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What Type of Business Traveler Are You?

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By: The Center Team

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Travel is typically one of the biggest drivers of a company’s discretionary spend, especially for companies with sizable sales teams. Yet it’s also one of the most difficult to corral, as control continues to shift away from centralized travel departments, toward employees arranging their own flights, lodging, and transportation—often right from their phones.

We wanted to get a handle on employee attitudes toward business travel in the age of Uber and Airbnb, so we surveyed more than 300 employees to find out more. We identified five distinct types of business travelers.

1. The Cost-Conscious Traveler (28%)

This type of traveler is motivated to help the company save money. Cost conscious travelers, who represented just under 30% of our survey takers, seek out cheap flights and inexpensive lodging, and rarely use full meal per diems. Many businesses ask employees to treat company money as their own, and this group takes that to heart.

Of note:

  • cost conscious travelerCost-conscious travelers were more likely not to know what the budget is (22% vs. 16% overall). They’re doing their best to do the right thing despite a lack of clear information.
  • This well-intentioned group was most likely not to complain about doing expense reports—4 out of 5 agree that they’re necessary to a well-functioning business.

2. The Policy Follower (37%)

The Policy Follower—the most common type of business traveler in our survey—sticks to company travel guidelines. This type of traveler flies on preferred airlines, stays in approved corporate hotels, and carefully observes meal per diems.

Of note:

  • policy followerPolicy followers are more likely to use online software like Concur (27% vs. 21% overall), and more likely to know what the budget is and keep spending within it (70% vs. 61% overall). This suggests that online tools, clear policies, and budget visibility play a significant role in keeping spending in check.

3. The All Business, All the Time Traveler (15%)

This type of traveler tries to be reasonable with costs, but does what it takes to get the job done, even if that means booking more expensive flights or last-minute hotels. About 1 in 7 of the business travelers we surveyed described themselves this way.

Of note:

  • all biz travelerThis type of traveler was more likely to file expense reports manually (64% vs. 52% overall) and to say that filing expense reports is time consuming (39% vs. 27% overall). Comparing to the Policy Follower suggests that manual processes, combined with a “spend now, get approval later” model, make it more challenging to keep discretionary spend in check.

  • This group was somewhat more likely to charge things like rideshare services, music subscriptions, meal delivery, and Amazon purchases under the radar (19% vs. 13% overall).

4. The Work the Perks Traveler (13%)

Though certainly the majority of business travelers we talked to act with the company’s best interest in mind, just under 15% of the respondents acknowledged that they want to eat and drink well, stay in nice hotels, take advantage of upgrades when available, and chose car services over public transit.

Of note:

  • work the perksThis group was three times more likely to agree that expense reports are a waste of time, or that they don’t see the point (19% vs. 6% overall).

  • This type of traveler was also more likely not to know what the budget is and just spend what they need (20% vs. 16% overall).

5. The Budget Renegade (6%)

And a handful of travelers—about 6%—described themselves as Budget Renegades. These travelers may be unpopular with the finance team because they rarely stick to company policy, but ultimately feel they are doing the right thing because they deliver against their sales targets and goals.

Of note:

  • renegade traveler

    Most of these travelers (87%) are not required to submit expense reports. Of those that do, they’re more likely to complain that expense reports are time-consuming (40% vs. 27% overall).

  • Budget Renegades are nearly twice as likely not to know what the budget is; they just spend what they need to get the job done (31% vs. 16% overall).

lineTO THE POINT

Across all five groups, we see employees generally trying to do the right thing when it comes to business travel.

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When there’s a lack of clarity and visibility into policies and budgets, a subset may Work the Perks, but many more do their best to make the most Cost-Conscious decisions. And companies who make clear policies and centralized tools a priority are rewarded with responsible Policy Followers.

Business needs change more frequently than budgets do, however, so there are times when employees need to be empowered to make smart, strategic spending decisions. All Business, All the Time spenders and even Budget Renegades believe their spending choices support larger business goals—which they certainly can, as long as their decisions yield results and don’t result in unexpected surprises.

