Cure P2P Blind Spots with Expense Reporting Management Solutions

Transcription

1 Cure P2P Blind Spots with Expense Reporting Management Solutions Capturing Competitive Advantage Featuring insights on...»» Current Market Trends in P-Card Usage»» Common Problems of P-Card Management»» Benefits of Expense Reporting Management Technology Underwritten in part by

2 Contents The Blind Spot in P2P 3 P-Card Usage 4 Types of P-Cards 6 Pains of P-Cards 8 Curing the Blind Spot 10 Optimizing Purchasing with an Expense Reporting Management Provider 13 2

3 The Blind Spot in P2P Organizations are always looking to increase visibility, control, and compliance in their procure-to-pay process. One of the most effective ways to achieve these goals is through a commercial card system. The use of purchasing cards also known as procurement cards or p-cards is a common practice. They are attractive to purchasing departments for their ease of use as well as their smooth integration with existing systems and business policies. In addition, their deceptively simple adoption does not detract from their power in compliance and accuracy. P-cards give employees more power to accomplish tasks in and out of the office, and they relieve pressure from accounting departments devoting time to constant control and review. Although p-cards allow for quick purchasing and reporting, there is still some room for error as the transactions make their way from the card holder to the card approver. PayStream has identified this as a blind spot between purchase and payment a part of the journey that can cause major problems for an organization s bottom line. The answer to the problem lies in software that will reconcile the data from the p-card purchase to the ERP to the final payment all in an automated process that is efficient and timely. This technology, Expense Report Management, fixes the blind spot in P2P, and allows for easier and more secure interaction between employee activity and the ERP. This report will show the current trends of p-card usage to demonstrate how commonplace and vital they are in today s organizations, as well as the importance of a complimentary expense reporting system for overall company efficiency. 3

4 P-Card Usage Throughout years of conducting market surveys involving hundreds of financial professionals across several industries, PayStream has been measuring the usage of various AP, AR, and P2P technologies. In this research, there has been consistent evidence of widespread p-card use among organizations, as the tool s simplicity and ease of use makes it one of the most appealing business process technologies. PayStream s 2014 P-Card survey results illustrate a high level of adoption by today s organizations, see Figure 1. Figure 1 Current Technology 81% 73% Which of the following technologies does your organization currently use? 52% 49% 27% Front-end imaging OCR/Automated data capture Automated workflow Electronic payments Purchasing cards There has also been steady growth in p-card usage, showing the tool s consistent value for organizations, see Figure 2. 4

5 We do not use p-cards and have no plans to use them 15% 22% We are currently evaluating the implementation of a p-card program 11% 9% Figure 2 We already have a p-card program in place 69% 72% P-Card Usage Where does your organization stand in regard to the usage of p-cards? Figure 3 Benefits of P-Cards What benefits has your organization achieved from your p-card program? P-cards are very important for many companies electronic payments systems. While other epayment methods are common among purchasing departments (such as checks, wire transfers, and ACH), p-cards bring specific strengths to certain parts of the process. The most common benefits organizations receive from p-card programs are rebates and incentives from p-card activity, increased convenience for employees, and lower processing costs, see Figure 3. Most of the improvements p-cards bring result from the fast and easy payment process. Improved compliance with contracts / purchasing policies etc. Float / ability to increase days payable outstanding (DPO) Rebates and incentives from p-card issues 7% 25% 63% Ability to negotiate better pricing with vendors Reduction in maverick spend 3% 7% Reduction in procure-to-pay cycle time 45% Increased convenience for employees 75% Lower processing cost 50% 5

