UK CFOs: How to master multi-entity expense management and automation

A short use case: Pre-Payhawk, Wellpointe Inc., California's largest residential assisted living operator, faced some big challenges when managing financial processes across multiple entities. These challenges were especially sticky during mergers and acquisitions (M&A). And the manual process of handling credit card spend was slow, error-prone, and inefficient, particularly when it came to allocating expenses accurately.

However, since moving to us, the Wellpointe Inc. team has transformed its financial management processes, achieving seamless spend visibility and control across its subsidiaries.

One of the key priorities of the transformation? Getting the expense allocation (aka coding or categorization) right.

George Kutnerian, CEO at Wellpointe Inc., explains:

We use Payhawk to leverage real-time data to achieve continuous financial closings — and enhance our FP&A capabilities. With Payhawk’s spend management platform, we’ve eliminated our manual, error-prone allocation processes. And we can track each subsidiary's expenses accurately and automatically, helping us reduce our workload, improve data accuracy, and regain control over our spending.

How to automate business expense tracking and reporting with expense categories

Automating business expense tracking and reporting with expense categories is a game-changer when it comes to streamlining your financial management.

By setting up expense categories that align with your company's unique needs, you can ensure that every transaction is automatically classified and recorded accurately. With Payhawk, you can also leverage bulk controls, automated approval workflows, automated OCR data capture, and more to ensure that your systems scale with you as you grow.

Robbie Hadfield, (ACCA-qualified accountant) and Senior Director of Product Engineering at Payhawk, says:

As startups grow, CFOs face new challenges in expense management. Initially, formal processes may seem unnecessary in small teams where trust is high. However, as the company scales, managing expenses becomes more complex. With more people and more projects, the CFO often has to support the founder in shaking off 10 million approval threads and instead give accountability to the budget holders (without losing transparency and oversight).

Back to concrete expense categories: To manage expenses effectively, you need to categorise them based on your business’s specific needs. This might seem straightforward, but it can get complicated, especially for multi-entity management at growing companies.

If you’re in charge of finance for a company with multiple subsidiaries, you’ll likely need to create categories tailored to each subsidiary or department. Working closely with budget owners, you might come up with categories like "Subsidiary A - Marketing" and "Subsidiary B - HR." This approach allows you to track expenses accurately across all parts of your organization.

As the finance lead, you set the business budgets for the financial year based on each entity’s plans. But, it’s important to make sure that, when each entity gets its annual budget approved, you don't overlook additional expenses like meals, transportation, entertainment, and other “petty cash” initiatives.

Getting access to real-time, accurate, and detailed expense data is invaluable. It improves your finance team’s forecasting, decision-making, agility, and more, as shown in the example below.

How to use expense categories to track business expenses in multi-entity companies

In this example, the sales team in Entity A spent $2,000 on transportation to visit clients, and the account management team in Entity B spent $4,000. If the sales team in Entity A doubles in size this year, you might budget $4,000 for their transportation. Conversely, if the account management team in Entity B has fewer clients now, a budget of $2,500 might suffice.

Andrew Jacobi, VP of US Finance at State of Play Hospitality, describes it like this:

We get complete global spend visibility, and we can see our receipts and invoices directly in NetSuite because of Payhawk's native integration. That data flow means we can understand our P&L very quickly after we produce it with no headaches. Plus, the customisable class settings within Payhawk help us allocate spend by categorising between venues or categorising spend into the right general ledger code.

Here are some of the biggest benefits of having access to real-time spend data at your fingertips:

• Comparative analysis: Benchmark your spending against industry standards and historical data within your company
• Budget forecasting: Use your real-time expense visibility and direct ERP integration to set and monitor targets for future expenditures
• Performance benchmarking: Compare your financial performance with similar companies
• Cost-saving Identification: Pinpoint potential savings without compromising business operations or customer experience

Top tip: At Payhawk, we offer lots of efficiency and transparency-boosting multi-subsidiary features, see more in the video below...

Integrating spend categories with accounting and ERP systems

Data integration is vital for streamlined financial operations, and with automation, it can be easier than ever. Despite this, many CFOs still manage expenses manually, entering payment data into accounting software and risking errors and delays.

At Payhawk, our advanced spend management solution lets you eliminate manual data entry. You can leverage corporate cards and expense management software to automatically record any and all purchases made by employees or contractors. And our platform integrates seamlessly with ERP systems like NetSuite and accounting software such as QuickBooks and Xero, ensuring that your financial data is always up-to-date and accurate.

Key features include:

• Automated expense recording: Sync purchases directly with your expense management system
• Customisable spend categories: Automatically categorise expenses according to your tailored system
• Real-time data sync: Instant updates to your ERP and accounting systems

Uchenna, Finance Manager at MDM Props, says:

With Payhawk, each cardholder codes up their own expenses, keeping all information centralised and project budgets transparent .This not only consolidates our financial data but also frees up time for proactive financial analysis instead of chasing receipts.

