What a three-year-old can teach us about expense management
Isn’t it exhausting, the way our lives are filled with the here and now? So much clamours for our attention that the day is behind us before we’ve done half of what we wanted to achieve. But if we could sneak away from the pressure for just a few minutes, we might have the opportunity to see the world through the eyes of a child, and give ourselves space to ask a child-like question. And discover important things as a result…
The older I get, the less I seem to know. It’s not necessarily that I forget things (but I’d be a fool to deny that it happens); rather it’s because I discover that there are more and more things I could know, but have no clue about.
I assume three years old have the same feeling, which is why they spend so much time asking the question every parent is familiar with: “Why?” It precedes so many apparently random thoughts, like ‘Why is the sky blue?’ or ‘Why has that man got no hair?’ or ‘Why must I eat the carrots?’
We could learn much to our advantage if we retained that childlike inquisitive streak. Roger Antonsen advocates as much in an interesting Ted Talk about maths. Here he suggests that understanding numbers can offer a different perspective on the world, as a result of which we can change the way we see things through a greater understanding.
It sounds a little deep and hard to grasp, I’ll grant you, but it really isn’t. Antonsen uses numbers to make his audience think about shape and even about music, and then about the sea…
And it was after I’d seen his presentation that I thought about ExpenseOnDemand, and it occurred to me that our online expense management system offers much the same thing; a different perspective on expenses – and from that, their role in business running costs. And that, naturally, leads to the ability to seek out savings with which to enhance profitability.
My view is that it’s all a question of collating information and asking the right questions. With diligently-recorded expenses, and the means to analyse the data offered in this easy-to-use expense management software, it’s possible to discover what those right questions are.
Here’s how it works
When all the spending for a business is collated (the size of the business isn’t so important; the same rules apply, and we have software packages to suit every size of business), then patterns emerge. The patterns might reveal a spending spike over hotel accommodation, for instance. The immediately obvious question is ‘why are we spending so much on hotels; is it justified?’ Those questions may prompt further investigation to discover the reasons. There may be many good ones, but without asking the question, it’s impossible to know – and if such sending isn’t justified, and is adding no value to the business, then alternative action is necessary. Cheaper hotels might be the answer, or fewer visits, or teleconferencing. All are options that might better suit the business, but would never have been considered unless the data had been analysed.
Reveal the hidden costs
Then think about executive travel generally, and ask ‘why’ again. Cheaper flights might be available a few hours’ drive away – but apply ‘three-year-old’ thinking, and ask: ‘Why are you flying from that airport?’ A reasonable answer might be ‘The flight is cheaper.’
The three-year-old would follow up with another ‘why?’ Answering that might force a look at the bigger picture. Then you’d factor in the cost of travel for the executive to the right airport, and the marginal gain from the lower flight price would become even more marginal. It doesn’t matter if he drives himself, or has a driver; there’s a cost.
Then consider how much his salary costs the company in raw cash terms, and factor that in too. At that point it may be that the marginal gain has been wiped out altogether – making the ‘cheaper’ flight nothing of the sort, but actually more expensive.
And then the three-year-old might ask ‘why didn’t you think of that in the first place?’ The answer might well be ‘because we didn’t think about it’.
Think like a three-year-old now and then. Ask why. The answers might turn out to be gold nuggets…