The average large Australian business pays more than A$2m (US$1.45m) annually in managing its corporate expenses and almost 90% of the country’s major corporates admit to concerns over how they manage expenses, according to a survey.
Asked for specific examples of their concerns, one in three survey respondents said that inefficiencies were costly to their business, while one in four said that manual reconciliation was time consuming.
The research, conducted by pollster Opinion Matters for financial technology (fintech) company Conferma, a specialist in virtual card number (VCN) technology, suggests that Australian businesses with at least 250 employees collectively spend over A$8bn per year on managing expenses. The total is more than double the Australian foreign aid budget.
The surveyed businesses typically have around 364 staff authorised to make purchases, pushing up the cost of managing these multiple expenses streams. “What we are seeing here is billions of dollars being wasted due to a confused landscape of multiple employees making multiple payments and using outdated methods to claim expenses,” said Simon Barker, chief executive officer (CEO) of Conferma.
“It is costing Australian business time and money to navigate this landscape and should be subject to much more rigorous control and oversight. Companies have to pay expenses; it’s a critical part of business life. Yet there is no additional reason why companies should face operational inefficiencies and excessive business costs.
“It is clear that the finance professionals we have spoken to are very concerned about the management of expenses and, with the costs that we have identified, it is easy to see why there is such concern. A business spending $2m a year on expenses management is not a business operating at peak efficiency.”
Respondents generally agreed that management costs can be curbed through increased use of technology and automation. Of the finance professionals surveyed who manage the expense claim system 60% mentioned the ability of employees to make purchases on mobile devices as a possible solution. Asked about the growing technology of virtual card numbers, 44% of the finance professionals surveyed said that they had heard of them with 13% currently using them.
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.
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