CFOs see managing indirect costs and employee expense as challenges to improving their company’s overall finances in the coming year, according to an American Express study of 485 CFOs in companies with average annual revenue between $10 million and $1 billion.
“With cautious to negative economic expectations, most senior financial managers polled in our survey will rely on containing costs as much as growing revenue to maintain the financial health of their organizations during the next year,” said Anre Williams, Senior Vice President and General Manager, US Middle Market, American Express Corporate Services.
CFOs report those internal cost issues they are most concerned with are streamlining internal processes, negotiating better deals with suppliers, and containing direct and indirect costs through improving the management of capital.
Eighty-five percent feel they are not getting the best possible rate from their vendors. This shortfall was attributed to a lack of buying power, negotiating staff and aggregate spending data.
To correct this, CFOs report plans to leverage accurate aggregate expense data to qualify for supplier discounts, improve vendor management and integrate back-office systems to aid with information flow.
Forty-four percent plan on placing tighter restrictions on indirect expenses, such as office supplies, express shipping, telecommunications and computer equipment.
Travel and Entertainment (T&E) will not be controlled as closely, with only 29% planning to further restrict T&E spending.
However, managing expenses is complicated by the lack of proper tools, as 42% say they lack the proper tools to monitor employee compliance with spending policies. CFOs are putting into place cost saving measures such as:
- Issuing preferred vendor lists for office suppliers
- Utilizing technology to simplify expense management, such as replacing paper-based expense reports
- Discontinuing cash advances and check reimbursements in favor of corporate cards
The ‘Expense Management: The Route to Best Practices for Mid-Size Organizations’ study surveyed 485 CFOs in companies with annual revenues between $10 million and $1 billion. A full copy of the report can be downloaded at www.americanexpress.com/cforeport .