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Warning signs: How to spot when a business outgrows its expense setup

How do you spot the warning signs that your company has started to outgrow its expense setup? Here’s a look at some expense setup red flags.
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Any growing business should be familiar with the risks posed by “boiling frog” syndrome.

This is the idea, based on 19th century observations, that a frog placed in boiling water will quickly leap out. If, however, it’s placed in tepid water that’s slowly brought to the boil, it will stay in – not perceiving the danger.

It’s used as a way to describe the difficulties we face when it comes to identifying threats that arise gradually. When you’re managing a growing business, spotting these risks is a constant challenge.

As an organisation grows and becomes more complex, it places increased strain on business structures but fault-lines can develop gradually, emerging slowly over the course of weeks and months.

One of the areas most susceptible from this problem is the way that organisations choose to manage employee expenses. What starts out as a simple administrative task for a new businesses can become a dangerous drain on resources.

Those most at risk are businesses which are reliant on traditional expense setups which use manual processes. Unlike a digital setup, these don’t have the flexibility and scalability that’s required to handle the demands of a growing organisation.

So how do you spot the warning signs that your company has started to outgrow its expense setup? Here’s a look at some of the most common expense setup red flags:

Longer processing times with your expense setup

The bigger a company grows, the more employee expenses it will have to handle. With each claim being processed by hand, it creates a burgeoning flood of paperwork for finance teams. As times creep up, it creates a dangerous information lag as expenses take weeks or even months to go through the system.

Rising level of losses in expense setup

With more time devoted to processing claims, it means there’s less time to properly monitor and police costs. It creates an environment in which workplace fraud is able to thrive as falsified and exaggerated claims go unchallenged. It can quickly create a workplace culture in which “creative” claims are seen as the norm.

Numbers stop adding up

It’s not just the increased size of a growing company which will expose problems. It’s also the added administrative complexity as new divisions and departments are created. When information is processed manually and stored on spreadsheets, it makes keeping data in sync an increasing headache.

Struggling to cope with compliance

As a system begins to struggle, it becomes increasingly difficult to ensure that expenses comply with external legislations. This is a particular problem when trying to safely navigate the complexities of HM Revenue and Customs (HMRC) rules on tax and VAT.

Staff grumbles and discontent regarding expense setup

A surefire sign of a misfiring expense system is a rising level of frustration for employees. It’s the hassle of creating claims, the length of time it takes to be reimbursed and the general toxicity caused by expense fraud and distrust between employers and employees.

If these warning signs sound familiar then your business needs to review the way expenses are handled. It’s a chance to take action before emerging issues are allowed to become serious problems that can stifle growth and increase risks.

All of these problems are symptomatic of the outdated methods that companies have traditionally used to manage expenses. It’s the reason so many companies are moving over to digital expense management.

The systems replace manual processes and paperwork with fast and efficient automated tasks and cloud-based storage of data. It removes the administrative burden from finance professionals – improving processing times by around 25 per cent.

It allows information to be handled in real-time with data automatically collated and made instantly available to the finance team. It frees up the time and resources to focus on properly managing expenses, rather than processing them.

Webexpenses is an award-winning digital system which provides a smarter way for businesses to manage their expenses. Find out more about how it works here.

This article is part of a wider campaign called the Scale-up Hub, a section of Real Business that provides essential advice and inspiration on taking your business to the next level. It’s produced in association with webexpenses and webonboarding, a fast-growing global organisation that provides cloud-based software services that automate expenses management and streamline the employee onboarding process.

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About Author

Adam Reynolds

Adam Reynolds is CEO of webexpenses, a fast-growing global expenses management software provider. With an extensive background in software and leadership, he joined webexpenses as head of sales in 2013. He became the CEO in 2015 and now oversees all business functions from technical and product development to customer services. Webexpenses software is used in over 70 countries throughout the world and – with offices in Sydney, Brisbane, and Texas – continues to grow internationally.

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