You Don’t Know
What You Don’t Know

Why Consulting Companies Are Losing 35% in Project Expenses.

Clients signing on for consulting services agree contractually to reimburse the vendor for their project related expenses. But – did you know that up to 35% of project-related expenses go undiscovered and are never billed back to the client?

This is real data from Pivot Payables’ customers. Here’s what we’ve found after digging deeper into the reasons why.

Manual Processes the Root of the Problem.
Expense Reports Can’t Flag Client Expenses Accurately.

If your consulting company uses spreadsheets or other manual processes to report expenses then you’re starting at a disadvantage. Spenders need an easy and error-proof way to report and allocate each expense to the proper client but maintaining current project lists in this scenario is nearly impossible. Piling on to the problem – manual methods often don’t require the spender to make a choice between billable to the project or not.

Pivot Payables customers say:

It’s enough of a challenge to get spenders to submit their expense reports on time.
Going beyond that is a big ask. They don’t have the right tools so there is no
guarantee they would provide 100% accurate information.

Disadvantages of Manual Methods are Exponential.
Backup Documentation Assembled from Disparate Sources.

It’s common for projects to involve a team of services folks – each submitting expense reports over time.  Collecting all those expenses – along with receipts – is time-consuming and requires thorough review to make the process worth it. Especially challenging is allocating expenses between multiple clients while at the same time ensuring clients see only their project expenses.

Pivot Payables customers say:

Assembling backup documentation can take hours for each client per billing cycle.
If you bill each client once a month, the time adds up as do the potential errors.

 How Do You Know You Have All the Expenses?
You Don’t.

The resulting backup documentation from a manual process is part science; part art.  While there are expense reports and receipts to prove expenses, those are only for the ones that were entered correctly at the beginning or – through manual review – discovered along the way and corrected.

Pivot Payables customers say:

We thought our only problem was the extraordinary amount of time
it took to assemble the expenses into client backup documentation – nope.
Automating the process allowed us to look back and compare, finding enough
missed expenses to pay for our new system for two years.
And that’s just one story!

Consulting companies do bill their clients for project expenses – but only the ones they know about. Now you know.

CFO? 5 Trends to Watch!

How analytics, robotics, next-gen cloud computing, cybersecurity, and evolving budget tools will shape tomorrow’s organizations.

CFOs are tasked with ensuring that the accounting basics, such as processing payments and reconciling accounts, are handled without a hitch. But simply having the bare minimum in terms of financial infrastructure won’t get an organization, or a career, very far.

Modern senior finance professionals need to think strategically about how automation and streamlined processes will impact the finance team — and ultimately the business — five years down the road. To be tactical partners with business leaders and the C-suite, chief finance officers need to be scanning ahead to help the company thrive and meet continuously evolving demands.

The job of the CFO is evolving beyond the accounting function, and modern CFOs need to be well-versed in the latest fintech trends. Knowing your way around a spreadsheet will no longer suffice. Successful CFOs should look to the tools and strategies that will shape the next five years.

This white paper outlines five financial technology trends that CFOs need to consider as they establish priorities for the finance team and the enterprise.

Read the complete white paper: SAPConcur_18_Global_5TrendsforCFOtoWatch_Eng

About the White Paper Sponsor – SAP Concur®

SAP Concur® solutions take companies of all sizes and stages beyond automation to a completely connected spend management solution encompassing travel, expense, invoice, compliance and risk. For more than 20 years, these leading, innovative solutions have kept customers a step ahead by delivering time-saving tools, connected spending data and a dynamic ecosystem of diverse partners and apps. User-friendly and business-ready, SAP Concur solutions unlock powerful insights that help businesses reduce complexity and see spending clearly, so they can manage it proactively.

Less Than Perfect Cash Flow?
One Adjustment. Big Results.

Here is one change that could improve cash flow by weeks if not months.

Organizations that bill back expenses to clients can have large amounts of out-of-pocket cash sitting in limbo waiting for reimbursement.

The reason why?

Because of the many moving parts required to properly report the billable expenses including spend capture, project assignment, management approvals, and data assembly.

Billing back project expenses is a science, not an art. It requires absolute accuracy and businesses invest in guaranteeing that precision.

Just how much is the investment?

Cardno reported an excess of 500 hours per month to generate billing statements for their clients.
Cardno is an international company listed on the Australian Securities Exchange providing professional infrastructure and environmental services serving Environmental, Defence, Energy and Resources, and Transportation markets –  just to name a few.

Missed expenses directly impact Cardno’s profitability and errors can result in billing disputes that add even more time onto the cycle between spend and reimbursement.

Cardno has since streamlined this mission-critical part of their company, saving over 500 hours each month.

What was the one change?

Automation.

Cardo eliminated all their manual steps in favor of fully automating the process to create billing statements for their clients with a combination of SaaS-based expense reporting and client bill back.

That 500 hours has been converted to pure profit.

Say hello to Cardno!

Upside Down on Legacy Systems?
Think Overall ROI.

Many companies have some type of older application that performs a mission-critical function.

You know the one.

• Customized over time to serve particular needs
• Nightmare when it’s time to connect to other systems
• And, an expensive bottleneck as new systems and processes are brought online

If you’re on the fence about replacing an older application, consider the incremental benefits of the update combined with your other modern systems. It might give you the justification you need.

Newer applications are designed to integrate with – well – other newer technologies. That is a large part of their value. Any time you force them to connect with older systems their value is reduced and so for that matter is the value of the legacy application.

So much so, that you could be upside down on your overall ROI.

Today a much wider number of systems are working together across the organization and their value in part is based on aggregation.

Think about CRMs. For a long time, their function was tightly tied to the sales process and thus the measurement for ROI.