6 Types of P-Cards P-cards bring convenience to electronic payment systems due in large part to the versatility they offer. The uses of p-cards have recently been expanding and diversifying in the technology market. Today, there is a variety of p-cards many of which are not limited to plastic cards that handle different types of purchases and/or spend categories. Corporate Travel Card: The Corporate Travel Card is generally used by organizations for employee travel and entertainment-related expenses, and provides essential data to the employer. One Card: The One Card is a combination of a simple purchasing card and a corporate travel card. It involves one payment solution that integrates data with an organization s general ledger, ERP, and other existing systems to reduce manual data entry and create a single monthly payment for all transactions. The One Card provides flexibility and convenience through managing procurement, travel, and fleet expenses. Fleet Card: A Fleet Card or Fuel Card is a product used by organizations to pay for fuel and related expenses for company vehicles. Ghost Cards: Ghost Cards are card accounts issued to a specific supplier to process all the organization s transactions. Organizations can use Ghost Cards as another payment option instead of providing a credit card to each employee, and it provides a single account for organizations to pay employee charges. An organization can also assign their vendors a single Ghost Card number. When several employees buy office supplies from the same company, the single card number provides an easier method to track a receipt for all of the supplies purchased from the vendor. Virtual Cards: Virtual Cards, also known as throw-away cards, are non-plastic accounts with multiple security and control features. Virtual Card account numbers are dormant until the payment is sent specifying the authorized payment amount, payment date range and supplier. Suppliers cannot authorize payment until they receive notification from the buyer that the account limit has been raised to the approved payment amount. 6

7 Single-Use/ Event Cards: Similar to Virtual Cards, Single-Use Cards add another layer of security and control by locking down the use of the account to a specific supplier, for a specific down-to-the penny amount, within a certain time frame. An Event Card is a type of Single- Use card that allows users to spend during a specific time and place. For example, employees attending a business conference or hosting a business meeting may be given a special single-use Event Card for their purchasing. 7

8 Pains of P-Cards Despite the simplification and versatility that they bring to purchasing, p-cards do not solve all the pains of an organization s payment management system. Depending on the number of employees and the average amount of company spend, payment systems can have many weak spots that hurt the organization s bottom line. While automated payment solutions are beneficial and much better than a manual process, a poorly-managed system can lead to a downward spiral of processing pains: lengthy approval times, late payments, and overall higher processing costs, see Figure 4. Figure 4 Pains in Payment Management 61% 46% 54% What are the biggest challenges your organization faces in the payment management process? 25% 29% 7% High processing cost Loss from fraud Duplicate payments Late payments Missed discounts Lack of payment visibility The weaknesses of p-cards play a role in the pains of electronic payments. This weakness is reflected in the fact that although p-cards are used by many businesses, they are not preferred over all other forms of electronic payments, see Figure 5. 8

9 76% 73% 48% 43% 9% Figure 5 Payment Methods Used by Organizations Checks ACH Wires P-Cards None of the above Which of the following electronic payment types are integrated with your organization s AP system? Figure 6 The virtues of p-cards should make them a leader among electronic payments, but processing pains hold organizations back from more widespread use. These pains often arise from lack of transparency between the purchase and the ERP. Most organizations reported their p-card systems are weakly connected to their accounting systems, see Figure 6. 35% Resistance to P-cards What is the primary reason your organization does not use p-cards? 18% 24% 14% 9% Internal resistance to change Concerned about security Suppliers do not accept cards Difficult to aggregate with AP systems Other This disconnection is the cause of the P2P blind spot. However, while this blindness is harmful, it is not incurable, and the utility of a p-card should not be discarded because of weak payment management. Rather, organizations should leverage expense management software to optimize the p-card process. 9

