Expense Automation Finally Reaches The Cloud With Expensify!

Cloud accounting has revolutionised the financial sector, with some major players breaking through and creating real world solutions that just plain work for simplifying the accounting process.

Where most fall short is with expense reporting, because it’s like all the major platforms need integrated with add-ons/additional apps to complete the package.

Part of managing your business requires you or your finance department to stay on top of all the expenses. That’s a tedious and time consuming chore in itself.

Until you start with Expensify!

In our opinion, Expensify is revolutionising how expense reports are automated, created, shared and submitted.

What it does:

·         Smart scan – Is great for filing away receipts

·         Auto bank and credit card imports – This goes further to match the tags on your digital receipts to the corresponding bank or credit card transactions. If there’s no match from your bank or credit card data when you import it over, it’ll be created as a cash expense.

·         Distance Tracking – This lets you/your staff insert mileage either as a total distance, or you can set it a policy level to cover the maximum allowance employees can claim as an expense, or use the standard mileage allowance. The choice is yours when you set it up.

Other options for tracking mileage is to use the GPS setting, which will also record the data of where you or your staff travelled to and from to warrant the expense, or users can input the odometer data to file mileage expenses.

All of that done via a mobile app!

Faster reimbursements to employees

If there’s one thing going to get on your staff’s nerves, it’s waiting too long to get paid back what they are owed. What Expensify have done is included an option to automatically reimburse staff based on amounts predetermined by you.

What you can do with this is set a maximum limit that you’re happy to automatically reimburse, provided that your policy has been met, which you can set to include a receipt, ensuring that the expense report submitted to you has the necessary attachments for you to attach to your own reports and reclaim the expenses through your business accounts.

The Real Benefits of Expensify is Simplifying the Workflow for Finance Departments

With any number of employees submitting receipts for expenses, it creates a monster workload to review expense reports and then account for them by filing in the appropriate categories. Then depending on your company policy, you may have chain of command where the reports need approved and then sent up the chain of command for final approval and payment processing to reimburse the expenses to employees.

The Expensify app has a user friendly interface so anyone within your company will be able to use it. Only those authorised can manage the workflow though.

You can use this to create policies at management level, which will then instruct users what they need to do before they are able to file their expense reports; no more back and forth with incomplete reports. If it’s not got the data you need, it can’t be submitted for approval.

You can require your staff to tag expenses to an appropriate category, such as travel, meals, accommodation, mileage or entertainment. For each expense filed, you’d be best to set the policy to only allow reports to be submitted with a receipt attached.

Employees will be able to submit their reports with the population of a few fields and attaching the receipt and then just clicking submit. When the report is submitted, it sends an email to whoever is set up to manage the expenses letting them know there’s a new expense report awaiting their review.

Depending on how your policies are set up, the person reviewing the expense report submission can approve and reimburse or they can forward it further up the chain of command for someone senior to authorise or deny it.

The workflow can be as simple as authorising one person to sign off on legitimate expenses, or it could be used at enterprise level, passing expense reports from department to department until it receives the final seal of approval.

Payments can be reimbursed automatically and you can set filters to only pay amounts under the value you specify, ensuring that by enabling auto reimbursement that you aren’t going to run into cash flow problems.

Expensify uses the slogan, “expense reports that doesn’t suck” and it’s actually true of the product they have. What can suck about getting your staff more motivated by giving them what their owed faster and thereby never leaving them out of pocket for longer than necessary?

Besides, your finance people need this because it’s automation of a tedious task and will work to increase productivity and boost staff motivation.

When there’s something you can automate, that’s what to do. Now you can automate your expense report creation, submissions and automate the reimbursements of legitimate business expenses to your employees, whilst simultaneously ensuring that you have all the required information for your own accounting records.

We think it’s neat!

Getting Ahead With Procurement Processes

It doesn’t matter what size of company you have, you will have suppliers, overheads and bills coming in that need paying. You’re also going to have contractual obligations, whether or not you have an internal legal team and/or procurement team at your disposal.

No matter the size of your operation, you must control your overheads otherwise they’ll rip your organisation apart.

