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Wednesday, October 15, 2014

Business Challenges in Expense Management

In the current slow economic growth scenario, with rising prices and market volatility many companies face challenges in sustaining their profits and business growth. Most of them respond to these challenges simply by reducing indirect costs. While operating on a business program, expense management professionals play a key role in identifying risks in indirect spending. Risks involved in spending are addressed by using enhanced data analysis and developing a strategic approach based on facts to overcome challenges. Expense management professionals involve themselves to develop an operating model to provide more visibility on internal processes and seek to understand spending patterns and their resulting financial impact. This model includes the creation of expenses, submissions, approvals, data analytics, reporting and forecasting. Some of the challenges faced by modern organizations in expense management are:

Very less visibility on travel costs Expense reports not monitored accurately Travel that is non-complaint Policies and procedures not communicated properly

Leading companies develop an operating advantage by consolidating multiple data sources to obtain a holistic view of indirect spending. The operating advantages are achieved by linking data to specific actions which include sourcing negotiations and provide insights into spending patterns by traveling employees. Most companies spend approximately 7% to 10% of their total budget on indirect cost. Addressing the challenge of decreasing indirect costs is a critical function for companies than ever before.

Mobile applications are internet applications that run on smart phones for a traveling employee to connect with his/her enterprise IT infrastructure. These applications provide functionalities that are similar to internet based application software and accessed using a desktop or a laptop computer. A few examples of mobile applications are email, database utilities, instant messaging client and other customized enterprise applications. This helped companies greatly in the evolution of expense management processes. Older expense management systems relied on paper-based processes which took more time and cost for a process to complete. The availability of mobile applications has proven benefits like streamlined solutions, reduced processing time and costs.

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