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The arguments for leaving paper behind are piling up as fast as those receipts in your accounting department.
David Rosenbaum, CFO.com | US
May 10, 2012
In his "old life," at another company, Jeff Harrison ran a mobile engineering group. He had about 400 engineers "driving around, fixing HVAC systems, electrical, and plumbing."
His engineers would buy supplies at Home Depot and True Value as needed, and then, Harrison says, they'd "fill out paper expense logs, collect tons of receipts, [and] key in what they bought into a PDA, which would feed into the database. Then they'd send the paper receipts to accounting. We'd have to go through all the receipts and compare them to the database. It was a massive, material job."
In these days of smart phones, tablets, and automated everything, it's surprising how many organizations of all sizes are still managing travel and expense processes manually. A recent survey of 300 finance professionals by PayStream, a payroll and accountancy services provider, found that 71% of the companies surveyed were still mailing paper receipts to the accounts-payable department, creating lots of work and very little value.
For Harrison's accountants, reconciling those receipts was a huge job. Collecting and mailing them was also a chore for his engineers, and did nothing for the top line. "When my engineers turn a wrench, I make money," says Harrison, currently director of finance for engineering and maintenance at Cushman & Wakefield, a privately held commercial real estate firm with more than 13,000 employees worldwide. "When they're filling out expense forms, they're not turning wrenches, and I'm not making money."
When Harrison started at Cushman last year, the company's engineers were still filling out expense forms on paper. "They bought a hammer; they filled out a form and sent it with the receipt to their manager for approval. The manager sent the receipt to finance. . . . I lived with that headache at my previous company," he says. "I knew I couldn't go down the same path."
Harrison began researching applications for automating the expense process. He found many, ranging from solutions provided by giants such as ADP and NetSuite to smaller, mobile-focused niche players. Many had "more bells and whistles" than he thought he needed. He wanted something simple, with a relatively gentle learning curve. He chose to experiment with Abukai Expenses, a mobile reporting application that today announced a partnership with Concur, a provider of travel and expense management platform integration.
Right now, Harrison has implemented Abukai only in Cushman's engineering group. Corporate employees, including Harrison himself, are on PeopleSoft and still mail paper receipts. "My engineers," he notes, "are more advanced than I am."
The Abukai system Harrison is using costs about $100 per seat for an annual subscription. An engineer takes a picture of the receipt with his phone and e-mails it to finance, freeing him to spend more time turning wrenches. At this point, says Harrison, those e-mails are still manually entered into Cushman's general ledger and P&L. But, he says, "[by automating] I assume a productivity increase of 5%–7% in terms of hours. That's highly correlated to revenue in my pocket."
It's not just large businesses with large, mobile workforces that struggle with expense management. At a CFO conference this year, a finance executive from a small, privately owned energy company was spilling his heart out to Abukai president and CEO Phillipp Schloter, who was listening sympathetically.
"I have no control over credit cards," the CFO (who didn't wish to be identified) told Schloter. "My district manager goes to Smith & Wollensky for dinner three times a week; it goes into travel. My boss's wife has a company gas card; it goes into travel. My boss flies first class. I get receipts for football tickets that are supposed to be business expenses. How do I know? What if the IRS asks me to justify it?
"The spend is disconnected from our product, and no one can link it back to the cost of goods sold. It's bad for auditing; it affects profitability. Plus, I get expenses one, two, three months late from sales, making it impossible to hook them into the general ledger.
"I need something that provides more accountability and auditing," the CFO said.
The PayStream report found that 42% of executives surveyed struggled with an "inability to enforce corporate travel policies." Another 21% found an increase in overall expenses and 8% worried about "lengthy reimbursement cycles." It was challenges like these — and one traumatic experience — that inspired Schloter to found Abukai in 2010.
Schloter was a general manager at Nokia, traveling for weeks at a time. He was at Heathrow Airport in London, trying to book a flight, when he got a message from American Express saying he owed $50,000. "I was using my corporate credit card," Schloter recalls. "The receipts were in my laptop bag. I was, like, OK, I'm on a mobile phone, why isn't there a better way to do this?"
Schloter believes Abukai can help rein in abusive spending. "The CFO gets objective data," he says. "For example, finance gets a picture of the hotel bill — the daily rate, what was spent on the Internet, the phone, parking, movies, all broken down — rather than a credit card where it's all summed."
Harrison's version of Abukai works with BlackBerry. It also works with iPhone and Android, but Harrison says his engineers are used to the BlackBerry. "They can take apart HVAC systems blindfolded, but put an iPhone in their hand, it's different," he says.
"I want them worried about turning wrenches."