The corona pandemic has also changed the way companies handle business expenses. Digital tools open up entirely new possibilities, for expense management – if they are used correctly.
The Covid-19 pandemic has permanently changed the business world: everyone must work from home, video calls instead of face-to-face meetings, new tools for digital collaboration are being introduced – the list is long. The changing framework conditions also result in a change in business expenses, which also affects expense management. Companies have only reduced their business expenses by an average of two percent. Still, these are no longer mostly travel expense reports, but mainly costs for IT equipment for employees and cell phone and internet contracts or food deliveries.
The provider of professional expense management, has analyzed how the spending behavior of companies has changed in the wake of the corona pandemic. The business expenses of over 35,000 medium-sized and large companies around the world were evaluated. Four critical trends emerged:
Customer Contact As A Decisive Factor
The Covid-19 pandemic has divided companies into two groups: those were sales (primarily online) have skyrocketed and those where consumer interest in their products and services has decreased every day. It also showed that companies spent their money differently during the crisis. Compared to the time before Corona, companies spent an average of only two percent less, but differently. Instead of business travel and expenses, the money was spent on remote employee setup.
Companies whose sales had declined also spent between 33 and 50 percent less on business expenses. These are companies whose services are based on direct contacts, such as banks and insurance companies, and companies in the catering, telecommunications, and industrial services sectors. It can therefore be concluded that customer contact is the deciding factor in whether sales have plummeted and how business expenses were incurred during the pandemic.
Expense Management: Less Money Spent On Business Travel
The world came to a standstill: Travel around the globe and business trips came to a halt, meetings and events had to move quickly to virtual platforms. As of March 2020, 80 percent of companies have not booked any flights for over a year and a half. Overall, 30 percent of companies continued to spend the same amount of money on business travel as they did before the pandemic. At the same time, some companies stopped traveling at all. Since the beginning of the Covid-19 pandemic, hardly any money has been spent on business travel.
More Money For Location-Independent Work
In return, the expenses for location-independent work increased drastically in 2020. This includes payments for (minor) purchases related to remote work, including the technical equipment of the employees. As part of the obligation to work from home, many companies have invested in the specialized equipment of their employees: laptops, cell phones, and telephone and internet contracts have been purchased.
The Digitization Of Expense Management
The pandemic has brought digitization forward by three to four years. Customer and supply chain interactions, as well as internal processes, are now more digital. The advanced digitization is also reflected in the type of expense management. With a suitable platform for expense management, companies can digitally map, manage and automate their entire expense management. This makes company expense management more efficient and more accurate. Digital and automated expense management ensure error-free processing of receipts and invoices. The finance departments have access to consistent data in real-time, which can be displayed in detail or presented visually.
This enables accounting staff to understand the impact of the expense policy, gain insight into corporate spending behavior, and identify potentially unnecessary expenses. Digital expense management solutions notice abnormalities and inform the responsible clerk about a possible fraud case and prevent the company from spending more money than necessary. The accounting staff and the employees who submit their expense reports are demonstrably more satisfied with such a solution.
Manage Expenses Better With Expense Management
Using a digital expense management solution during the pandemic allowed companies to manage their expenses better. Even if the employees traveled less than before, costs were still incurred, for example, for IT equipment or a suitable remote setup. Without an expense management tool, employees have to send their receipts to the office, but they all work from home, so it can take a long time for companies to get their money back.
With a digital billing of business expenses, employees could settle their bills from home without delay, even during the pandemic. It also gives companies better control over overspending. Even if they don’t see their teams in person, thanks to digital expenditure management, they can manage their budget more efficiently, even compared to the time before the pandemic.
Expense Management: Outlook Into The Future
The pandemic has significantly changed the way companies spend their money. Digitization is accelerating and changing the expense management market. Companies have to adapt, digitize their spend management, and look for a better solution with fewer processes and more flexibility. It can currently be observed that the transition to digital techniques is accelerating sharply during the pandemic.