Here's What Startups And SMEs Can Gain By Implementing A Spend Management System

With SMEs losing valuable time and money managing their expense claims, spend management solutions like UAE-based Qashio allow businesses to record and report their expenses in real time and instantly issue corporate cards linked to the solution.

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One of the biggest challenges facing companies in the MENA region is a lack of visibility on their day-to-day company spending. Whilst larger corporations usually have a basic expense management software that allows them to reactively verify spending, SMEs and mid-market companies usually don't have any software at all, leaving finance departments nearly blind to their employee spending until expense claims are filed and processed at the end of the following month.

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On top of that, it is almost impossible to issue employee credit/debit cards, making reconciliation even more challenging. According to Spendesk, the average expense claim takes 20 minutes to process, and with dozens of expense claims being submitted every month, SMEs are losing valuable time and money managing this process. But advances in technology as well as regulatory changes in the region are now allowing smaller businesses to control their expenses via programmatically issued debit and credit cards.

The new wave of expense management solutions, often referred to as spend management solutions, like Qashio in the UAE or Brex in the US, not only allow businesses to record and report their expenses in real time, but also provide the ability to instantly issue corporate cards linked to the solution. Through linking their spending directly to their spend management tool, companies get visibility on transactions in real time, and can ensure they don't have any nasty surprises at the end of the month. The ability to consolidate all spending into one funnel allows finance managers and owners to more accurately forecast cash flow, and control the company's outgoings.

One of the major benefits for SMEs implementing a spend management system are the resources saved on processing expenses. According to Aberdeen Strategy and Research Group, the average cost of processing an expense report is US$35.02. Often, this cost is overlooked as it is difficult to measure, but companies understand they are losing valuable time and money managing this process. With a spend management tool, transactions are automatically recorded, and they can usually be matched to the corresponding general ledger code, and also automatically synced with the company's accounting software.

Spend management softwares empower businesses to spend smarter by providing them with the tools needed to proactively manage their budgets and gain real-time visibility on spending. The most effective solutions will offer companies the ability to issue unlimited virtual or physical cards for their employees and set custom restrictions on these cards such as spend limits, spend frequency, and vendor restrictions.

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Spend management solutions also provide companies with the ability to suspend or block cards easily, enable or disable ATM withdrawals, and set suspicious activity alerts, significantly reducing the risk of fraud transactions. Almost every company has, at one point or another, been the victim of reckless or misguided employee spending for which they have had to bear the cost, and according to a report by All Star, two-thirds of employees have not read their company's spending policy. Having pre-set restrictions in place on cards, allows employees to spend in the knowledge that they will not be in breach of their company policy.

Setting preemptive controls on card usage removes spending ambiguity from the equation by automatically limiting employees from over-spending or spending with non-approved vendors, giving employees the confidence to spend in the knowledge they are complying with company policies. Spend management solutions also allow companies to streamline communication around spending through collaboration tools, which eliminate the risk of miscommunication that can arise during offline conversations. These tools allow companies to keep a comprehensive record of spending decisions, which becomes crucial during the auditing process.

Petty cash management is one example of a process which can be easily managed through a spend management software. Managing petty cash is a time consuming and costly process for companies, resulting from a reliance on outdated, manual practices. Most companies in the region still manually record expenses, and reconcile those one-by-one through the painful process of receipt matching. Companies can set proactive controls on their cards including spending limits, spending frequency, and restricted vendor or category usage. By automating the entire petty cash management process from start to finish, companies can replace the need for cash, and with digital receipt and memo collection, they can also remove timely expense reporting processes.

With the introduction of corporate taxes in the UAE in 2023, auditing and compliance will be key focus areas for all finance departments. Knowing the challenges of change, we at Qashio are actively working with senior management at some of the largest auditing firms in the world to ensure that the transition is smooth for our customers. To make the auditing process as fast and efficient as possible, we have developed direct integrations with all major enterprise resource planning and accounting software to streamline the reconciliation process.

Globally, 43% of companies still manage expense reports manually, according to Hubspot's 2019 Travel & Expense Management Trends Report, leaving room for a plethora of errors. In this region, a majority of businesses still use manual computer system validation processes, paper receipts, and handwritten notes to try to track company expenses and payments. Discrepancies with company spending are commonplace, often resulting in reactive lengthy investigations or changes to policies. With spend management solutions, these problems will become a thing of the past.

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