How Expense Automation Can Increase Manufacturers’ Profit Margins

With complex global supply chains, often small margins and myriad financial and operational risks, any opportunity for manufacturers to lower operating expenses is welcome. Whether this is hedging against commodity price increases and exchange rate fluctuations, or identifying opportunities for cost reductions within the supply chain, any area where costs can be controlled with no loss of quality is welcomed by the CFO.

Another area where manufacturers can improve cost control and improve quality is, of course, through automation. Across all areas of industry, the ability to automate manual processes both reduces labor costs and minimizes the risk of errors. So, as automation in the manufacturing process has been proven to deliver wide-ranging benefits, why shouldn’t manufacturers’ finance teams also investigate what kind of benefits automation can have across back-office processes? One area that immediately becomes clear is automating expense management, a function that has traditionally been very labor-intensive and error-prone.

Submitting hard-copy receipts and spreadsheets is a slow and often tedious process for both the end-users as well as the finance teams who need to process them. For travelers, expenses can’t be entered on the road, so those who travel frequently for business, there can be major delays in reimbursement leading to frustration. Receipts must be stapled to manually-entered spreadsheets. Billing codes and expense policy regulations must be remembered. For the back-office, these manual processes can also lead to a wide variety of other risks: errors being introduced in the accounting system through rekeying mistakes, incorrect allocation of expense types, difficulty in enforcing travel and expense policies, and the potential for expense fraud, to name just a few. On a larger scale, manual expense processes also make it difficult for organizations to effectively analyze employee spend, which reduces the ability to negotiate volume discounts or identify inefficient spend. 

Related: Top 10 Perils of Using a Manual Expense Solution

Automating expense management gives organizations a wide range of benefits, both for the end-users who need to submit their expenses for reimbursement and the travel and finance teams who want more streamlined solutions that can provide more effective control and deliver actionable insight. For those on the road – typically valuable and high-performing sales leaders – entering receipts into the system requires little more than taking a photo from a mobile phone and emailing or uploading it into the system. Optical character recognition technology within the system will automatically extract receipt data and convert it into expense line items. Travel booking data flows directly from corporate travel agencies, and online purchase receipts and hotel folios can simply be emailed into the traveler’s expense account. Nothing else needs to be done to create expense items.

While many road warriors may be equipped with company-issued mobile phones and submit expenses several times per month, it’s likely that many employees – particularly that those who work in the manufacturing plants – will only incur expenses a few times per year, and will own a wide variety of device types. For larger companies with global supply chains and networks of factories, it’s also likely that many of these factory-based employees will be in locations where English isn’t well understood, and there may not be any internal IT support staff in place.

With this in mind, a global expense management solution needs to be both easy to use, and more importantly, easy to remember. In order to minimize support calls, it must be just as straightforward to submit and manage expenses on any mobile device, regardless of whether it’s a laptop or an Android, iOS, or Windows-based phone – especially considering that many front-line employees may have an internet connected phone but no laptop. A mobile web solution that allows your employees to use it in their native language – wherever in the world they live – will also make life easier all round.

For the finance team, expense automation not only streamlines laborious processes, but also automatically enforces travel and expense policy enforcement, so approvers and administrators don’t need to recheck that expenses are in compliance for each report and user. This is especially important for companies where expense limits in one market may differ significantly from another. Each organization creates its own business rules for expenses, outlining the parameters for expense submission and routing, and these are then automatically enforced by the system. These rules can be configured in unlimited ways so that, for example, a globally-traveling sales executive based in the head office will have more flexibility than a worker in an overseas manufacturing plant.

In addition, as data can flow directly from the end-user to the ERP system without any need for manual rekeying of data, errors can’t be introduced into the system.

Related: Specialist Expense Vendors vs. ERP Suite Modules: Pros and Cons

On top of easier, speedier, reimbursements, the ability to analyze expense data more efficiently and effectively also offers major benefits for controlling costs. Issues that may be otherwise difficult to identify and slow to address can be resolved much more easily. Does your sales operation in Brazil book business class flights more than usual? Why are out-of-pocket expenses always so high when visiting the factory in Manila? Can we get a better deal on flights to Taiwan? This information is available immediately in an easy-to-view dashboard format, so that actionable data can be used to make cost-control decisions in near-real-time.

Given the cost savings and financial insight benefits that expense automation can deliver, the question is less “can we afford to invest in an expense solution?” and more “can we afford not to invest in one?”