The key is for businesses to have clear budgets and policies in place, for employees at all levels to have visibility into those budgets and policies, for budgets to be adjusted regularly along with changing business needs, and for teams to have frequent communication about how spending decisions do (or don’t) support the larger strategy.

 

What kind of business traveler are you? Drop us line or or tweet us at @TheCenterCard!

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Your Employees Want to Do the Right Thing. Here’s How To Help Them.

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By: The Center Team

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We recently surveyed 300 employees at a range of small, medium-sized, and large companies for a deeper understanding of their attitudes toward business travel, expense reports, and corporate cards. The good news? As we expected, people generally want to do the right thing.

Tools and Processes

A full 4 in 5 of the respondents still use manual processes such as collecting receipts and inputting expenses into spreadsheets to complete their expense reports (52%), or a combination of manual processes and online tools (28%). Only about 20% submit reports online.

Achieve more: Embracing streamlined tools and processes saves everyone time, shortens cycles, and helps your team stay focused on more strategic priorities than taping receipts to sheets of paper.

Expense Reports: Friend or Foe?

Though more than a quarter (27%) of respondents felt that submitting expense reports was time-consuming (likely due to the manual processes mentioned above), and 23% wished there was a more effective way to get them done, 75% of employees say they understand why expense reports are needed. Only a handful (6%) feel they are a waste of time.

Achieve more: Though most employees understand why expense reports are important, you can level up by explaining how those expenses connect to larger business priorities. Engaging your team in the big picture gets everyone working together more effectively.

A Little Knowledge

Six out of 10 of employees are aware of the budget for travel & entertainment and keep their spending within it most of the time. An additional 18% do their best to stay within the budget but occasionally go over. And well over half (61%) would be more inclined to stay on budget if spend were monitored and tracked in real time.

On the other side of the spectrum, 16% don’t know what the budget is—and only 5% know what the budget is but ignore it. In general, employees at smaller companies were less likely to know what their budget is (29% compared to 16% overall).

Achieve more: When employees know what the budget is, they’re more inclined to respect it. Even if you’re not big enough for sophisticated tools and processes, timely communication about how much employees have available to spend will go a long way toward hitting key numbers.

Business Travel

An impressive 4 in 5 business travelers consistently make cost-conscious decisions, adhere to company policy, or generally try to be reasonable with their expenses. Only 13% aim to “work the perks,” and just a handful (6%) ignore the budget in favor of meeting their sales and business targets.

Achieve more: When you have clear policies in place, employees are inclined to follow them—though it’s also important to empower employees to seize opportunities on behalf of the business from time to time. Consistent communication and a shared understanding of your strategic priorities are key.
 

The Facts on Fraud

If you’re concerned about fraud, the good news is that almost 9 in 10 (87%) of the employees we surveyed never charge “work-related” expenses to their corporate cards, and 74% said there is “no way” they could get away with personal expenses on a corporate card. Interestingly, small company employees were much more likely to say personal expenses could go under the radar (43% said it would be easy or were somewhat confident they could get away with it, compared to 26% overall).

As for which questionable expenses do occasionally go under the radar, the top offenders were Amazon purchases (7%), rideshare and food delivery apps (4.5%), and music streaming services (1%).

Achieve more: Since our results do show that employees generally do want to do the right thing, establishing and communicating clear policies about these kinds of “gray area” expenses is worthwhile, even when you’re just starting out. Even better? Involving your team in setting those policies.

In the Center Manifesto, we say, “We believe that the solution lies not in statements and spreadsheets, but in tools and trust. And that when people have the right information, in the right environment, they will make the right choices.”

lineTO THE POINT

Our research backs this up, which is great news for companies of all sizes.

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What’s your take on making it easier for employees to do the right thing? Drop us line or or tweet us at @TheCenterCard!

