The expectation to cut costs and track payments can put major pressure on management to perform. If managers, directors, CFO's and COO's are still using manual methods like spreadsheets, they're likely to make a critical error, throwing off budgets. Managers can expand their capabilities and do so much more with expense management solutions.
1. Making savings stick
Most cost-cutting initiatives are done with short-term goals in mind. Perhaps an organization needs to save now in order to afford new hardware or solutions. This type of effort erodes with time and the cut costs typically return within 12 to 18 months, according to McKinsey & Company. With expense management tools, managers can do more to make savings stick and enact real change throughout the organization. Expense management can help cost savings stick for long-term benefits.
To do this, managers need to break costs down to the groups or individuals who are responsible for them. Insight on this level will help identify expense mismanagement and redefine the way organizations collect and report payment information. By focusing more on how to make the cuts, not just how much needs to be saved, managers can establish new policies and procedures that model the desired behavior, saving costs for the long term.
2. Stay on top of potential risks
Organizations can rack up considerable costs by simply failing to follow compliance standards. Breach of loan covenants will also put a business at great risk for heavy penalties and consequences. Managers must keep a complete, up-to-date risk profile that enables them to stay in front of business operations and ensures the company's cost structure doesn't violate any covenants, TechTarget contributor Linda Rosencrance stated.
Doing this on spreadsheets would be next to impossible, as these programs don't have the metrics or reporting capabilities that are necessary to perform a complete analysis. With an expense management solution, managers don't have to wait to compile data, they can have the most recent financial exposure in near real time. These tools also provide thorough evaluations to monitor organization spending patterns, detect potential risks and flag unusual behavior or services that are no longer valuable.
"Expense management tools provide an all-round view of vendor relationships."
3. Organize vendors
Businesses have a number of services and products from a variety of vendors. Paying a monthly fee for these assets can become routine, and if an organization doesn't keep accurate tabs on vendors, it might be paying for items that are simply not beneficial. Expense management tools provide an all-round view of vendor relationships, including what services they're providing and how much is being paid. As BW Disrupt noted, this type of information can help prioritize vendor payments, serve as documentation and improve overall transparency for bill processing. Companies can also easily recognize items that need to be canceled or renegotiated.
Managers must have the right information on hand to perform effectively, and expense management will enable these leaders to do more than they were ever capable of. With an expense management solution, managers can easily organize vendors, navigate potential risks and make savings stick for long-term gains.
About the Author: Jeff Poirior
Jeff brings 25 years of telecommunications and information technology management experience in voice and data networking, server support, and telephony and security; with a significant emphasis on customer service. Prior to joining Valicom, he was chief of the infrastructure support section for the Wisconsin Department of Transportation. Jeff was the vice president of operations for CC&N, overseeing telecommunications, help desk, data and desk side support services. Prior to that, he served as the associate director of technical resources for Covance, responsible for managing systems and network operations supporting 1700 users in Wisconsin and Virginia. He has also led data center operations at Magnetek Electric, supporting mainframe systems, client/server applications, telephony systems, and computer-aided design. Jeff holds a bachelor’s degree in business administration from Cardinal Stritch University and a master’s degree in business administration from University of Phoenix. In addition, Jeff is a past board member of the Wisconsin Telecommunication Association.