Feb 16, 2022
5 mins read

How to remove stress from your month close process

Trish Toovey - Content Director at Payhawk - The financial system of tomorrowTrish Toovey
Male Employee Completes Expense Management On The Road
Quick summary

If your business still tackles expense management like a difficult equation, it's never going to add up. It might go something like personal funds x work expense x receipts x reimbursements = paying your staff back 30 days later with 0 visibility of spend. But, that will only equal disgruntled staff, wasted time, and a heap of hidden costs you didn't know about.

Table of Contents

    You've done the maths. Every time one of your employees spends money for work, it costs the company. Well yeah, that part is easy to work out. But, the hidden costs in this equation are more difficult to calculate.

    The hidden costs of 'legacy' expense management

    Let's assume one of your London-based sales employees, Tim, bought a coffee and churros on a work trip in Barcelona. The next step might look like this if you still manage expenses with personal cards, paper receipts, and manual reimbursements. Tim pays with his personal card. The card issuer or bank then charges an additional fee for using the card abroad. Tim pops his receipt in his wallet, along with the other 20 receipts he's been keeping, gets a caffeine and sugar hit, and then closes a deal.

    Now Tim's back in London, and he's expensing all of his work trip payments. The trouble is, he can't find that receipt. Never mind, he'll submit it and worry about it later. Meanwhile, Laila in the finance team is busy chasing everyone's receipts from the trip. She comes across Tim's missing receipt and asks him for it. She asks him for it again a few days later — and again, at the end of the month. The trouble for Laila is that there were 15 Tim's on that trip as far as she's concerned. And she has to get the information her team needs to process the month-end by Friday. Laila's boss isn't going to be happy if they have to delay month-end closing or if they have to work all weekend to finish it on time.

    Check out how much time and money you could be wasting on manual expense management here.

    Maybe parts of the above example are a little old-fashioned. Many companies understand the benefits of expense management automation by now. Even so, many of them still come unstuck when it comes to data entry. Even if all the Tims on the sales team submitted their expenses correctly, Laila would still have to enter all of the data manually unless the expense management tool has OCR technology to update it for her.

    By now, it's taken up a lot of Laila's time, and she can't focus on other more critical projects, like optimising the way the company spends, and she's constantly stressed about getting everything ready for each month-close.

    The major hidden costs here are:

    1. The personal card fees
    2. The salary paid to a professional finance manager that's going towards expense management admin and receipt chasing
    3. The big delays in management reporting and potentially harmful decision-making based on missing financial information

    CFO tips and tricks: How to manage month-end close like a pro

    Expense management automation

    So, what if Tim could have gone on his work trip, paid with his company card, taken a pic of the receipt, and job done? That's a couple of clicks and no waiting for expenses. Plus, with expense management software that supports company cards, his expense and proof of purchase would be available for Laila and her finance team to view straight away.

    So, Laila and Tim like this new world. They agree this is the best way to manage expenses from now on. And the business invests in expense management software, which means Laila can focus on optimising budgets, and Tim can focus on closing deals.

    Now, let's put Laila and Tim in your business. In this scenario, you've decided to use Payhawk, and our expense management automation has relieved a lot of your finance teams' admin burden. Now they can focus on supporting teams and stakeholders to look after their budgets and get the most from their spend. How? Well, because we don't just offer expense management automation.

    At Payhawk, we deliver all-in-one finance and first-rate customer support as standard. Meaning your finance teams can now see live data of the business' spend and cash flow — and how each budget looks in real-time. Plus, they can create reports on company spending and filter by cost centre, team, category, employee, and even supplier.

    We make expense management more effortless as you go, too. Our AI will suggest the appropriate data for an invoice, and our machine learning will consistently improve recommendations based on your business' spending behaviour.

    Better business spend control

    Now that every expense is traceable, your finance team can see how company spend fits into the overall budget. They can work with team leaders to suggest appropriate spend caps and updates to the spend policies and adjust these directly in the tool. Meanwhile, your company card users will see their spend limits, and it's easy for them to stay compliant. And for those times they need to spend more? They can simply request extra funds in a couple of clicks, and the company's designated approval chain can agree to top up the funds or not.

    Every payment is traceable, so your finance team has complete visibility and can escalate or make suggestions if there are good ways for individuals or teams to make savings.

    How to manage your budgets with Payhawk

    1. Use team cards: Here, each team member gets a company card assigned to a specific team budget. Each member can spend as they need as part of the team, and it's all linked to the same card limit
    2. Track your spend: Your finance team can track each team budget (as above) per cost centre to see what spend looks like in different business functions and find ways to reduce costs or suggest budget changes.
    3. Adjust and improve budgets: Your team leads/budget owners can get real-time visibility of the team spend so they can adjust expenditure as necessary to stay within the planned budget. Plus, they can find insights to influence upcoming budget planning.

    As you can see, everything changes for the better once your teams start using Payhawk. Finance leaders can focus on optimising budgets and controlling company spending, and stakeholders can run the projects they need without the burden of expense admin to slow them down.

    A better expense management equation looks like this: personal spend = 0. Hours wasted on chasing receipts was 15 now = 1. Approving expenses and posting into the accounting system was days 10, now = 2. A better and more productive way to do business then, and that's even before we subtracted the number of days your team used to wait for their reimbursements. Book a demo to find out how to make the expense management sums add up at your business.

    Trish Toovey - Content Director at Payhawk - The financial system of tomorrow
    Trish Toovey
    Senior Content Manager
    LinkedIn

    Trish Toovey works across the UK and US markets to craft content at Payhawk. Covering anything from ad copy to video scripting, Trish leans on a super varied background in copy and content creation for the finance, fashion, and travel industries.

    See all articles by Trish →
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