COVID-19 brought about a series of new changes for businesses to ensure their survival. Now, leadership teams need to have the foresight to predict the future in terms of risks or opportunities for their business.

'Companies have begun to modify their cost management strategies from what was a 'Save-to-Transform' right before the pandemic to a 'Save-to-Thrive' model.' -

Deloitte Survey

The unstable economy has led to a 74% increase globally in the adoption of cost-saving methods. However, given the current scenario, it is safe to say that every little penny saved could impact its profitability. To sum it up, there is no better time for businesses to look for new ways to reduce their expenses while also ensuring a solid financial balance than now.

Why should businesses find ways to reduce expenses?

• To identify and eliminate unnecessary spending across the organization.
• To obtain better deals with frequent vendors through negotiation.
• To reallocate budgets for optimizing business spending.
• To partially/eliminate miscellaneous/hidden costs that can add up.

How Can Businesses Cut Down On Expenses?

'Human errors are the reason behind 50% of data breach incidents.' -

Baker Hostetler Report

The danger of managing critical financial processes manually is that they leave multiple avenues for human errors. Additionally, a remote scenario where managers cannot constantly monitor employee actions and progress results in lost time and money.

How to check if existing financial processes need refinement?

• Identify and evaluate all existing processes to note which require both employee effort and time with no business impact.
• Take feedback from your employees on which tasks feel more tedious and redundant since the onset of remote work.
• Identify specific areas where Finance managers lack control and visibility into processes and workflows.
• Individually evaluate the impact of every broken process on your business and the ROI for process improvements.

How to fix broken financial processes?

• If your employees are being overburdened, consider outsourcing work or even hiring interns.
• Leverage the power of cloud technology to ease the workload off your employees' shoulders while also making the process cost-effective.

Let's take the case of manual expense management:

If your company processes around 100 expense reports in a month employing a spreadsheet system, it will cost you about $68 per report to process.

But, if you use an expense management software, the processing time per report is cut by a third, and the cost for processing the same 100 reports will be brought down to $11 per report.

Another example that's especially relevant in the remote economy is business travel.

If a company has 10 sales employees that regularly travel and average a cost of $3000/month in air travel, that comes out to $30,000 each month that your business spends on business travel.

But if your company purchased webinar software to eliminate the need for 50% of these meetings in-person, it could save the company an extra $15,000 each month.

Similarly, optimize other financial processes by calculating their ROIs to save on multiple hidden and operational costs.

Alternatively, if you want to track the activity of the sales team and automatically generate activity reports, you can use a sales CRM. It'll help your team to cut off manual tasks and focus on activities that contribute more to ROI.

Efficiently track and monitor business expenses

'Financial management, when done correctly, can ensure that businesses stay well-within budgets and don't overspend.' -

Federal Reserve Bank of Chicago

Staying right on track with one's expenses is the first step of effective financial management. Here's how it benefits businesses in the long run:

• Creating spot-on budgets: To develop clear and consistent budgets that rarely shift, Finance teams need to know the exact cash situation of the company while also comparing projected spend with actuals.
• Cash flow optimization: Having a proper track of business expenses can ensure a healthy reserve during emergencies. Furthermore, businesses can also plan and enforce responsible ways in which employees can use corporate credit cards.
• Risk mitigation: Regular reviews of business expenses help Finance teams identify unplanned spending or pilling up miscellaneous expenses. This further enables them to locate and reduce expenses that violate company policy; thereby, eliminating unnecessary expenses in months to come.

The cornerstone of policy compliance is a well-made expense policy. It doesn't just enforce compliance but also dramatically reduces the number of policy violations, expense fraud cases, and back and forths employees need to have with the Finance team.

With the complete shift to a remote mode of work, employee needs have changed. This means all previously existing policies are now subject to change to better adapt to remote work needs.

How can businesses suitably modify expense policies?

• Thoroughly study every expense policy that has been implemented to note the ones that have been affected.
• Take the opinion of your employees on what difficulties they face to make necessary changes to the expense reporting process.
• Ensure that all new changes to expense policies have been over-communicated across departments.
• Take additional feedback from employees on whether the policies work or if it needs more changes.

How can businesses improve policy compliance?

• Ensure strict action is taken on those employees who do not comply with company policies. This ensures that other employees are well aware of the consequences and will remind new hires to never indulge in such practices.
• Additionally, you can adopt an expense report software that seamlessly enforces compliance by automating pre-submission checks. Finance teams can set custom policies depending on the business's needs, thus enabling employees to submit compliant reports on time.

Conducting regular audits is the only way to ensure that expense fraud is prevented. As mentioned before, taking serious action on fraudsters ensures every employee is aware of the consequences, which drastically helps reduce expense fraud to save costs.

How can regular audits benefit your business:

• Enables Finance teams to discover cost-saving opportunities to save thousands of dollars annually.
• Ensures the company is compliant with IRS policies to keep you out of trouble with the officials.
• Business executives get in-depth insights into the financial health of the business.
• Regular audits ensure that companies never fall into overspending traps.

Conclusion

Fixing your broken processes are essential to sustaining through these uncertain times. Expense management, lying at the core of every business, cannot remain broken if you want to thrive. Streamlining it with an expense software can often go a long way in helping you find cost-cutting opportunities with zero additional effort.

This ensures your business maintains sound financial health to optimize costs wherever it can.