Based on a talk by Teampay Founder and CEO Andrew Hoag at Lola.com’s Agile Operations Summit
The way companies spend money has changed, in three key ways.
- Companies are buying more “things” than ever before, including SaaS software, fractional services, and on-demand everything, in addition to traditional T&E and physical items.
- Purchases are being made by employees across the organization, rather than a handful of executives or central purchasing department.
- Those employees operate from different locations and time zones, and have different working hours: full- and part-time workers, temporary staff, contractors, and freelancers.
As company purchasing as shifted from top-down to bottoms-up, finance operations needs to maintain control and visibility over spend. Just look to WeWork for an example of what happens when internal controls are lacking. FinOps must proactively ensure that employee purchases comply with company policy and leverage accurate spend data for reporting, forecasting, and strategic planning.
Establishing a formal process in-and-of itself seems simple enough. What’s not so simple? Enabling controls that don’t impede the speed and agility of your business. Companies that move fast have a competitive advantage, which you can lose if you bog employees down with bureaucracy. Any process that slows you down is destined to fail.
Employees want—and need—autonomy to get their jobs done. In today’s business environment, your workforce must move quickly and agilely, which often means they need to spend company money in real-time. Burdensome processes may lead employees to spend outside of policy in order to do what they think is right for the business.
This causes 5 major problems for finance and operations professionals that steal time away from strategic initiatives and negatively impact their agility, accuracy, and efficiency.
- Policy misalignment: There is a disconnect between what employees think they should do and what the finance team actually needs them to do. This means employees often spend outside of policy without meaning to.
- Hodgepodge spending: Employees spend willy-nilly, which results in unexpected and unapproved spending, murky audit trails and questionable data.
- Best-guess accounting: The finance team has to spend time hunting for receipts and other information, and they frequently code transactions using their best guess, instead of data.
- Lack of transparency: Finance teams often don’t become aware of transactions until the corporate credit card statements come in at the end of the month, which limits their ability to deliver accurate reports and forecasts.
- Manual work: Finance professionals spend hours, if not days, each month on manual work, including data entry, back-and-forth with employees, correcting codes and categories, and transferring data from one system to another.
Solving these challenges requires a new way of thinking about the finance function. FinOps are not merely tasked with managing financial processes; they are responsible for optimizing those processes to enable agile business. FinOps are the ones who support finance and other employees alike in fueling speed and efficiency across the company.
Most legacy P2P systems were built for the era of centralized purchasing and have failed to evolve to support a bottoms-up approach. They are designed to be reactive, meaning they process and categorize spending data after the point of purchase, and flag policy violations rather than proactively preventing them. Additionally, these platforms lack the delightful user experience necessary for employees to move quickly and easily through the workflow.
What Does It Take to Be CFO of a Unicorn Company?
New innovations in technology allow finance operations to have total control over spend and an agile employee experience. Spend management doesn’t exist in a vacuum; it requires adherence from the entire workforce in order to function effectively. Therefore, finding solutions that are easy and seamless for employees to use is a must.
Finance leaders are leveraging technology with these 5 capabilities to manage spend in an employee-first culture:
- Proactive policy controls embed the company purchasing policy into automatic request routing, so you can proactively enforce policy without disrupting the employee workflow.
- Intelligent payments limit employee purchases to an approved amount and vendor, which keeps them from going over budget and eliminates rogue spending and fraud.
- Upfront coding naturally collects purchase data from the employee upfront during the initial request, which is then seamlessly passed through the workflow.
- Automated reconciliation means that purchases are automatically uploaded into the general ledger as they happen and are correctly coded in real time.
- Purchasing workflow automation unifies the entire purchasing process into a single automated system, guiding and alerting users when an action is required.
These capabilities enable modern finance teams to contribute strategic insights to their organization. With access to accurate information on company spending at any point in time, finance teams can deliver better reports and forecasts, which means smarter decision-making for the company. Equally important, these capabilities allow finance teams to be an enabler of business growth, not a bottleneck.
Employees shouldn’t have to spend hours a month looking up policies, entering purchases weeks after they spent money, and searching for paper receipts. Conversely, FinOps teams shouldn’t have to rely on employees to know the corporate purchasing policy by heart. With distributed spend management software, “shouldn’t” becomes “don’t.” FinOps can access the data they need, correctly coded, at any point in time—without taking time away from employees in the process. With new technology, FinOps can be a driver of speed and agility across their organization.