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Why is company spending such a struggle for SMEs?

Managing expenses is crucial for keeping on top of cash flow, but many SMEs struggle with it. Darren Upson, VP of Small Business Europe at Soldo explains why spend management doesn’t have to be a headache.


Managing finances and expenditure is essential for businesses, which makes it even more surprising just how little control there often is over how they actually manage spend. It’s a damaging situation for both companies and their employees.

In November 2017, Soldo commissioned a YouGov survey of 2000 employees and 2000 Financial Decision Makers in UK SMEs to get a picture of how companies manage their cash flow. More than a third (36 percent) said that they have to do unnecessary financial detective work at the end of the month to determine who spent money, where they spent it, and why.

So, it’s safe to say that managing finances is a time-consuming issue for UK SMEs. But why is it such a struggle, and which areas are companies struggling with most?

Reporting and reconciliation

Just under a third (30 percent) of UK businesses said they’d be willing to leave a percentage of company spending unreconciled at the end of each month. Similarly, nearly a fifth of (18 percent) are willing to leave up to 10% of company spending as unreconciled. Almost 1 in 10 businesses (7%) are willing to leave up to a staggering 20% of company spending unreconciled at the end of each month.

This is an immediate cause for concern. If your monies aren’t monitored and reconciled properly, you increase your risk of undetected loss. This very oversight is how some people can embezzle thousands, if not millions of pounds over time. Reconciling your bank statements and your money owed helps you prevent losses and can alert you to problems in your accounting system.

Lack of autonomy

According to our research, over half (57 percent) of employees who are unable to spend on behalf of the company when there are less than 50 employees. In this day and age, it should be possible for employees to be given their own pre-loaded cards. Reimbursing staff creates more admin and more unnecessary processes that, as we found out, are hard for companies to keep up with.

Struggles with reimbursement

The majority of UK SMEs (49%) expect employees to pay for their expenses up front and reimburse them at a later date: an interesting statistic when considering this was one of British employees’ main bugbears, with 1 in 10 employees saying they had to wait longer than a week to get their money back.

Similarly, a third (33 percent) of UK SMEs ask employees to pay upfront, whatever the conditions or amount. But only a minority (7 percent) of SMEs say employees earning over a certain amount should pay expenses upfront.

Not even a tenth (9 percent) of businesses currently give employees cash in advance to cover any expenses. Of course, you can’t always give the right amount of money in advance, as some expenses crop up spontaneously. However, your employees shouldn’t always be expected to pay out when it’s necessary, and you can save yourself admin later if you gave them the tools they need in advance to pay.

What companies can do

By implementing a clear and structured expenses policy for employees to follow, you can simplify the process by making everything uniform.

Businesses have seen the benefit of digitising offline, paper-based processes across all departments – and finance is no exception. Digitising spend reporting and making full use of spend management mobile apps for when employees are on the go makes keeping track of expenses and reimbursing employees much more consistent and efficient.

Employees shouldn’t have to record expenses themselves. This is how seemingly ‘insignificant’ expenses are left unrecorded or only crop up months after the event.

Sharing a single company card for every employee is also a security risk and makes individuals less accountable. Trust your staff and give them to those who need them. But make sure the spending on these cards is controlled – use pre-paid cards instead of credit cards.

Spend management doesn’t have to be a headache. It must strike a balance between employee autonomy and management visibility – employees should be able to spend while the C-suite can keep track of spending. And with today’s technology, that is totally possible. Spend management requires the same attitude that you would treat other areas of the business – digitise the process, empower your employees and put stringent processes in place.