 

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What Type of Business Traveler Are You?

In the Dark About Discretionary Spend?

 

Are Spreadsheets Something to Celebrate?

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By: The Center Team

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There’s a holiday for just about everything, it seems, and today happens to be National Spreadsheet Day.

Certainly there are those who might view this day as cause for celebration, a chance to geek out on pivot tables, vlookup, and the DOLLARFR function.

But for most of us, spreadsheets are so ubiquitous in planning, budgeting, tracking, reporting, and organizing processes that every day feels like National Spreadsheet Day.

In fact, our survey of business leaders revealed that more than half of companies require their employees to input expenses into spreadsheets, and spreadsheets remain the most popular way for companies of all sizes to manage their budgets.

We’ve talked to teams who “hack” their forecasting process and estimate accruals by circulating spreadsheets to capture expected travel expenses and invoices as they close their books each month. And we've seen Excel used for everything from managing an RSVP list for a company party to tracking client relationships.

Here are some of the issues we’ve seen with spreadsheets, and a few ideas for addressing them.

  1. No way of communicating updates. The minute you send a spreadsheet as an attachment, it’s out of date.

    The fix: Share live documents instead of circulating attachments, and then hoping everyone has the right version.

  1. Disconnected from other tools. Today’s finance teams are using a wide array of tools and technology, but they don’t always talk to each other—and it seems that most don’t talk to Excel. One CFO we spoke with generates financials in Quickbooks, for example, but doesn’t update his Excel model unless there’s a board meeting coming up.

    The fix: Simply increasing the cadence of your cross-functional budget check-ins can help you start to transition to a more automated and informed process.

  1. Various levels of sophistication. Finance pros can push the boundaries of what spreadsheets can do, but there’s a limit. And our own VP of Finance and Accounting estimates that more than 80% of spreadsheets include errors.


    The fix: Just because you can do something in a spreadsheet doesn’t mean you should. A simpler spreadsheet, free of errors, is better than a "fully loaded" one that might be fully loaded with mistakes.
     

Everyone is comfortable using Excel, but it’s flawed as a budgeting tool. It’s estimated that over 80% of spreadsheets have errors, and there are serious problems with version control and managing access to the latest model. For this reason, Excel spreadsheets quickly become static and dated. 

           Jeff Drummond, VP of Finance and Accounting

 
  1. Various levels of understanding. Remember that people absorb information in different ways, and not everybody speaks spreadsheet.

    The fix: Look for creative ways to present your data visually and pull out the real story behind it in relatable terms.

  1. Can shortchange true collaboration. It’s tempting sometimes to just communicate via spreadsheet, but face-to-face discussion can go a long way toward shared understanding and effective teamwork.

    The fix: Carve out time for active collaboration and discussion when you need to get everybody on the same page (or tab) about strategy and priorities.  
 

Spreadsheets: a necessary evil, or just evil? What are your tips for making them work at work? Let us know!

lineTO THE POINT:

National “holiday” or no,
as we say The Center Manifesto,
we believe the solution lies not in statements and spreadsheets,
but in tools and trust.

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What To Do When Your Spending Outpaces Your Growth

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By: The Center Team

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A high-flying start-up drops $4 million on its holiday party. Its 5,000 employees have free run of the lavish theater where the Grammys are awarded, surrounding bars and restaurants included. Drake is the headliner, and Diplo performs an exclusive set atop a glittering 100-foot DJ tower.

This is not an episode of Silicon Valley—it was an actual party thrown by Snap earlier this year. You might deduce that Snap was rolling in cash, but in fact the company had reported a loss of $350 million the previous quarter.

Snap’s CEO Evan Spiegel reportedly footed the bill for the bash himself, but the disconnect is still jarring. What a company spends its money on is a clear reflection of its strategy and its values, and a signal to its customers, employees, and investors.

