Keeping afloat with cash flow in the age of telecommuting

Staying afloat in the pandemic-transformed business landscape requires cash flow and spend visibility.

Cash flow is one of the most important short-term determinants of whether a business will survive in times of adversity. If a business has cash in hand, it lives to run another day. If not, it shutters.

During this period, many businesses are finding ways to boost cash inflow and cut cash outflow. What’s the smart way to go about this exercise? How do organizations overcome spend visibility challenges caused by widespread remote working and figure out which areas to cut back investment on, and accurately predict upcoming spend?

In this interview with DigiconAsia, Andy Watson, senior vice president and general manager for Asia Pacific Japan and Greater China, SAP Concur, explains why organizations need to transform the way they manage spend when remote work is the new norm, while creating clearly defined and enforceable policies for travel, entertainment and procurement, and to build a culture of spending accountability with the help of technology. 

How drastically has travel and entertainment expense management changed as a result of COVID-19?

Watson: Clearly there has been a huge impact on travel for both business and leisure, and unfortunately, we see the impact on the travel industry as a whole.

This has brought whole new challenges to organizations operationally – in terms of marketing and interacting with prospects and customers, for instance – as they seek new ways to increase business performance and user experience.

For most companies, a large part of the workforce has now been working remotely from home. Travel and entertainment expenses have largely been reduced, but this also translates into new expenses that have emerged in their place.

With face-to-face meetings being out of the question, relationship-building with customers and prospects needs to be reassessed.  For example, live webinars have replaced physical events; digital marketing efforts have expanded; and virtual lunch meetings are often done now with customers’ favorite meals or other small tokens delivered to lift their spirits and keep the company’s name top of mind.

Making sure that the workforce is able to work productively outside the traditional place of work has become critical. This is certainly not a given in all roles and industries, as the work-from-home infrastructure varies enormously.  Ensuring the well-being of the workforce also has new challenges and sometimes, even virtual fitness class reimbursements have become new types of expenses that must be put into consideration and tracked to control costs.

With this instant shift in work culture, many organizations have not had a chance to contemplate how the change would impact their current expense policy, or even establish a travel and expense policy that states what is and what is not included. To avoid confusion, it is important to anticipate “work-from-home” or “business continuity” expenses, and clearly communicate to employees what is available to them.

During this period, many businesses are finding ways to boost cash inflow and cut cash outflow. What’s the smart way to go about this exercise?

Watson: Companies need clearer and more granular visibility into their cash flow by knowing where they are spending, and understanding where they have room to optimize. Only then will they be able to figure out where to cut spend. These are some of our recommendations to help them do so:

• Set clear spend policies: An up-to-date and clear expense policy can help get everyone on the same page when it comes to corporate goals and parameters for company spend. These spend policies should be transparent, and absolutely need to provide comprehensive direction on how expenses, invoices, procurement requests and other financials should be handled.  Employees should never be in doubt about what is compliant and what is not.

• Get forward visibility on outgoing spend: When it comes to cash flow in uncertain times, knowing what spend needs to happen and ensuring that approvals can still take place can make the difference between healthy cashflow and late payment fees. Don’t fall behind on your accounts payable. Increasing visibility will ultimately ensure a steady cash flow and resilience against any business changes.

• Understand spend trends to negotiate payables: Get in touch with regular suppliers and ask about options so that both businesses can continue to run in harmony when cash might be short. Technologically, a centralized invoice platform can give businesses full visibility into the why and where of outgoing spend.

• Prioritize employee needs. It has never been more critical for businesses to take extra care of their staff and provide them with the resources they need to do their job effectively. A recent Forrester study found that organizations that create exceptional employee experiences have engaged workers and improved business outcomes.

It’s important that employees have the right tools to do their best work. Determine what they need and pinpoint solutions that will streamline their work. These may include mobile solutions that simplify administrative tasks with the touch of a button, or API integrations that connect data across an organization, so it is accessible in one place.

How do organizations overcome spend visibility challenges caused by widespread remote working, figure out which areas of expenditure to cut back on, and accurately predict upcoming spend?

Watson: Especially with a remote workforce, having a paper-based management of expenses and invoices can lead to challenges and even cause late payments that can skew financial outlooks.

Investing in simple-to-use cloud-based travel, expense, and invoice solutions would allow teams to operate and control spend remotely, on the go, and from anywhere in the world.

There are automated tools today that let employees submit expenses by simply taking photos of their receipts from their smart phones. Finance managers can also approve expenses and automatically update them into finance management systems without having to track down the physical paper trail at the office. As expense policies undergo updates, the SAP Concur app, for instance, can help flag and fix compliance issues before they cause problems.

By digitally organizing travel, expense and invoice data in one place, data from sources as diverse as corporate credit card accounts, online travel sites and service providers can be aggregated in one view, ensuring that it can be transformed into easy-to-consume insights. This lets budget managers quickly understand where spend is going and whether any shifts are needed.

Corporate-wide spend visibility also makes it easier for organizations to demonstrate compliance and meet regulatory requirements. Spend technology today allow for unusual or suspicious expenditures and travels to be quickly flagged for deeper investigation, preventing any issues from snowballing.

In anticipation of the post-pandemic ‘new norm’ workplace, what are some best practices for enterprises to control travel, entertainment and procurement costs to stay nimble and accelerate recovery?

Watson: Now is the time to act. Implementing the right processes and spend policies now will help businesses achieve future success.

For instance, they need to have the ability to instantly access up-to-date information for visibility into what, where and how employees are spending. Finance teams can then use this data to forecast spend and revenue, and find ways to reduce spend – pre-approvals can also be added to the process to control costs before they hit the budget.

Tech-driven resources like digital tools, automated services, and mobile apps help organizations to stay nimble and should be harnessed to facilitate the new way of working. As travel slowly resumes, these resources can also benefit business travelers, allowing them to book, change, and manage itineraries on the go, and even submit their travel expenses away from the office.

An additional advantage is that when a business has its cash flow sorted out, it can afford to take a step back and delve into strategic tasks like understanding the current landscape of their market and optimizing its positioning. The company will also be in a better position to study how its customers’ preferences are likely to change as we enter a new normal, and make adjustments to its medium-term business model.

How does technology help to build a culture of spending accountability?

Watson: Technology gives finance departments the authority to deliver messages to powerful business leaders about spending patterns that are out of the norm. For instance, real-time data monitoring and analysis can demonstrate to a senior executive in charge of big facilities and big budgets – and the board − that his move to approve six months of electronic components and stockpile them will have a large impact on the organization’s cash flow and working capital.

What you can’t see, can cost you.

Spend management technology today enables firms to see what’s happening, anticipate risks around the corner, and take action – before it’s too late. The data provided is easy-to-understand and can be tailored to individual employee needs.

With the ability to use specialized audit services, as well as artificial intelligence and machine learning to ensure receipt and spending policies are being followed consistently, companies no longer have to rely on one-size-fits all, after-the-fact monthly budget spreadsheets. This means employees can finally be held accountable to eliminate overspending, while gaining autonomy to proactively adjust spend to seize unexpected opportunities.

Spend management systems provide companies with opportunities to remind travelers and buyers about policies. A firm no longer has to wait until the invoice hits the accounting department − with technology, users can avoid making a purchase or booking a flight that doesn’t comply with policy.

Lastly, a great user experience drives strong adoption, giving the benefits to both employees and the company. By implementing the technologies and tools that employees actually want to use, businesses can take a big step toward achieving a more productive and satisfied workforce.