Managing spending across a distributed workforce
Today, the paradigm shift toward decentralized work is more of a necessity than an option. Our new normal of social distancing demands fully remote workforces, and companies are working through various stages of adjustment. But even before the world faced such an unprecedented challenge, the workforce was becoming more distributed due to myriad factors, giving employees greater independence while companies struggle to adapt.
Finance departments bear the brunt of this impact. We live in an era when corporate spending looks fundamentally different than it did in the past. Current economic challenges aside, in general, more people are buying more products and services than ever before — especially online: Forrester predicts B2B e-commerce will hit $1.8 trillion by 2023 in the U.S. alone.
Bottom line, the traditional way of managing spend will no longer cut it. Companies that want to stay agile must reframe their thinking to accommodate the increasingly distributed nature of spending and focus on the needs of the employee.
Empowering employees in the End User Era
A far cry from the way companies were organized even a decade ago, today’s workplace structure has evolved thanks to three key trends:
First, the rise of the digital economy has meant that more work is taking place outside of company walls. Of course, this remote work trend has spiked dramatically in recent weeks due to forces beyond anyone’s control — but, helpfully, the larger shift has been gradually happening over time so that tools like Slack and Zoom have enabled employee autonomy by increasing the speed and ease of collaboration both inside and outside the office.
Second, more than ever, employees at all levels of an organization are empowered to play an active role in their business’ operations. Flipping the legacy top-down spending structure on its head, staff-level employees are demanding the authority to make financial decisions previously made centrally. In fact, more than 80 percent of non-C-suite employees now have a say in purchasing decisions.
Third and most notable: Even more than the amount, the diversity of spend is increasing as a result of SaaS, e-commerce, on-demand and fractional services. Once an expensive, complex need, business software is now not only affordable and easy to implement for everyone; it is crucial to running a successful company — and the power to purchase it is changing hands from corporate leaders to everyday employees.
We’ve entered the End User Era, where employees themselves are influencing the products and services they use on a daily basis. They are communicating what they need in order to get the job done and are entrusted to buy those resources.
A new set of challenges for finance teams
While this new distributed framework for spending has increased the pace of innovation and improved employee satisfaction, it has also given rise to new challenges, which are exacerbated when employees and finance teams are not in the same physical location. The transition to bottom-up spending has fundamentally altered the way that money is flowing out of organizations. As a result, finance teams are finding it hard to keep up. In the face of the new, emerging economic risks, they can’t afford to fall behind.
Still relying on legacy systems that weren’t built with the End User Era in mind, finance teams are faced with the near-impossible task of managing spend using outdated tools built for a different era. The result: a series of bureaucratic bottlenecks that stall day-to-day and year-over-year operations and worse, add more stress and workarounds within an already difficult situation.
For instance, finance teams waste precious organizational time simply trying to uncover who bought what, and why. This requires manual back-and-forth with employees across the organization in order to get to the bottom of each purchase. Finance typically ends up making tradeoffs between delaying month-end close or sacrificing accuracy — both of which have significant impacts on their ability to plan and forecast.
Adding insult to injury, many employees find their company’s spending policies are unclear or difficult to locate. Most employees are good actors, but just not well-informed. To keep moving efficiently, they may step out of bounds to buy what they need, when they need it. By the time finance teams see unauthorized transactions at the end of the month, it’s too late to adjust course.
Together, these compounding issues make employee purchasing unpredictable and confusing, which takes a toll on the bottom line. According to data from the GBTA Foundation, nearly 20 percent of expense reports contain errors or missing information, requiring 18 minutes of additional time to complete. For companies, this adds up to an average of $500,000 and almost 3,000 hours a year, not to mention the original time and money spent submitting the expense report in the first place.
What the future of work requires
Traditional approaches to spend management no longer support the pace of business today. Manual, reactive processes eat up valuable time that employees and finance teams would be better off dedicating the time to more strategic tasks. Companies are constantly looking for ways to improve transparency and use automation to drive business more efficiently — and it’s time for logic to be applied to employee spending. In our on-demand world, there is no room to be anything but agile.
Companies should utilize the kinds of technology they enjoy in other aspects of the business in their financial processes. On the finance side, that means using automation to eliminate time spent tracking down receipts, and finding ways to allow accountants and controllers visibility into transactions as they occur so that immediate adjustments can be made. On the employee side, that means meeting team members in their existing workflows and establishing proactive guardrails that allow them to spend freely within company policy.
Employees are the engine that drives any organization, large or small. Empowering them with smart, policy-driven access to funds will foster agility across the company and ensure finance teams are well equipped to manage distributed spending in the End User Era.
Technology has awakened a newly empowered workforce, and it’s only fitting that businesses adopt innovative tools to better support that workforce. Unfortunately, the current global pandemic we find ourselves in has accelerated this shift, and it has become clear that change is necessary.
As employees continue to leverage their autonomy, finance teams must leave legacy systems behind in order to cater to those employees where they are, online and in real time.
Long after this unique moment in time passes, and as tech advancements continue to fuel an ever-changing, fast-paced digital economy, the nature of work will only grow more distributed. Companies that fail to find a common thread to tie the fragments together will face the financial consequences. Those willing to abandon the status quo and embrace modern tools to solve modern challenges will find new opportunities to grow and thrive in the future.