There’s no question that primo perks can help startups land great talent, bring teams together, and make employees feel valued. And of course, most companies aren’t spending millions on  over-the-top parties. But when you add up how much you are spending, on everything from snacks and birthday cakes to hoodies and events, you might be surprised. Here’s how your team can pull together at every level to ensure your perks work with your higher-level goals, not against them.

Executive Team: Set the Tone

When your company is in build mode, it’s easy to adopt a “more is more” mentality as you establish the culture and pursue key hires (particularly when stories like the Snap bash are plentiful). The executive team plays a critical role in shaping the strategy and setting the tone.

It’s important to know what similar companies offer as perks to ensure you’re being competitive, but that doesn’t mean you have to match what others offer exactly, especially if it starts to feel like an arms race.

Prioritize perks that emphasize what’s unique about your company, and think outside the box. REI offers its employees two paid days—YayDays—each year to get out and enjoy the great outdoors. Seattle-area digital marketing firm Wheelhouse DMG plays up its scenic setting overlooking Salmon Bay with a 25-foot office boat that can be used for meetings. Selecting a few well-chosen perks that connect strongly to your company’s unique qualities can help you stand out to job candidates and create a stronger sense of community internally.

Questions to consider:
  • What perks would be a powerful extension of our vision and our values?

  • How can we use perks to stand out instead of just trying to match what other companies are doing?

  • What kinds of perks feel right given where we are with our funding, size, and performance?

  • Are we sending the right message to our team, our customers, and our investors?

Communication inspiration:
  • As you know, our mission is to make international travel accessible to all, so we’ll be offering every employee a yearly $2,000 travel stipend to help fund a dream trip.

  • One of our values is originality, so each year we have a companywide contest to plan the most unique holiday party for a set budget. We’ve done everything from indoor skydiving to square dancing!

Finance: Clarify the Costs

To the finance team, perks are some of the most visible expressions of fiscal culture. They are also opportunities to strengthen that culture, since they’re often easier to talk about across departments than measures like EBITDA  or Unlevered Free Cash Flow.

The most important role the finance team can play is to truly understand costs and communicate them in a way that increases understanding and drives productive conversation.

Questions to consider:
  • How much are we spending on perks on a per-employee basis, by department and across the whole company?

  • What tools and processes do we need to make our spending on perks more visible?

  • How is our spending on perks per employee tracking to our growth and our financial performance?

  • What are some creative ways we can communicate the costs so it’s clear and memorable?

Communication inspiration:
  • Did you realize that last year we spent almost $1,000 per employee on the anniversary party? You know, if we had brought that down by just 25%, we could have funded 10 new hires for a year or upgraded our entire server infrastructure!

  • Did you know we’re spending $900 a month…..just on bananas?!

Budget and People Managers: Weigh In On What and Why

At the people level, perks are powerful for building team morale and rewarding hard work. And when you’re hiring, they can be enticements or even table stakes when the job market is hot.  

Some perks are created with intention and managed well, while others take hold organically and spread like aggressive weeds. Unofficial traditions like weekly office lunches, or bringing dinner when a key deadline is looming can quickly become the norm—and when you’re adding multiple new hires monthly or even weekly, those costs start to snowball.

It’s important for people managers to stay tuned in to what matters the most to team members, and adjust course as needed.

Questions to consider:
  • Which perks are most valued by team members? What’s most important to your people, individually and as a group—off-site activities, individual rewards, time off, other?

  • Why are we offering a certain perk? Is it for a certain time period, or is it ongoing?  

  • How can we communicate the reasons for perks and the guidelines around them as clearly as possible?

  • How can we involve team members in coming up with ideas for changing things up?

Communication inspiration:
  • I know you’ve all been working extra hard for this product launch. To help you stay fueled during the crunch, we’ll be bringing in lunch every day for the next two weeks. Let me know if you have any special requests, and enjoy!

  • You’ve probably noticed that we’ve added more than a dozen new team members in the last couple of weeks. We’re having a special happy hour this Friday to give you a chance to get to know the new folks.

