocated budget. This can in turn affects productivity.
Broken Expense Reporting Processes:
With no real time visibility into employee expenditure, managers are left in the dark about employee expenses for business purposes which need to be reimbursed. The first look a manger gets into these expenses is when an expense report is submitted, and this leads to situations where unauthorized spending has to be approved – which is borne by the company – or rejected, leaving the employee high and dry. Both of which are highly undesirable outcomes.
Manual expense reporting also has a high chance for errors, which in turn creates inaccurate data, compromising the quality of the data or further delaying financial reports, as the expense reports need to be changed and resubmitted.
How Automation Helps Combat Poor Expense Visibility
It is essential for companies to make a concerted effort towards improving expense visibility. Having real time visibility can lead to a more informed and efficient decision making process reducing unnecessary expenditure and improving the bottom line numbers.
Automated expense management provides significant insight by providing CXOs with real time visibility on the expenditure incurred. Financial reports and analytics on expenditure and left over budget help in planning and budgeting, while giving greater control over the expenditures incurred.
Data collected through an automated system is 100% accurate, meaning that you can have complete confidence in the validity of this data. Financial reports are all collected and collated through a single system, making it a highly efficient process as well.
Shifting over to an automated system is what will bring your company to the next level of decision making through enhanced expense visibility.