Large US businesses are spending more than US$1m per year on managing the expenses of their employees, according to research that points to a chaotic culture of lost receipts shared payment methods and bills that are hard to account for.
The report, commissioned by Conferma, which is a virtual card number firm that aims to improve the handling of business payments, claims that in total US companies with more than 500 employees are losing US$33bn each year managing expenses.
“What we are seeing here is billions of dollars being lost thanks to a confused landscape of multiple employees using multiple ways in business to claim expenses,” says Conferma chief executive officer (CEO) Simon Barker. “It is costing US business time and money to navigate this landscape and should be subject to much more rigorous control and oversight.”
One of the key problems is that the corporate cards are often only issued to the most senior executives, creating a practice of card sharing that leads to difficulty reconciling credit card receipts and bills with specific members of staff. In fact, 90% of those surveyed in the poll reported difficulties making numbers add up arising from this practice.
The report claims the number of staff authorised to make purchases for a given company, on average is 328, painting a picture of the complexity of trying to make receipts add up. It’s a widespread problem, according to the report, with some 90% of chief financial officers (CFO) admitting they find it “difficult” reconciling payments to multiple spenders.
“Companies have to pay expenses, it’s a critical part of business life,” says Barker. “Yet there is no additional reason why companies should face operational inefficiencies and excessive business costs. If something is difficult to do, it will cost time and money. And employees face unnecessary difficulties too; they have to remember to keep receipts, fill out expenses claim forms and then wait, sometimes for weeks, to be reimbursed by their employers.”
The report suggests there are some 30,000 businesses with more than 500 employees spending more than US$1m each year.
Like every other part of the enterprise payments stack, there’s an opportunity for technology to automate, streamline and take cost out of the process – one that companies like Conferma are trying to solve.
Another is Pleo, a Danish startup co-founded by the former chief financial officer (CFO) of business-to-business (B2B) sales giant Tradeshift. The firm is attempting to reinvent the corporate card, making it faster and easier for employers to issue cards to any member of staff while retaining control over what they spend on it. It also automates receipt capture and accounting, making hunting for crumpled receipts a thing of the past.
Late payments were experienced by 64% of companies in 2016, a recent Coface report found.
Nearly one in five organisations now regularly use artificial intelligence, according to the latest reports.
While offering a range of benefits, smart contracts also present users with major challenges and won’t fix inefficiencies in a company’s supply chain.
The new era of open banking, payments automation and improved customer experience were all high on the agenda over the three-day event in Copenhagen.