Despite how essential it is, managing financial risk and compliance often falls to the wayside in SMEs’ priorities. Fortunately, management systems can help
Managing financial risk and compliance is vital for your business to not only stay in control of its growth and direction but also for its reputation. This involves monitoring employee spend, ensuring staff compliance and meeting government regulations among other duties. Yet, in the average SME it’s often one of those areas that gets squeezed because of lack of time and money. However, dealing with it is easier and cheaper with a management system. Here’s how.
Avoid accidentally breaking the law
Everyone knows businesses must be compliant with legislation. But what if you inadvertently break the rules? It’s worth remembering the penalties HMRC can charge don’t just apply if you deliberately break the law but also if your error is due to lack of reasonable care.
It therefore makes sense to have an expense system in place giving end-to-end visibility over spend. Whether it’s travel, expense or accounts payable, a robust system letting you see non-compliance as it happens makes all the difference.
As well as giving you confidence in compliance, a top-notch system helps in other areas of finance. For instance, the duty to report on payment practices was introduced by the government to reduce the impact late payments have on small business’ cashflow. And with an expense system increasing visibility, you’re able to make much more targeted improvements.
Hurting from the inside
Although external compliance and risk should be at the forefront with expense management, a company’s internal factors are equally as important.
For example, are travel bookings and employee expenses consistently checked to ensure that they’re compliant with your policies? Or do you rely on your staff’s better nature to just do the right thing? If the latter, note that research by SAP Concur, the expense management provider, shows one in five employees think it’s okay to exaggerate expense claims.
Maintaining a consistent, balanced cashflow internally is also critical to business health. And being able to provide accurate forecasts is essential when planning to invest for future growth. But without the right systems in place, there’s little room to make plans when it’s based on out-of-date information.
A good expanse management system could provide integrated travel and expense management so policies can automatically be enforced on individual line items. This is on top of real-time visibility to more easily track and forecast spend.
No one likes to think their business is at risk of fraud but sadly everyone is facing the risk of malicious individuals trying to steal from them. Research from the Association of Certified Fraud Examiners suggests eye-watering losses due to occupational fraud – which it defines as fraud committed against a business by its own employees – with a median loss of over £115,603 from just one incident. And Action Fraud, the fraud and cybercrime reporting centre, says it’s believed around 675,000 businesses have suffered fake invoice fraud at some point in their trading history.
A strong counter is imperative, which is why products like Concur Invoice exist to help spot duplicate invoices, give complete audit trails and increase visibility over spend.
Simply put, opting for expense and invoice management means you’re taking steps to protect your business from those less scrupulous than you.This article comes courtesy of SAP Concur, the travel, expense and invoice management service and creator of the Cracking the Code on Compliance eBook