All Leaders: Revisit Regularly and Communicate Clearly

When you’re caught up in a heady phase of growth, it’s easy to just keep doing what you’ve been doing—our research shows that only 14 percent of businesses adjust their budgets regularly throughout the fiscal year. But companies can outgrow perks just as they outgrow small offices and inefficient processes. Even when you’re operating at a scale like Amazon, there’s a point at which certain events and traditions can’t keep up with the pace of growth.

We often see companies who set their budgets by taking what they spent in a particular year and simply adding 10% to it, but when you have proliferating perks in the mix, costs can spiral out of control quickly.

Revisiting spend regularly can help avoid a crisis where you have to overcorrect and slash perks, which can be disconcerting to employees and undermine the very culture you’ve built. And whenever it’s time to make changes, the way they are communicated makes a huge difference.

Questions to consider:
  • Have our strategic priorities changed? How should those be reflected in our perks?

  • Which perks have we outgrown in terms of time, money, or space?

  • How many employees are we planning to add in the next quarter or year? Which perks are incurring per-employee costs, and how much are we spending on those?

  • Is our fiscal culture where we want it to be? Are we sending the right message to our teams?

Communication inspiration:
  • We hope you’re as excited about our new office location as we are! Now that we’re in a more central location, we’ve decided to keep our team lunch to once a week. We encourage you to explore the neighborhood, get some fresh air, and look forward to Fridays, when we’ll gather in the Cascade Room.

  • We know many of you have enjoyed the on-site massages, but you may have also noticed that we’re in a space crunch! We’ll be reclaiming the small conference room effective next month, but we’d love your ideas for reducing stress - talk to Janet!

At every stage of growth, it’s important to think strategically about what perks make the most sense for your culture and your company size, to be clear about how much they cost, and to revisit as your situation changes.

lineTO THE POINT

Involving employees in the conversation and communicating clearly will help you create a strong fiscal culture based on success, not excess.

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Related Articles:

The Problem with Set It and Forget It

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5 Resolutions To Start the New Business Year Off Right

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By: The Center Team

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We’ve found that many businesses simply accept the budget process as being cumbersome and complex, but it doesn’t have to be that way. As you turn the page on the calendar year, it’s an ideal time to introduce some new perspectives and methods to get everyone on the same page and transform your budget into a dynamic, strategic tool. Here are five resolutions to start fresh.

Resolution 1: Make the Shift to Rolling Budgets

Business needs change rapidly, but most budgets don’t. A recent survey we did with business owners and finance managers showed that more than half set budgets just once a year. Less than 15% of the companies we talked to evaluate their budget periodically throughout the year and adjust as necessary, and businesses with more than 500 employees were even less likely to operate this way.

Achieve More

  • Moving away from static spreadsheets to more automated tools certainly helps, but there’s no need to wait for a technology-driven solution. Simply increasing the cadence of cross-functional budget check-ins and changes will help you make this important and impactful shift.

  • If you’ve been thinking about your budget annually, put quarterly or monthly check-ins on the calendar right now. And if you’re already doing that, try increasing the frequency to weekly or even daily to help your organization transition to a rolling, “live” budget mindset.

Resolution 2: Break Down the Silos

Our survey results showed that of the companies who never go over their budget, about three-quarters (73%) report that they have ongoing communication and budget updates across departments. We found this strong cross-departmental communication to be the top driver for budgeting success. Too often, budgeting and reporting is done department by department, without a shared understanding of how each department’s budget and priorities connect to the overall business strategy.

Achieve More

  • When you put those regular budget check-ins on the calendar, be sure to make them cross-team events. Set the “we’re in this together” tone by giving updates on your business priorities (highlighting any changes each time you meet), and then allowing time for discussion of how each department’s line items support that strategy.

  • By devoting sufficient time to the big picture, with frequent reminders that everyone is working together toward the same goals, you can help your teams be more open to trade-offs and discussion about the best way to invest company funds. You’ll also increase visibility into each department’s priorities and challenges.

