“Outdated” expenses systems cost firms $100m a year: Report
Thursday, June 2, 2011/
A new survey reveals Australian businesses lose $100 million annually in rectifying errors in expense claims, as 67% still use manual processes such as forms and spreadsheets.
Galaxy Research recently conducted a survey on behalf of Concur, a provider of integrated travel and expense management services.
According to the survey, based on the responses of 200 Australians, nearly 70% of Australian businesses still use inefficient manual processes to handle business and travel expense claims.
This leads to as many as two thirds of businesses reporting errors, the survey states. Errors include the absence of a receipt, expenses being allocated to the wrong code, and individual expenses not reconciling with the total claim figure.
Mike Eberhard, executive vice president and general manager of Concur Asia Pacific, says it seems ironic that in an environment where technology is at the forefront of so many businesses, almost 70% still use manual processes to collate expenses.
“With out-of-date and/or complicated systems… a large number of companies do not have the necessary visibility into how or where their money is being spent,” Eberhard says.
“Outdated processes are creating an enormous and unnecessary hidden cost for Australian businesses.”
Marten Jagers, sales director at Concur Asia Pacific, says the global financial crisis served as a reality check for many companies, particularly SMEs, in that it forced business owners to “dive deep into their books” to determine exactly where their money was being spent.
“For many SMEs, and particularly start-ups, measures attempting to reduce the number and/or cost of countless business outlays can lead to greater expenditure in the long-term,” he says.
“In the case of expense management, employee expenses are often managed entirely or largely through manual processes.”
“Yet managing the process on a typical start-up budget can often backfire in time spent collecting, summarising and formatting data for reporting.”
The survey reveals that manual processes are not only time consuming but can cause friction in the office; 45% of those who encounter errors regularly report that they cause annoyance.
Eberhard says better recording of expenses is vital, particularly to small business owners who need “constant insight” into their financial position.
“In an era where technology permeates every facet of business life and with cloud-based services making powerful applications available to any business, regardless of size, it is very surprising that archaic practices, such as filling out forms manually, still exist in today’s workplace,” he says.
Eberhard says cloud-based services are an ideal option for small businesses because they don’t require a huge outlay and can be implemented in “less time than it takes to hire somebody”.
When choosing a cloud-based solution, he says small firms should ensure there is flexibility in the contract in case it isn’t to their liking.