During these austere times, it is important for businesses to review their operational costs and expenditures. The global downturn has seen businesses slash their costs but that is not the only solution to surviving the recession. Implementing an expense management programme can offer more control, drive down costs and support long-term growth objectives.
Business expenses can be a huge outgoing, emphasising the need for a cost control policy. Research from AT Kearney
found business to business indirect spend, including travel and entertainment, stationery and IT, is estimated at €1.3 trillion (£1 trillion) in Europe. There are several benefits of having an expense management programme in place. These include:
• Simple, streamlined control over expenses
• Strengthened negotiating position with key suppliers
• An automated expense programme to track employee spend and reduce administration
• The opportunity to analyse transactional data
It is vital to communicate the expenditure policy to employees, to foster their engagement and promote personal accountability. This will encourage responsible decision-making and help reduce any out-of-policy expense claims.
To reduce expenditure and consider growth opportunities, businesses need to examine their spending habits and identify unnecessary costs. We have seen increasing focus on working capital as one of the key levers for moving a business forward and in a much broader form than just cash flow. Businesses are looking at ways to lower processing costs, reduce the risk and cost of funding and explore ways in which balance sheet ratios can be improved. In the current economic climate, buyers and suppliers need more flexible finance solutions and liquidity in the supply chain to deliver stock promptly and pay suppliers on time.
The recession has impacted on everyone’s bottom line, so it is important to have transparency over costs. Putting programmes in place to simplify the process can offer significant savings on business expenditure. It is encouraging that in Europe there are CFOs who plan to spend on operations to fuel growth despite these austere times, according to a survey from CFO Research Services
. With a robust expenses policy in place and a working capital management solution, savings can be used to hit growth targets.
☛ Alan Gillies is vice president and head of UK sales, UK division of American Express Global Corporate Payments, the headline sponsor of the CIPS Annual Conference 2012. To book your place at this year’s event, which takes place in London on 4 October visit www.cipsannualconference.com