“Ongoing communication and iteration with budget owners and spenders helps teams stay aligned with overall strategy and empowers everyone involved.” Jeff Drummond, VP of Finance and Accounting, Center

Resolution 3: Demystify the Data

Most budgets are written in financial terms that are well understood by FP&A teams, but aren’t always easily digestible by other departments. This can perpetuate the mindset that finance “owns” the budget and can make team members feel less invested in it.

Achieve More

  • Remember that people absorb information in different ways, so look for ways to get beyond spreadsheets and charts. Look for creative ways to present data visually and pull out the story behind it in real, relatable terms.

  • Challenge team members to title each chart with a headline summarizing the story behind the data. Make it a practice to explain commonly used acronyms to build shared understanding, and allow time for questions and discussions. Building a shared understanding will help your whole team feel more invested in the process—and more accountable for the outcome.  

Resolution 4: Empower Your Finance Team as a Strategic Business Partner

Your finance team can be an essential resource for helping the entire organization use the budget as a strategic business tool. The trick is to set the expectation that finance doesn’t “own” the budget—everybody owns the budget.

Achieve More

  • Set the right tone by creating regular opportunities for cross-department collaboration, and empowering your finance team to partner with each department to develop a budget that supports the overall business strategy.

  • Finance can drive the progress and be the expert on the overall strategy, but it’s essential that each department feels invested in the process as well as the outcome. And the more the finance team knows about what each department is trying to achieve, the more effective the partnership will be. This takes active collaboration and discussion beyond just circulating spreadsheets.

“We believe that the budget should more than a dreaded annual event: it should be an ongoing opportunity to reflect on what’s happened and plan for what comes next.” Heather Singh, Chief Marketing Officer, Center

Resolution 5: Get a Handle on Discretionary Spend

Office supplies. Subscriptions. Trade shows. Travel. These types of one-off expenses may not be the largest line items in your budget, but together they can have a surprisingly big impact on your bottom line. Discretionary spend is the easiest area for companies to control, yet 25% of the business owners and managers we polled had “no idea” how much of their budget goes toward it.

Achieve More

  • If you don’t have a baseline figure for discretionary spend, now is an ideal time to establish one. Simply add up everything from 2017 that’s not a fixed cost and calculate the percentage of your total expenses. If you’re above 20%, this is likely a strategic area to focus on for your bottom line.

  • When you review your discretionary spend from the previous year, you might identify some areas where more formalized policies would make a difference. Be sure to involve your team in the discussion, and communicate any new policies clearly. The more people understand the why behind your policies, the more successful they will be.

To the point: It’s easy to simply accept the budget process as cumbersome and complex, but some simple organizational and practical changes can help you transform it into a strategic tool that helps your team achieve more.

 

Related articles:

Getting a Handle on Discretionary Spend

The Center Manifesto

Budgeting Methods, Attitudes, and Success Factors: New Infographic

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By: The Center Team

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Managing budget and spend is time-consuming and complicated. We recently surveyed nearly 250 US-based business owners, CFOs, and managers to build a deeper understanding of how companies of all sizes manage this critical business function.

Not surprisingly, most respondents’ companies set budgets on an annual basis (55%), despite best practices that recommend rolling budgets. Just 14% of respondents said their companies adjust budgets periodically through the year.

We also found that nearly half of companies (43%) continue to use manual processes and antiquated tools like spreadsheets, and that a quarter (25%) had “no idea” how much of their budget went to discretionary spend (travel and entertainment, office supplies, software subscriptions, and other controllable expenses).

Our conclusion is that new tools are needed to make it easier to answer the question “How are you tracking to budget?” It’s more important than ever to connect budget to spend so companies can make strategic decisions about where to invest resources.

Here is a visual summary of what we learned.

