Risk & Economy » Over £100bn of UK corporate spending is unreconciled

Up to £106.2 billion of company spending is left unreconciled by a fifth of UK business each year, according to a survey of thousands of small to medium sized enterprises (SMEs).

Financial detective work and cumbersome spend management processes contribute to cash flow crisis, revealed in a survey of 4,000 SMEs by pollsters YouGov for London-based Fintech provider Soldo.

The survey found 18% of UK SMEs accept  10% of unreconciled monthly spending due to lack of efficient processes in place.

It also showed that more than a third of financial decision makers do unnecessary financial detective work at the end of each month to identify company spend

Nearly half of all UK SMEs (45%) said the level of control over company spending is one of the biggest challenges to the business in 2018

Half of UK small business financial decision makers cite a need for improved internal cash flow processes to increase trust and transparency for employee business expenditure, says Soldo- which seeks to solve the challenge of how companies control their spending.

The results of the survey, analysed in the Soldo Spend Management Whitepaper, also show heavy administrative burdens, multiple spending channels creating complex accounting methods and a lack of spending autonomy for employees are contributing to significantly reduced productivity and ultimately costing businesses when it comes to tax returns and reconciliation of spend.

Opportunity missed

The report also highlighted an opportunity for UK SMEs to utilise new technology and shred the hours that are currently reserved for managing spend, while simultaneously increasing control over company money.

The survey data reveals wasted administration hours, pointing to a loss in growth potential and highlights overall procedural inefficiencies which, if addressed correctly, could instantly increase productivity.

Key findings from Soldo’s survey data and subsequent whitepaper show 20% of UK SMEs spend  2 to 4 hours on each purchase decision — time that could be allocated to other billable tasks if more streamlined processes were in place.

30% of UK SMEs are willing to leave a percentage of company money spent as unreconciled at the end of each month due to the difficulties in tracking and categorising spending

As a company scales up, its spending process becomes more complex: over 12% of companies with 50-200 employees reported spending more than 8 hours on one purchase decisions.

Half of all finance decision makers surveyed believe that entrusting employees with prepaid company spending cards would increase efficiency, trust and transparency in the overall internal company financial process.

Empowering employees

In surveying both employees and financial decision makers, a major pain point revealed in the cash flow process is how employees make purchases on behalf of the company.

The survey shows 49% of UK SMEs expect employees to pay for company expenditures from their own pocket then claim that expense back at a later date. Yet, nearly a quarter (22%) of business owners say they spend between two and four hours of unnecessary ‘detective’ work at the end of each month to reconcile this spending.

From overspending and missing receipts to remnants of travel budgets not being returned and the writing off of unfathomable purchases, the report highlights a significant opportunity for businesses to empower employees with the autonomy to undertake spending independently, while cutting down on the widely reported grievances of employees who are not reimbursed in a timely manner.

An interesting finding considering that employees across the board said that paying for company expenses out of their own pocket and then claiming it back is a major bugbear. One in 10 UK employees said they had to wait more than one week to be reimbursed for expenditures made on behalf of the company. Only 9% of UK SMEs give employees cash ahead of an expenditure

Carlo Gualandri, Founder & CEO of Soldo, says: “From these survey findings, it is clear that businesses across the UK are in need of a better spend management solution. The time spent on deciding, entrusting and reconciling company expenditure directly leads to lost revenues and reduced productivity.

“Inefficient spend management processes are a huge burden for business owners and employees alike, especially as the business begins to scale. By employing the right technology to streamline and fully control company cash flow, UK SMEs stand to increase efficiency, save time and money, and increase positive transparency amongst staff,” he adds.