Why managing travel and subsistence spend is crucial to cash flow

Balancing the money coming into a business with cash disappearing in the opposite direction is a constant challenge for all companies, but for SMEs it can be crucial. While chasing late payments has become part of everyday life, it is never pleasurable – and always time-consuming when your energy would almost certainly be better spent on more worthwhile activities like, for example, growing your business.

But if you have very little control over when your largest customers pay you what you are owed, common sense tells you that you ought at least to be able to manage what you spend. Invoice management is a sensible discipline to instil in any company, but there are other seemingly less obvious areas, like entertainment and travel expenses, that have a habit of falling off the radar and causing problems.

A recent AMI Partners survey of 400 SME financial decision-makers commissioned by SAP Concur, a global travel and expense management service specialist, found that 69% of respondents admitted their manual expense, travel and invoice solutions were inefficient. The same problems occurred in nearly every industry involved in the research.

The challenge to retaining control becomes greater as a business grows. When a company is small and starting out, keeping tabs on travel and items like client lunches is relatively straightforward, but as more people join and submit manual expense claims so the process starts to spin out of control. In fact, 60% of the respondents in the survey cited this as a serious problem before they took the decision to turn to an automated solution.

Moving away from a paper-based process that relies on individual approval for reimbursement not only frees up a lot of wasted time, but also removes the scope for human error. As a result, figures are more accurate which, from the cash flow perspective, is vitally important.

A predictive cash flow software system like CaFE thrives on being fed accurate data which can be translated into a valuable forward view of your cash position, vital to running a smaller business. Early warning of potential cash flow difficulties – even if they arise from failing to account for and control out-of-pocket expenses – can save a lot of anguish further down the line.