Infographic of results from Center Survey August 2017

 

Full-Size Infographic

Press Release: New Center Study Reveals Companies are Eager for Fresh Approach to Budgets

Getting a Handle on Discretionary Spend

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By: The Center Team

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Do you know how much of your company’s budget goes toward discretionary spend? If not, you’re in good company—25% of the business owners and managers we polled recently had “no idea” how much of their budget goes toward discretionary spend.

What is it, exactly?

One factor may be confusion about what discretionary spend is, because it’s not a term you’re likely to encounter on a corporate card statement or in a budget spreadsheet. Discretionary spend falls outside of fixed costs like payroll and rent. It typically happens at the employee level, not at the company level. It includes things like travel, meals, entertainment, subscriptions, and office supplies.

This kind of spending is discretionary because it involves some amount of choice. Is it better to travel to your remote office for an all hands, or call in? Is it worth calling on that prospect one more time this quarter, or not? Should we splurge on a larger booth at the next trade show? Do we want to increase online advertising?

Why does it matter?

These kinds of expenses often don’t seem like a big deal when you consider them one by one—especially when compared to big-ticket items like salaries or office space. But when you add them all up, they have a surprisingly big impact on your bottom line—and the bigger your sales team, the bigger the impact. All told, discretionary spend can make up 25% or more of your company’s spending, which is —a pretty big number. It’s also the easiest area for companies to exert short-term controls to manage cash flow. If you find yourself struggling to make your budget numbers, discretionary spend is a strategic place to focus.

Challenges and Trends

One tough thing about discretionary spend is that it’s hard to see. It’s a collection of small line items across multiple departments and cost centers, which makes it difficult to track and manage.

Another trend to be aware of is that discretionary spend is on the rise as employees make more and more purchases from their own mobile devices and accounts—an Uber here, an AdWords campaign or an Amazon Prime order there. And as a company grows, it gets harder to track—in our recent research, companies between 100 and 500 employees were most likely to say they had no idea how much discretionary spend they had.

Strategies and Solutions

How can you get a handle on discretionary spend? Here are a few ideas.

  1. Track: A first step is to figure out how much of your budget actually is going to discretionary spend. Add up anything in your budget that’s not a fixed cost. You might need to move line items around or total them up in a different way than you’re used to.  You can also take a look at your past few quarters to see if your discretionary spend is increasing or decreasing, and add it to your key performance indicators (KPIs).

  2. Communicate: Have an open conversation with your team about discretionary spend—what it is, and how it affects the business. Helping employees see the link between the everyday choices they make and the bottom line paves the way to getting your entire team to think more strategically. And if you find that your discretionary spending is on the high side, you can involve your team members in creative solutions to bring it down.

  3. Formalize or fine-tune: Based on your findings, you might need to establish or make changes to your policies and processes. In our companion survey, two-thirds of employees look for ways to save the company money and follow spending policies conscientiously, so giving them clear guidelines and explaining the “why” behind them help build a sense of shared mission.

  4. Analyze: Once you have a handle on your discretionary spend baseline, you can start assessing how much of it is productive by helping you close deals, understand your customer more deeply, or deliver faster. You’ll also identify some unproductive spend that’s not getting you closer to those bigger goals. This could take the form of recurring expenses or pricey color printouts that get dumped in the recycle bin at the end of a trade show. Elevating the conversation around productive vs. unproductive spend helps your whole team adopt a more strategic mindset.

  5. Empower: After all, you don’t want to create an environment where all spending is a bad thing. There are absolutely cases when employees should exercise their discretion to seize opportunities or accelerate growth. Talk about real scenarios and trade-offs as a team to ensure the business’s high-level priorities are clear and help everyone make smart, strategic spending decisions.

To the point: Understanding your company’s discretionary spend, analyzing how productive it is, and empowering your team to evaluate it against strategic priorities can have a big impact on your bottom line.  

Have a tip or insight about discretionary spend to share? Drop us a line at hello@centerid.com.

