3 Key Insights Finance Managers Need to Know for 2022

Key Insights Finance Managers Need to Know for 2022

By this time of year, finance managers should have a firm idea of what the company’s goals are for the rest of 2022. But it’s impossible to plan for the future without assessing the past and present.

So, we’ve put together a list of key insights that all finance managers should know for for this year.

It’s time to check your blind spots and make sure you have the data and insights you need to make 2022 an on-budget success.

3 Key Insights Finance Managers Need to Know for 2022

1. Where manual processes are creating bottlenecks

A bottleneck can be anything causing work to slow down or grind to a halt — and often they are the result of sluggish manual processes. In addition to disrupting workflows, Forbes notes that bottlenecks can cost businesses time, money, and employee morale.

So, it’s important to regularly review where bottlenecks are happening and revise the practices causing them. For instance, if employee reimbursements are consistently slowed down because they require approval from one specific person, it could be time to rejig that process. If approval hinges on one person, what happens when that person is away from their desk or, god forbid, takes a vacation? 

Automation is a business’s best friend here. Using software and corporate credit cards that can be customized with pre-approved budgets and locked to specific vendors to ensure that employees are able to purchase necessary equipment and services to do their jobs — without overspending or waiting weeks for approval and reimbursement.

Automating tedious, repetitive manual tasks like recording transactions and matching receipts also speeds up the process, freeing up your finance department to focus on bigger picture items like strategy and insights. 

2. Where you need to protect against fraud 

According to ACFE’s 2020 Report to the Nations, 5% of a business’s revenue is lost to fraud each year. The report also states that typical fraud cases go undetected for 14 months and cost the business $8,400 a month during that time. So, it’s crucial to have safeguards in place to protect your business.

Some of the most common types of business fraud include:

  • Misappropriation of assets
  • Invoice fraud
  • Bribery and corruption

Misappropriation of assets is the most common type of business fraud, and involves any member of a company stealing from an organization. This can include theft of cash, inventory, services, intellectual property, and data, as well as submitting doctored receipts, false expense reports, and reimbursement claims for purchases that are not business related.

Asset misappropriation can be avoided by ensuring that all corporate accounts are secure, purchases are tracked and verified in real-time, and a clear corporate spending policy is in place and adhered to.

Invoice fraud can take different forms, including preparing invoices for products and services that were never provided, paying out checks to shell companies, and over-inflating the price of contracts awarded to friends and family.

To avoid invoice fraud, always cross check that goods and services paid for have been provided. Additionally, automated software can be used to make sure that all spending correlates with the receipts submitted. 

Bribery and corruption can look like using money, gifts, or contracts to influence regulators, customers, lawmakers, employers, or employees, as well as getting kickbacks or favouring particular vendors for personal reasons. 

To avoid getting sucked into shady business dealings, companies should have a designated manager or third party to oversee compliance. One of the easiest solutions they can implement is to issue a clear gift policy for employees and clients so no one is giving or accepting anything that could be classified as a bribe. As always, any legitimate business expenses like lunch meetings or employee perks should be tracked and reported accordingly.

3. Where you can cut unnecessary spending

It’s hard to cut costs if you don’t know where all your spending is happening. So, finance managers need to have a full understanding of a company’s spending habits and be able to step in when irresponsible or unnecessary expenses occur.

Vendor subscriptions 💻

One place a business can probably save a few bucks is vendor subscriptions. Sure, your employees need up-to-date software to do their jobs well, but not everybody needs the exact same tech stack. Dig into subscriptions and see if there are unused licenses or accounts being paid for, and check if there is a less expensive subscription plan that’s more in line with the number of users at your company.

You can also ask yourself (and your employees) if there are multiple vendors being paid to perform redundant tasks. Maybe you have two or three (or more) subscriptions to SaaS vendors that all perform similar functions. Consolidate where possible, or check with vendors on their product roadmaps to see if the features you need from them will be available soon. If not, it might be time to cut out a few subscriptions.

Finally, make sure that your vendor payments are clearly broken down and consistent. Know what you’re paying for, and if there are services you aren’t using, try to negotiate the cost of subscription or switch to a different tier. 

Payment platforms like Mesh can even notify you if a recurring payment is off from the usual amount to ensure that you are never overpaying or being double-charged. It even alerts you to duplicate subscriptions with the same vendor. You can also lock a virtual card to a single vendor to ensure that nothing else is being purchased with that account and to easily track payments.

Travel and entertainment expenses 🛩🍸

Business trips are a common company expense, but they can also rack up extra costs pretty quickly. Ensure that there is a firm policy in place so that employees know what their spending limits are and stay within them. This will save a lot of headaches later on.

Of course, you’ll also want to do some research before approving travel plans. Certain cities might have cheaper, more frequent flights, but much higher hotel and restaurant costs. Be sure to communicate expectations to employees and adjust budgets accordingly.

Automation will once again make things easy, allowing managers to pre-approve certain spending and automatically matching receipts to transactions on company accounts.

Miscellaneous spend 💸

Miscellaneous spend: the “junk drawer” of corporate finances. This basically includes all those costs that didn’t quite fit anywhere else, including supplies, home office equipment for employees, legal fees, utilities, advertising, insurance, and so on.

It’s also the account that is probably monitored the least closely. And because so many things get relegated to miscellaneous spend, this is where a lot of purchases can slip through the cracks. 

As with any other expenses, you’ll want to be sure to match receipts with transactions and verify that all purchases are actually business related. You’ll also be surprised at how many unnecessary recurring expenses can probably be greatly reduced or eliminated altogether.

Have we mentioned that automation is