Spotlight on M&A

Growing your corporate Group via M&A can be a quick way to access new talent and/or assets, but it comes with its fair share of challenges. One big issue is the clash of corporate cultures, which typically leads to over half of M&A ventures failing.

Then there’s the headache of migrating systems and processes, like software and policies. Switching your newly acquired business from their favourite tools to something completely new can be a time-consuming hassle (think ERP, expense management solutions, CRMs, mailboxes, credit cards, etc.). Plus, you probably have entirely different ways of doing things, from spending money to approving purchases. Finding a balance between what’s necessary and what’s just a preference is vital.

It’s about finding common ground on spending habits, tracking methods, and approval processes. For this, you need a) user-friendly solutions your coworkers can easily adopt and b) complete multi-entity control and visibility to make the right decisions fast when it comes to bringing everyone together via policy, expense approvals, budget management, expense processes, and more.

How to master M&A expansion with Payhawk

Need to onboard multiple entities and create standardisation while allowing for some ramp-time flexibility? At Payhawk, we can help you with key customisation features that support your growing business without insisting that ‘one size fits all’.

You can leverage the solution to get all of the below benefits and more:

• Global standardisation (card controls, policies, etc) with optional local settings
• ERP and master data transfers (including tax rates, suppliers, and employees subsidiary by subsidiary)
• Multiple card currencies (including many with 0 FX) and cross-border bank payments — all in one solution
• Local language support across the platform and help desk
• An added software-only feature that lets you manage and submit expenses outside of the USA, UK, and Europe
• Group Dashboards, for a single pane view into Group Spend (each entity’s tasks, funds and action items roll up to this dashboard)
• A range of payments to support operating efficiently worldwide, including ACH, Sepa instant/Faster, FPS, and international bank payments (supported by Wise)
• Get ROI fast, as Payhawk is quick to replicate in new entities (pick and choose what expense types and workflows you replicate from the group to the subsidiary and what processes are subsidiary-specific) — plus work with the same implementation team for all of your entities
• Take advantage of customised controls for subsidiaries (which can even be independent of the parent org if you choose). Customise controls, workflows, cards, and more, based on your unique needs.
• Ask your implementation manager to connect your Payhawk accounts across different ERPs based on your acquisitions and their existing setup (i.e. parent on NetSuite and subsidiary on QuickBooks Online)

Further expense customisation with Payhawk

With our solution, you can customise expense categories to fit your specific business model, whether single entity, domestic multi-subsidiary, or global.

Plus, you can use custom fields to create as many categories as needed. When an employee makes a purchase, they can select the appropriate category (from the list you set), ensuring that expenses are accurately allocated in real time.

How it works:

1. Set custom fields: Tailor categories to match your business needs
2. Automate receipt data capture (and chasing): Employees snap and upload receipts, selecting the relevant category
3. Seamless integration: Expenses are automatically categorised in both your spend management and accounting software or ERP and reconciled directly for continuous close.

George at Wellpointe describes:

We've empowered our spenders to code their own transactions with Payhawk. And when I say code, I don't mean they're just putting a note next to it; for us, our chart of accounts actually lives in Payhawk. And so anyone who's spending within Payhawk is empowered to leverage the chart of accounts and code the transaction appropriately. Eventually, I want to get to the point where all spenders code expenses exactly at the point of purchase… and I've given the team a tool to reinforce that expectation and help us build a transparent spend culture.

Simplifying spend categories: Key takeaways

Categorising expenses is just the first step toward effective FP&A. It provides transparency into where your money goes, enabling better investment and decision-making. While customising spend categories allows for detailed tracking and helps identify cost-saving opportunities while maintaining financial accuracy.

With our solution, you can take your spend categorisation to the next level and achieve the following, too:

• Accruals concept integration: Differentiate between invoice/receipt and payment recognition dates for more accurate financial reporting
• Efficiency and granularity: Break down spending into detailed categories and subcategories, enhancing ROI calculations and financial insights

At Wellpointe Inc., the transition to our spend management system has resulted in some major improvements. George explains:

Payhawk has helped us transition from day-to-day accounting to a more strategic FP&A function. This shift allowed us to focus on higher-value activities, such as analysing variances in key expenses (like food costs across different locations) and making informed decisions to optimise our operations.

In conclusion, managing expenses across multiple subsidiaries doesn’t have to be a headache. With us, you can streamline your financial processes, get real-time visibility into spending, and reduce errors. Like Wellpointe Inc., you’ll find that automating expense management helps you make smarter decisions and save time.

Ready to see how it works for you? Book a demo with us today and take the first step towards easier, more efficient expense management.