Managing spend is a bit like watching the fog roll in over the city: you know the expenses are there, you just can’t see them. There’s a reason reconciliation and expense report processing are not high on the list of accounts payable's favorite activities: getting its arms around employee spending is a challenge.
The first step in managing tail spend:
Employees hate traditional purchase processes: Buying things at home is simple, but when employees walk in the door at work, the purchasing red tape slows everything down. If employees have to chase down approvals for time-sensitive purchases, they’ll start looking for other ways to get the job done. This is a recipe for maverick spend.
Employees aren’t trusted with plastic: Access to corporate and p-cards is usually restricted to a select few. So, for employees who are on the outside looking in, they can either bum a card off a coworker to buy something—obscuring who the actual buyer is in the process—or risk not getting reimbursed for their purchase.
Modern purchase environments don’t take checks: It’s not just consumer purchases anymore, your employees are increasingly working with suppliers and contractors that want to get paid before rendering services or shipping products. Company checks in these instances just won’t cut it.
Employees need to make timely purchases to meet their business objectives, but they really don’t have the means to do it on their timeframe. So they seek out faster workarounds that make purchases harder to track.
Eliminate tail spend by empowering your employees
So how do you get unwieldy employee spending under control? Contrary to our draconian instincts, it’s not tighter spending policies. In fact, existing corporate policy around employee spending is woefully inadequate as a management tool. According to a 2017 Spend Matters survey of procurement professionals, 60% of the respondents say employees face no penalties for out-of-compliance spending. Another 40% say employees don’t even know how to requisition a purchase properly.
Aligning your policies with the spending needs of employees isn’t about giving up or selling out, it’s about empowering them to buy what they need without sacrificing oversight.
Enabling better purchasing for business teams
One of the unfortunate legacies of the traditional purchase requisitioning model is its centralization. All corporate spending converges at a single point. Spend Matters indicates that roughly 90% of the suppliers a procurement professional manages are non-strategic (i.e. ad-hoc and frequent low-value spend).
Streamline buying by giving budget owners the power to give out provisional virtual cards to employees on-demand. They can approve requests or ask follow-up questions in real time. The whole process takes minutes to do, while those who are normally involved in centralized buying can monitor transactions from a distance.
With this distributed purchasing model, business teams can effectively take the express lane for buying while saving time and skipping the whole onerous process. Time-sensitive purchases can be made without chasing down hard-to-get approvals or working through contracts to authorize suppliers.
Get a look at what the fog of employee spend is hiding
The beauty of a distributed purchasing model is that the transparency of employee spending actually increases as more spend is directed through it. And because your p-card and corporate credit card accounts are safely sourced to create virtual cards from within a secure web-enabled platform, your company’s better protected from fraud.
Trust me, your employees are ready to come out of the fog — they’re just waiting for the right tools to do it. Get a demo of Tradeshift Go and see the difference today.
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