10 Curing the Blind Spot Common p-card issues result from imbalanced workload, delays in reconciliation, and poor visibility, among other factors. However, when organizations use an expense management system to work between the p-card and the AP department, the technology pushes the purchase from the expense request to the approval, the ERP, and the payment with transparency, control, and speed. The integration and transparency of expense management systems brings improvements in the following areas: Reconciliation Although p-cards help with convenient company spending and compliance control, it can be very difficult for AP staff to get p-card holders to reconcile their statements in a timely manner. This can strain relationships between different departments and lengthen the time between payments. The differences in types of p-cards can have an effect on this as well. For example, Corporate Cards are divided into two groups individual p-cards and company p-cards. If an employee is given an individual payment card, they are responsible for submitting their own expense reports. Company policies must be followed, and the card issuer is paid directly for charges incurred. If an employee uses a company payment card, the employer pays all company charges. If there are unapproved or personal charges, the employee pays the card issuer directly. These different policies can hurt productivity. Expense management systems make expense reporting exponentially easier. Today s solutions offer highly configurable and simple report creation capabilities that take minutes to complete and are automatically routed to approvers according to business rules. Split allocation coding and Google -style allocation selectors, as well as mobile capabilities, make report creation even easier. Instead of the verification of multiple spreadsheets falling on corporate expense managers, purchasers can download and categorize their corporate card information and have the data sent to their internal accounting system for proper reimbursement and attribution. In addition, with increased ease of use and automatic routing, accountants don t have to track down these reports. 10

11 Workload Manual reporting processes hurt company efficiency by burdening employees who need to focus on other tasks with extra work. Whether it is the purchaser who has to fill out a difficult spreadsheet, or an accountant who has to decipher and rekey the spreadsheet data, too much time and energy is being spent on a non-value-added task. When an organizations financial system is integrated, accounting users are only review reports no longer needing to rekey data. With card information all in one place, it is much easier to track employee spending and reporting habits. Automated routing also reduces the burden of approvers trying to track down the appropriate report for each purchase. Expense reporting solutions enable AP staff to work more strategically and productively, ultimately creating faster payment times. Time The faster a purchase goes to payment, the faster organizations can take advantage of early payment discounts. Expense management software connects corporate credit card data to accounting systems swiftly and reliably. Purchases are imported and quickly separated into reimbursable and non-reimbursable categories. The faster the payments are processed through the system, the greater the benefits for the organization s bottom line. Compliance When there is a gap between purchase and payment, it makes room for spending error both purposeful and accidental. Poor spend visibility brings about too many purchasing discrepancies and gives too little control to approvers. Client billable expense policies, automated spend control, configurable company rules, and automatic approval routing all ensure compliance and decrease costs. User-Interface Most companies use p-card programs from a bank or other financial institution, many of which offer their own expense management solutions. However, these systems lack adaptability, usability, and scalability. They feature clunky interfaces that are difficult to navigate, poor receipt management tools, and inadequate approval management. In addition, many banks have no mobile functionality 11

12 and they are very slow to update their systems due to security infrastructure. Leveraging an independent provider with a organization s existing p-card system is often much more effective than using a solution from a bank p-card issuer. Many providers integrate with leading financial systems. This allows for updates to roll out much faster, higher levels of customization, and more personal service. The tools are also more advanced and easy to use online dashboards and self-service inquiries offer more control, mobile and global (language and currency) functionalities bring control to users on the go, and cash advance and personal expense handling gives organizations more working capital capability. 12

13 Optimizing Purchasing with an Expense Reporting Management Provider Purchasing cards are easy to use and simple to adopt. With the right management and control, they can be very powerful for purchasing departments, and ultimately, company success. Expense reporting perfects an already vital tool by strengthening, securing, and enhancing its function. However, in order to gain a truly optimized p-card operation, it is important for organizations to choose the right provider of expense reporting solutions. Chrome River is a leading provider of expense management and invoice processing software. It works with customers worldwide spanning many industries, and its application framework is designed as a scalable solution that can meet the unique needs of each customer small businesses and Fortune 500 companies alike. Its industry-leading expense management solution, Chrome River EXPENSE, offers ease of use and flexibility to accommodate complex expense policies, workflow routing, and management reporting, while bringing visibility, control, and compliance to p-card systems. The solution supports both travel and operational expenses incurred by employees, accommodates credit card integration, and offers extensive p-card-specific functionality that allows card holders to easily allocate charges to cost centers. For more information on Chrome River EXPENSE, go to www. chromeriver.com, info@chromeriver.com or call