Following a 2021 rebound in travel, global business travel activity is anticipated to jump an additional 38% in 2022, according to the Global Business Travel Association. Finance leaders are looking forward to high ROI from travel for sales and business development, internal business strategy, client account management, and employee training.
As leaders invest further in the recovery, keeping a close eye on spend visibility is imperative for long-term, measured success. The following spend management techniques keep businesses primed for recovery growth while providing insights for strategic decisions.
Technique #1: Empower Employees to Spend Responsibly
Demand for speedy decision-making became more urgent during the pandemic. Every year, managers waste a cumulative 530,000 days due to broken decision-making processes.
Companies often see better outcomes when they entrust decisions to the employees who are closest to the work. Delegating accountability and responsibility to employees (while providing sufficient coaching) leads to high-quality and speedy decisions. Simultaneously, companies need to create a fail-safe environment for when employees make faulty decisions—and allow them to learn from mistakes.
The default method for expense management creates headaches for everyone. Paying with personal funds, submitting paper receipts with expense reports, and requesting manual approval frustrates employees and finance teams.
Spend management technology automatically rejects expenses that fall outside of company policy, which ultimately supports better decision-making at the employee level. By coding written policies into spending systems, employees are less likely to commit mistakes when using corporate cards—eliminating the need to justify decisions to managers and auditors who are reviewing expense reports.
Technique #2: Invest In Agile Tools
Finance leaders have faced a real-time stress test of their strategic tools in the last two years, which has pushed many CFOs to re-examine their budgeting and forecasting processes (planning and estimating future spending). and forecasting.
Traditional forecasting methods rely on historical data to predict future spending, however, unforeseen disruptions can always break those models.. The pandemic was a wake-up call to use real-time data and generate rolling forecasts instead of relying on historical data. A McKinsey survey revealed that 65% of CFOs anticipate using rolling forecasts from 2021 onwards.
Rolling forecasts allow businesses to compare actual company performance against forecasts with higher predictive value. Finance leaders can adjust budgets to manage costs based on current spending and maintain an updated picture of company finances.
Constantly changing projections requires equally intelligent technology to track actual costs versus rolling forecasts. Companies then have the agility to customize budgets down to cost category or context before transactions occur.
Investing in spend management tools enables important real-time forecasting, budgeting, and financial planning.
Technique #3: Centralize Spend Monitoring
With more teams working remotely or semi-remotely, finance teams now require a single platform to access all files and communication related to expenses from anywhere. Centralized, cloud-based spend management tools integrate with existing systems, speeding up communication.
This access to existing spend data creates a single source of truth and allows for benchmarking across departments and against competitors. High-impact insights only become apparent when companies have clear visibility into every expense. Having thousands of data points also enhances reporting and spend analytics.
Using insights gleaned from high-quality data, businesses track cost drivers across suppliers and cost subcategories. By boosting visibility, finance leaders eliminate non-value-added expenses, mitigate risks, and improve cash liquidity.
Businesses invest in technology not just to save money but also to gain a competitive advantage. Understanding cost drivers gives growing businesses the ability to scale and react quickly to a constantly changing landscape.
TripActions Liquid enables real-time spend visibility so that finance teams understand cash flows and can plan strategically. Schedule a demo today.