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.
Data from Swift’s latest RMB tracker shows exceptional growth in RMB adoption in the United Arab Emirates (UAE), witnessing a 210.8% growth in payments value of the currency since August 2014, albeit from a low base.
SWIFT has announced that it has successfully completed the first phase of the global payments innovation (GPI) initiative pilot, clearing the way for the go-live of the service in early 2017.
However, a London summit on the industry’s introduction of the technology cautions that testing and acceptance are still at an early stage and firms should proceed with caution.
Despite faster payment technologies, business-to-business payments by paper cheque show no sign of decline from three years ago.