Expense management is one of the critical areas where Chief Financial Officers (CFOs) have to effectively balance cutting costs and spending. However, most CFOs still look at expense management software as a necessary tactic rather than a strategic business opportunity by perceiving it as a source for cost savings.
According to a survey, 70% of CFOs cannot precisely forecast their company’s travel and other expenditures, while over 50% lack visibility of the returns they bring in. Here are some of the strategies that CFOs must consider to transform expenses from an unpredictable cost into profitable growth opportunities:
Adopt a Dynamic Approach
The problem with a static expense management system is that their rigidness and inflexibility can be counterproductive and even harm the company. Therefore, the CFOs must realize that these policies must be dynamic to allow for greater flexibility according to the expense circumstances.
For example, while a business dinner at an expensive restaurant may look like too much, it may be warranted if it is with a high-profile client and generates greater returns.
The decline in the effectiveness of most expense management strategies is because they focus mainly on the amount spent. A more effective strategy would be to give a real-time view of how that expense impacts the company’s revenue to both the management and the employee.
Integrate Travel and Expense Management
Business travel is one of the most expensive costs of a company and adds to the challenge faced by those CFOs who cannot visualize their employees’ travel plans. A better strategy is to have an integrated travel and expense management online system to leverage for effective cost reduction.
Ensure High-Quality Data to Improve Visibility
Many CFOs complain of drowning in data that does not provide them any insights. To gain better expense visibility, it is important to leverage accurate data that allows to view and eradicate the inconsistencies in expense data.
Adopt a Continuous Process
Expense management is not a one-time task but a continuous process. Therefore, CFOs must establish a framework that is driven by data on-demand to make accurate budgets and expense forecasting more effective than before.
According to research, over 80% of companies are still using manual or semi-automatic expense management system that do not offer the flexibility required.
Zaggle EMS is an all-in-one expense management software with which businesses track their expenses, ensure compliance with their policies, and find new opportunities to save money for the organization.
Expert contributor and editor at the Zaggle Knowledge Hub, specializing in corporate spend management, expense compliance, and B2B fintech solutions.
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