Corporate expense management: Why you should automate for accuracy
Turning to online expenses software for corporate expense management has to be the best available option to keep corporate governance on track as we approach the end of two turbulent years for finance throughout the world, says blogger Stuart Pearcey…
It might have been greed. It might have been financial insanity. It might have been a belief that the world of finance was untouchable, and could do no wrong in the pursuit of ever-larger profits and bonuses.
Whatever the cause, the desire for ever-greater riches plunged the world into financial chaos during the first two decades of the 21st century.
The madness of misjudged financial strategies saw money lent to people who had no hope of paying it back, the collapse of banks which had been household names, interest rate rigging, and accounting irregularities. At times, it felt as though the big institutions really did believe they had money to burn. Other people’s money.
In the UK problems rumble on with the suggestion that a Royal Bank of Scotland division set up to help small businesses did nothing of the sort, but sought to improve the company balance sheet at the expense of the people it was supposed to help – although it would be improper to comment further about that before formal investigation.
However, the result of a sustained period of financial uncertainty has been the need for much greater transparency in the way we move money. No longer is it sufficient to pay large sums into a bank without being able to indicate their source.
For large organisations, that means a step change in corporate governance, and the establishment of a paper trail – Sarbannes Oxley in the USA, for example. SOX, as it’s known for short, is a law passed by Congress in America to protect shareholders and the general public from accounting errors and fraudulent practices in business, as well as improve the accuracy of corporate disclosures.
But how do you define fraud? To be effective, any definition has to be black and white, offering no areas for doubt. Rigging LIBOR would probably drop into everyone’s definition. Adding a few miles to an expense claim for a car journey might seem to be OK because it’s a lesser ‘offence’ and involves a relatively small sum of money, but it’s still fraud. It still impacts the bottom line.
It’s been estimated that about 1% of a corporation’s revenue could be leached away by employee expense mismanagement. It doesn’t sound a lot if you say it quickly – but it grows to a much more substantial number quickly when you consider Ford’s group revenue at $152bn, or the RBS (let’s stay with them for a while) at £12.6bn.
Corporate expense management: the only way
The only way to make expense management accurate is to use is automation; and the only way to do that is to use online expense software. Why do I say that? Because to be effective any expense management system must be universally available, easy to use, and always on hand. The only way to do that effectively today is using a smartphone app.
But online expense recording is about much more than online expense recording. That sounds faintly ridiculous, I know, but let’s look behind the statement. Using an effective online expense package brings with it a failsafe suite of options to prevent anything that could be construed as fraud, and feeds data back to your finance people for accurate collation of data. That deals with the corporate governance dimension, which is important. Having the claimed numbers accurate is also important, of course!
Picture: AndreBlais vis Dreamstime