An Expense Management System Avoids Drama in a Crisis

by David Rockliff, Managing Director, RBS Commercial Cards,
Global Transaction Services (GTS)

David Rockliff, Managing Director, RBS Global Commercial Cards, explains how companies can control cash and the burden on employees when emergencies cause unexpected expenses.

Crises can be costly in many ways, some of which are less obvious than others.

Crises can be costly in many ways, some of which are less obvious than others. Surprise disruptions such as the volcanic ash eruption, heavy snow or this year’s tsunami and nuclear disaster in Japan can leave employees stranded and companies having to deal with unexpected demands for cash.  Such crises are certainly serious for everyone involved, so you need to be sure that affected employees are fully aware of expense policies in place to support them, giving them one less thing to worry about. A suitable expense management system can prevent employees from being out of pocket and enable companies to keep control of their cash at the same time.

Unfortunately, companies commonly discover the flaws in their expense control systems at just the moment when the system is most needed – in an emergency. This is especially so when the crisis is prolonged: the Icelandic volcano Eyjaafjallajökull continues to cause problems and in 2010 wreaked havoc with European flights intermittently for a month. Employees stuck abroad when travel is disrupted are forced to dig deep into their pockets to pay for accommodation, sustenance and different travel arrangements, which they may not be able to afford.

Companies then find that their cash position is less visible and can end up paying much more in expenses than they budgeted for. The result can be an operational nightmare in which employees suffer and companies make policy on the hoof, perhaps arranging last-minute wire transfers or making temporary arrangements to cover considerable costs.

This can be avoided, however. I’d recommend four basic elements to a strategy to help minimise the impact of such situations on expenses control.

First, institute a clear emergency expenses management system and – vitally – make sure it is communicated to employees.

Linking up with the provider of a proven expense management system should be an excellent investment. A system such as the RBS onecard combines travel, entertainment and everyday employee spending. In general, it helps to manage day-to-day business spending by providing a clear picture of where employees are spending money, for example whether it is with approved suppliers and in the right places, and reduces the risks associated with carrying cash. For their part, employees enjoy greater flexibility in doing their jobs while you maintain visibility. In a crisis, widely accepted globally, it can offer your employees much needed support while you retain control.

An important part of any expense management system is adaptability. You need to be able to adjust to what can be a confusing and rapidly changing situation. One instance is to ensure that card credit limits can be quickly and easily adjusted to allow for additional and unexpected expenses. You can do this, for example, by changing card limits online or diverting specified transactions from an individual cardholder’s account to a central account. The advantages are that individuals do not exhaust their credit and the company maintains a firm grip on how much is spent, and when, where and by whom it is spent. The outcome is to simplify the process and improve working capital management. [[[PAGE]]]

But if employees do not know about or understand the system it will not  work. Regular and comprehensible communication with employees to keep them up to date with the system is essential. Similarly, the process will function best if you communicate with individual employees  who are caught up in an emergency and keep them abreast of the expense management measures being undertaken to help them.

Second, spell out what the company will pay for.

The last thing you want in a crisis is uncertainty about who foots the bill. Employees deserve to know what additional or unplanned spending is acceptable in an emergency and companies need to know so that they can implement crisis procedures. An expense management system works most effectively when it is clear.

Third, speak to your card provider as soon as possible.  

Being proactive is key. The sooner a crisis expense management system can swing into action the better. If your system comes from an outside provider, contact them as soon as you can, for example to raise credit limits on cards, and keep them updated. Accurate information can be scarce and confusing in a crisis. Sharing the information you have with system providers as well as employees can help to maintain confidence and clarify what is going on.

Fourth, re-evaluate your system after a crisis.  

Things rarely go to plan in a crisis and there are always lessons to be learned. Re-evaluating how well the expense management system functioned and incorporating that experience into the system should improve performance next time there is an emergency.