Since the onset of the COVID-19 pandemic, businesses lately have started embracing technology as a medium of change to combat the crisis. Businesses not just in India but globally are going through a rapid transformational shift driven by new technological innovations to ensure undisrupted continuity of businesses. In India, the task from organisations has been for reliable technology at low costs and the new mantra of digitizing certain processes has been comfortably adopted by them. Similarly, there has been a rise in demand for expense management solutions in India. Today, the traditional expense management systems are being replaced by technology and there is a constant and urgent need for improvised solutions.
The HR industry in India is continuously enabling and driving the acceptance of a digital transformation within organisations. HR Tech is not only automating processes but is also adding robust features to support advanced data-driven operations which are accurate, efficient and helps an organisation in attaining result-driven performance ratios, that eventually results in improved productivity.
Is filling spreadsheets, managing paper receipts and running after CFOs something that anyone would prefer doing or is it even possible in a world which is constantly preaching a contactless environment?
In a highly digitised world, moving away from traditional methods of manual expense management has become necessary not only to ensure speed of transaction processing but also the new rules of distancing forced on us by the pandemic. Moreover, reducing the paperwork, administrative monologues like receipt submissions and time-consuming approvals is very much becoming a habit with the modern workforce consisting of many millennials. Hence it is necessary for HR to let go the traditional methods and replace them with more agile models and opt for the digital ones.
While operational ease is one of the most important factors that has led to the emergence and acceptance of technological driven expense management systems, a very important factor has been the need to ensure optimization of spends in a really difficult period of time. Many organizations and particularly SME’s have realized the importance of prudent expense management for the overall financial health of the organization and the solution that companies are effectively adopting today is an expense management platform which ensures reminding, recording and reimbursing, recompensing or remunerating on time. It helps to manage the day to day business expenses easily and quickly which helps you to have a real time control over the finances.
Traditional Expense management vs. Automated Expense management System
Traditional expense management system is a time-consuming and tiresome process which requires countless hours for the data entry work. It showcases lack of control over the corporate Business Travel and the spending and gives poor visibility into Travel & Expense data. The entire reimbursement process is quite lengthy- Right from Cumbersome Paperwork to collecting the Scattered Data of Receipts, Lost bills and Expired bills. It requires more manpower which results in High processing cost of expensing.
Whereas, Automated Expense Management system organisations can simplify and automate their enterprise spending’s, have a complete control over profit, and higher visibility and keep costs down by running real-time reports. The expense management platform gives a centralized visibility and control over company-wide expenditure, anytime, across any device. The claimants not only save time, but the approval is faster and processing time is cut drastically.The Expense management system removes all the physical approval process from an organization’s approval cycle and converts non-digital information into digitized information.
According to a report by Oversight Systems Spend Analysis, a typical Indian organization loses 5% of annual revenues each year to fraud – 89% of this, is due to asset misappropriation, including expense reimbursement schemes. 85% of businesses in India need greater insights to fight fraud. Gaining control over total spending, spotting the red-flags of fraud, and cultivating a culture of compliance is of utmost importance, particularly in the current business environment. Hence, AI fraud detection tool in an expense management system helps organizations to catch duplicates, out-of-policy spends, incorrect amounts, suspicious merchants or attendees, and control over excessive spending that helps in improving the overall financial discipline of the Company.
4 Industries that are Benefiting from Scientific Expense Management-
Pharmaceutical Industry- According to a report by the Indian Brand Equity Foundation (IBEF),The Indian Pharmaceutical industry has been growing at a compounded annual growth rate (CAGR) of more than 15.92%. With Pharmaceutical industry having a vast market scope, managing expenses becomes of utmost importance, it becomes necessary to gain visibility, accountability and to track the day to day spending. The pharma sector for the sheer volume of transactions and the linkages that various stakeholders have starting from the company sales representatives to the retail pharmacy that eventually reaches out to the consumer an automated expenses management system has turned out to be a good resource to invest in. while the seamless transaction processing allows transactions to be completed faster, it has eventually led to a faster turnaround time on orders.
FMCG Industry- Fast Moving Consumer Goods (FMCG) is the 4th largest sector in the Indian economy. Revenues of the FMCG sector reached Rs 3.4 lakh crore (US$ 52.8 billion) in FY18 and are estimated to reach US$ 103.7 billion in 2020. Hence automating and simplifying the processes through AI not only helps in managing costs but also gives a clear real time visibility of the spends and gives a concise report in a single dashboard to the emerging entrepreneurs.
IT Industry– The industry that is actually responsible for innovation and adoption of technology in expense management in itself is also using the same effectively for its own purpose. Lately, the IT-BPO sector has become one of the significant growth sectors in fuelling India’s economy. In the financial year 2019, this industry in India generated an annual revenue close to 180 billion U.S. dollars, a significant increase from the generated revenue ten years ago. The IT industry is continuously undergoing rapid evolution every day and is changing the shape of Indian business.The IT sector has been India’s sunshine sector for quite some time now. According to the IBEF (India Brand Equity Foundation) figures, the Indian IT industry is set to touch $225 billion by 2020. Hence, having an expense management system is crucial in such a large sector. The sheer workforce that is employed in this sector, makes it important for organisations to adopt process based and scientific expense management systems to ensure lesser slippages and better utilisation of its resources.
Banking Industry– India is going through a shift in credit behaviour with millennials embracing tech which is now being used in the banking sector. Digital Disruption in the Banking segment adds on competitiveness, performance, operating efficiency, and cost savings. The Expense Management platform empowers businesses to spend smarter, therefore, saving time, money, thus resulting in happy and satisfied employees.