Today, CRMs are an integral part of the company, often serving as a central application for almost all business data and information. What started essentially as a customer database and prospecting tool has expanded to a platform that directly and indirectly impacts most of the company’s day-to-day business. CRMs are just one example.

A significant benefit to newer application models such as SaaS is frequent upgrades. They happen often, sometimes without advance notice, and deliver new features literally overnight. The overall benefit of a SaaS application (in this case) is diluted by the work needed elsewhere if other systems take time to integrate.

Think about the big picture and overall ROI. The math might surprise you.

Don’t Be Afraid to Fix It.

Companies that bill-back expenses to their customers often have processes in place that have adapted over time. The longer the processes have been around, the more difficult it is to implement a change – both culturally and technically.

Is it worth it?
Considering that older processes are typically manual and often rely on proprietary systems that cannot integrate with modern applications, it’s worth looking into.

Here are some considerations to help you decide:

What is the End Game Today?

The entire point of any billable project is profitability – right? Start at the end of the workflow in accounting. Their goal is to get money owed back into the company in as short a time as possible. What does it take today to get all the project-related pieces together and assembled into a package for the customer?

What To Watch Out For: The process may not be the same for all customers. Many have specific formatting requirements for how they want this data arranged on their statement. Also, be afraid of spreadsheets. Be very afraid.

Follow the Data Upstream

What are the steps required of the rest of the employees to feed accounting the information they need? You will end up at the expense report every single time. And although accounting can show you this process, I recommend you have a talk with someone who actually has to complete expense reports as a result of working on the customer project. Their angle on the process is worth understanding.

What To Watch Out For: Special reporting steps required for projects with billable expenses such as separate expense reports for each project with no other expenses included. Think about multiple projects going on at the same time. Also watch out for the look on their face.

Show Instead of Tell

Have folks actually do the work in front of you to accurately illustrate the time and attention it takes. As employees show each step, ask why it’s done that way. When you interview the accounting group I suggest bringing walking shoes because the copier, scanner, printer, and computer that stores the spreadsheets are not usually in the same room.

What To Watch Out For: Workarounds that exist to bridge gaps. You’ll hear “We do this because the other system can’t… ” or “This extra step is needed to double-check accuracy because…” and “I really need a new pair of walking shoes …” – that kind of thing.

After all that, does your current solution and process equally support the business requirements and the productivity of both your front office spenders and travelers, and back office accounts team? If not, it’s worth looking into something new for everyone involved. Change is good!

DEO. It’s a Thing.
Bill Back for Project Expenses.

When it comes to cash flow, tracking Days Sales Outstanding and Days Payables Outstanding are well known calculations.  The shorter the better.

Companies that bill back expenses to their clients have another important measurement.

Days Expenses Outstanding.

This clock starts ticking when the first billable project expense is purchased. Keep in mind many transactions are made well in advance of when the actual project work is done, and can be large purchases such as airfare, hardware, software, and supplies – especially those purchased in bulk and billed back to various clients and projects.

Do the math.

• June
  Pay for upfront expenses – airline tickets and supplies.
• July
  Pay for expenses during the project – meals, hotel, entertainment – paid on the corporate card or reimburse  employees as they submit expense reports.
• August
  Project completes. Assemble the receipts, invoices, and other backup documents to bill back the project-related expenses. Send the bill in August if you’re lucky.
• September+
  Many of our clients report 90 days and even 120 before they receive payment from their customers.

There are several areas in the process that can reduce your DEO.

Start with how you’re managing the spending side. How well does your expense management process track billable expenses for your particular needs? Proper tracking here reduces the work needed on the back-end to determine who to bill and how much.  Take a look across systems too. Expense reporting is an obvious one but look at your invoice process as well.

Future blogs will address other areas.

SaaS Expands CRM Value …
here’s how

CRM plays an important role in a company’s overall financial ecosystem. Activities tracked here are critical to measure the overall spend picture. SaaS for Expense Reporting and Invoice Management are just a couple of areas to consider during your analysis when choosing a new CRM system. SaaS applications (working together) can provide great visibility into the company by sharing and leveraging the data and information captured during these activities.

Some checks and balances as you research:

• Does the CRM integrate out of the box with other types of applications your company needs?
  Look for partner programs that offer validated applications. This means the two have been through a certification process. Tested, re-tested, and most importantly — have a formal process for resolving issues.
• Can you make configuration changes to the CRM without the help of the vendor?
  This is the mark of a modern SaaS solution. Ideally you can and the vendor offers assistance for complex configuration adjustments. Ask that question of the other applications as well.
• Are pricing models complementary?
  Often times SaaS offerings fall apart here and use a legacy pricing model. Do some serious legwork in this area and line up the pricing models for all SaaS applications together.
  Still make business sense? Then it’s a ‘go’!

The  Tail  Wagging  the  Dog

Billing back project expenses to clients often feels a bit like this.

Missed expenses are a direct hit to profitability so companies go to great lengths to track every dollar spent, often retrofitting processes that take place earlier in the workflow to serve the master. Sorry.
Dog humor.

A common practice is to require a separate expense report for each project but that has its’ challenges.

• More work for the spender
• Still no guarantee that 100% of the billable expenses are captured
• Splitting expenses across multiple projects is a manual process

This adds a considerable amount of work for the spender both in time and number of expense reports needed. Plus, it still requires manual steps on the back end to sort through reports and receipts.

It could be a wash or worse, you could be upside down if it actually costs more to track the expense than the actual item’s value.

Yikes.

You can’t spend it twice. Or maybe you can.

In any case, you certainly don’t have to.

Pivot Payables and Concur have a better way to bird dog (sorry, last one) client billable expenses.

Learn how!