Business Expense Management Goes from the Dark Age to the Digital Age

Business Expense Management Goes from the Dark Age to the Digital Age

By Jeffrey Melnick, CFO, EisnerAmper

Jeffrey Melnick, CFO, EisnerAmper

Jeffrey Melnick is a Partner and the Chief Financial Officer at EisnerAmper LLP. He has more than 25 years of business experience, including finance, operations, and mergers and acquisitions. Prior to joining the firm, Jeff held positions at Marsh & McLennan, General Electric, and Ernst & Young. Contact him at jeffrey.melnick@eisneramper.com.

To examine trends and discuss just how far we’ve come with respect to business expense management, I have to look back to when I joined EisnerAmper in 2015. While that was a mere four years ago, expense reporting technology—like most technologies—moves at light speed. Here’s just one example that illustrates this evolution.

The Bad Old Days

In order to reconcile the 800 A/P reports and 800 expense reports from multiple offices monthly, it entailed staff making photocopies of each, mailing them to the NY office and then coding them into the system. If that wasn’t enough, storage was just as much of an issue. There was placing these voluminous reports in the filing cabinet, after a time transferring to basement storage, and at some point sending to outside storage, before finally being discarded upon the required expiration date. Such a system is inherent with inefficiencies. And while it’s hard to believe we once lived that way (we did), it’s also why a digital solution became imperative to enable growth.

The Shopping List

So what did we look for in a digital solution? Since most of us essentially “live” on our cellphones, it absolutely had to be mobile compatible and easy for the users. We needed a system with a searchable database and intuitive administrative capabilities that could accommodate multi-currencies and multi-languages. The system would need to be scalable as we added colleagues and to accommodate client and revenue growth; and it would not only have to seamlessly integrate with our current ERP system, it would have to do the same with our next-generation ERP scheduled for 2022. That meant we needed a vendor with long-term sustainability that was heavily invested in the solution. We looked at many impressive products and decided to go with Concur.

We Concur

As I mentioned, most of the products we looked at are very good; this isn’t intended to be a commercial for Concur. Having said that, we’re quite happy with our newfound ability to leverage the mountains of data at our disposal. We’re using artificial intelligence to highlight potential violations of policy (outliers) that we can then inspect. More importantly, we can examine expense category trends in reports in order to negotiate better deals with vendors. Let’s take a closer look.

Check Please

Let’s say there’s a restaurant that staff frequent for business development purposes that’s located near our Manhattan headquarters. Our new system can run a report detailing the number of visits, dollars spent and so forth. We can then present that information to the restaurant owner in order to negotiate a company discount. It becomes hard for that owner to ignore the data; they want to do more business with us. We were also able to make business travel more efficient by giving staff the ability to create an end-to-end digital itinerary and process expenses via their cell phones.

The Bottom Line

Qualitatively, the painstaking, time-consuming old way of processing expense reports and accounts payable now begins at 2 a.m.at our office in India and is finished processing at 6 a.m.—every day. We’ve standardized A/P and expense reporting. Everyone from entry-level staff to the CEO uses the system because a) there’s no other option; and b) just as importantly, it’s easy. This lowers both the cost of expense processing and total SG&A costs as a percentage of revenue over time. We can better manage our expense base, know where we’re spending money, and identify instances of noncompliance. Quantitatively, post-implementation, we saved$1 million alone on travel and entertainment expenses.

No Reason Not To

Any size organization in any industry can digitize its accounting data. You can customize platforms to meet your specific needs. The first step is to get the right team in place and, like the famous ad says, “just do it!” It’s okay to perhaps take a step back in order to take two steps forward. Delaying a digital expense management solution only prevents you from getting better information for your business, which adversely impacts your bottom line.

Such an initiative readies the organization for more technological change; it changes the mindset of colleagues for the better. Being resistant to change only leaves a legacy of inactivity. All world-class companies think about improving their businesses every single day.

It took us 90 days to get up and running, and it’s transformed our firm. Who knows? In five years today’s technology may appear to be ancient. That’s why embracing change is critical to a firm thriving and growing.

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