Expense Management Made Simple for Manufacturers
Manufacturing companies deal with a lot of moving parts—in more ways than one. Manufacturing finance departments need to operate like a well-oiled machine to keep up with project budget approvals, expense reports, and employee reimbursements. Not to mention tracking correct billing codes and currencies for each project, and organizing the information they need to set future budgets.
Well-chosen expense management software can increase your finance department’s efficiency, lower error rates compared to manual processes, and provide an all-in-one solution to staying on top of a range of critical finance tasks.
Manufacturing Expense Management
Challenges and Opportunities for 2020 and Beyond
To put it mildly, 2020 has been a strange year. For an industry like manufacturing, which often requires in-person site tours to function optimally, pandemic lockdowns and social distancing have been major obstacles.
A survey from the National Association of Manufacturers found that 53% of respondents anticipated an impact on operations due to coronavirus, and 78% expected to see a financial impact on their business. More than 35% were experiencing supply chain disruptions, as well. This survey was conducted in March, so it’s possible that even more manufacturing companies have faced pandemic-related challenges since then.
The manufacturing industry had been experiencing significant changes even before coronavirus headlines hit newspapers. Finding skilled labor, navigating changes in tariffs and trade wars, and adopting updated, automated systems are all potential opportunities for manufacturers to be on the cutting edge in the industry. Thanks to reshoring, some manufacturers are even noticing increased demand for domestically produced materials in 2020. High demand for your business is a good problem to have, but it presents the challenge of balancing increasing capacity against using current resources effectively.
Considering the range of factors manufacturers are handling at once, individual customer and project margins matter more than ever. Prioritizing strong expense management practices can help keep margins as healthy as possible.
5 Ways to Improve Expense Management
Manufacturers need to stay nimble to stay on top of the coronavirus pandemic response and industry changes. A manual system of spreadsheets, emails, and even handwritten documentation could slow you down and open your business up to higher risk of losses and compliance failures. Here are a few measures of success to consider when you’re evaluating expense management options.
Expense management software that takes ages to implement throughout your company adds headaches, when the goal is to make controlling spend easier. Look for software that integrates easily with your system and offers a user-friendly interface.
A miskeyed data cell is all it takes to cause a costly error. Automating expense management processes does more than save time (although freeing up more time for your finance team to tackle other projects is a major plus, too). It also greatly reduces the risk of human error. If you can customize settings to make certain fields required, that can also help your team meet compliance regulations every time.
Social distancing regulations can mean your employees can’t always connect in person the way they usually would. If increasing capacity means opening an additional facility or recruiting skilled workers, you may need extra support to help employees communicate expense information remotely. A shared, central program makes it easier to view and share expense information.
A common time-waster is sending draft budgets or expense reports to the right manager for approval. Features like one-tap approval streamline the sign-off process to make processes more efficient and increase the finance team’s ability to control and reduce spend.
If you have facilities or projects in different countries, you need to be able to use the correct currency without running conversion calculations every time. Look for programs that can automatically select the appropriate currency to save time.
Benefits of Effective Expense Management Software
Activities in the finance department affect all levels of an organization. That means employees at every level feel the impact of effective expense management, from a top exec forecasting next year’s business strategy to an employee waiting on reimbursement for a hotel stay. An expense management solution like TravelBank can lead to the following benefits.
Timely expense reporting
If employees need to submit physical receipts, or wait until they can find a scanner to create a digital copy, they may delay expense reporting for weeks. This is frustrating and sometimes financially burdensome for employees, as well as challenging for finance professionals who may need up-to-date numbers. Digital receipt capture means employees can snap a photo on their phone and update reports as they go, leading to more timely reporting and responsive reimbursement processes.
When your expense management system is functioning optimally, it’s easy to log in and view how your actual spend compares to your planned budget. From there, you can make well-informed adjustments as needed to control spend and stay on budget for a project.
Gain in-depth financial insights
With an all-in-one solution, it’s easy to review how exactly project spending aligns with the company’s financial goals. From there, finance departments can run more thorough analytics and create predictive budgets with increased accuracy.
Clear, thorough expense reporting may also make a difference next tax season. Talk to your accountant about any additional documentation you should be tracking to file correctly for new or revised tax deductions or credits in the CARES Act or the Tax Cuts and Job Act.
Transitioning from manual to automated processes can take the hassle out of expense management. When it’s easy to meet project budgets and compliance requirements, you’ll feel more prepared to take on whatever the next year sends your way.