Related articles:

Leading the Shift to Strategic Budgeting

The Center Manifesto

5 Signs Your Company is Ready for a Corporate Card Program

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By: The Center Team

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When your company is just starting out, you can usually get by with a small business card or by having employees use their own cards for travel and purchases. But when your company reaches a certain stage of growth, there are clear advantages to setting up a corporate card program. Here are a few signs that it’s time.

1. It’s time for a faster and more predictable expense cycle.

Revenue is growing. Marketing is killing it on Google AdWords. Account execs are cutting deals across the country. It’s going to be a great quarter!

And then the expense reports come rolling in. Employees who held on to receipts for 5 months want to be reimbursed for expenses that no one knew were coming. $13,000 for online ads. $15,000 for flights. $8,000 for meals. $500 for a hot air balloon ride? The list goes on.

Establishing a corporate card program helps get your whole team on the same cycle of statements and reports, which helps prevent painful budget surprises.

Achieve more: With CenterCard, managers can quickly answer the question “How am I tracking to my travel and entertainment budget this month?”

2. It’s time to set clear parameters around spending.

When employees are spending money on behalf of the company, things can get a little messy. It’s easy to fall into a pattern of spend now, ask permission later. Tough conversations about what is OK and what is not take place after the fact—or they don’t happen at all. At best, you’re spending more than you need to be on discretionary expenses like subscriptions and office supplies. And at worst, you’re increasing the risk of fraud.

Rolling out a corporate card program is an ideal time to establish clear policies so everyone can be on the same page about the plan.

Achieve more: With CenterCard you can pre-approve spend before it happens—for every purchase, or for those that fall outside of agreed-upon parameters. For example, you could pre-approve $100 for office supplies each month, but require explicit approval for a laptop.  

3. It’s time to analyze your spending more closely.

Whether you’re building a company from scratch and analyzing return on every investment or growing your team and trying to allocate budgets efficiently, you need an effective way to track your discretionary spend—which can add up to a whopping 25% of your overall budget. When expenses come in piecemeal, on faded-out receipts taped to sheets of copy paper, this is difficult to do.  

Corporate card programs help by delivering your expenses in a clear, consistent format and organizing them by merchant category code. You can more easily identify opportunities to trim costs and to negotiate volume discounts with frequent suppliers.

Achieve more: CenterCard integrates with your financial expense software for even faster and more powerful analysis and reporting.

4. It’s time to empower your employees to spend.

A growing company needs to be nimble—not every opportunity can be anticipated a quarter ahead of time. Bureaucracy and personal credit card limits can’t slow down your team from acting on opportunities that will help you grow, whether it’s executing a quick ad buy, upgrading your trade show presence on the fly, or closing a big sale over a fancy dinner. Requiring your team members to use their own cards can limit their ability to act, or place extra pressure on their personal finances.

When you have a well-structured corporate card program in place, your employees are empowered to spend for the good of the company (and to make a good impression at that client dinner).

Achieve more: CenterCard displays the available budget right on each card, so employees always know how much they are empowered to spend in the moment.

5. You’ve experienced, or suspected, expense fraud.

We believe that employees generally want to do the right thing, but unfortunately there are some who don’t. We have heard about cases where employees falsified receipts or even manufactured fake ones to cover personal sushi dinners, golf outings, or sporting events—or where they purchased and expensed items, and later returned them for cash.

Corporate cards make it easy to ensure that the amount charged always matches the amount expensed, and if a purchase is returned, then the refund goes directly to the company.   

Achieve more: CenterCard includes standard industry fraud and security protections. What’s more, if a card is lost, it’s easy to turn it off to prevent other transactions.

To the Point

A thoughtfully designed corporate credit card program can help your growing company manage its discretionary spend predictably and flexibly, empowering your employees to spend with the right controls in place. It’s a powerful first step toward transforming your budget into a strategic tool.

 

Related articles:

Leading the Shift to Proactive Budgeting

The Center Manifesto

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