Late payments, supplier difficulties, delayed deliveries, expired contracts, rates increases etc. The list goes on.

What tends to happen in business though is the early stage start-ups focus on strategic growth without concern for the consequences.

Growth will happen when you put the efforts in and focus on strategic growth tactics, but when you do find your organisation growing, so too will your obligations, probably your staff and most certainly your overheads.

The more obligations your business has, the more reliant you will become on your suppliers. Without careful management, you risk your business being placed in a vulnerable position should your supplier find themselves with a competitive advantage because of your inability to control your procurement processes.

You absolutely must have processes in place, policies to control them and strategic systems to manage them both. Without those in place, your overheads will increase - substantially if you’re not careful.

Why be bothered with all the hassle?

If you’re focusing on growth right now, get yourself ahead by preparing for when you reach that stage. Visualise your business a year from now, two years from now, five years from now and you’ll likely see yourself going places.

Perhaps you’ll have a team of 50 employees or you could expand your operations by opening on more sites, hiring more people to aid in your expansion, in which case, prepare for that time.

What procurement specialists can do to help you prepare

If you don’t have the capital to invest in your own procurement staff to get things under control, outsource your outsourcing. The reason being that whilst the cost-savings will take longer to experience, you won’t be wasting cash flow in the short-term by spending on growth strategies to see the fruits of your labour wasted. You will retain more of your profits by having proficient supplier management processes in place, preventing things getting out of control.

All too often, what happens is companies experience expansion, then realise too late that they’re spending way more than they’re comfortable with and then have to bring in experts in procurement to clear up the mess made by inefficient sourcing and supplier management.

It prevents the battle of all battles…

When companies look to bring about cost efficiency, procurement experts are trusted to deliver on savings. To do that, it takes strategic sourcing, contract reviews, a huge advisory role and often a complete transformation of sourcing due to non-existent procurement policies.

As such, the savings commitment you will be looking for, will take longer to deliver because more tactical groundwork will need to be done before savings can be realised.

For any business focusing on growth strategies right now, get prepared for the increased obligations that accompany that by putting in place efficient procurement policies, and processes to manage the increase of suppliers and the relationships that come with them.

The more proactive you are with your procurement; the more savings you’ll lock-in before you start wasting it on inefficient sourcing methods. 

Image courtesy of norcazacademy.co.za.

Why Incorporate An Exit Strategy Into Your Contracts?

When you enter into business critical supplier relations, there is an all too often neglected area within the contract and that’s the plan to disengage.

Since the relationship between suppliers and clients are best when they’re mutually beneficial, the exit strategy needs to meet the same requirement.

That being said, the best time to discuss this is not during negotiations. It’s after the supplier has been partnered with you for a period; a working relationship established, rapport built and comfort grown for both parties to come back to the table and enter into further discussions about exiting.

The only thing that should be discussed during the negotiation process is the timescale for both parties to meet, after say six months after the supplier’s contract commences to discuss a strategy for disengaging.

It’s best to have this in place to ensure that the continuity of service provision remains the same, even if an existing contract is being terminated or transferred.

What a supplier won’t be comfortable with is too short a notice for your contract ending. They will want to know more about the “what if” scenario of losing a contract – and you your supplier.

Most will require more than thirty days for business critical supplies.

For longer term contracts of say over five years, a good rule to go by is one month per year. Using that as a general rule of thumb… if you’re on a three-year contract, a three-month notice period to terminate would be sufficient. That would give your supplier plenty of time to source new contracts and replace lost revenue, whilst retaining their continuity of service to your business within the final stages of the contract. At the very least, it’s risk management for both suppliers and clients.

Why would you end a contract with suppliers?

1)      It’s run its course.

2)      To re-enter into the tendering process, for which existing suppliers can also be a part of to keep your offers competitive.

3)      If either company feels the partnership is no longer beneficial, they can begin. negotiations to exit out the contractual obligations. If this is the case, you’ll be glad to have discussed the exit strategy beforehand as both companies will know the process to follow and the actions each party is responsible for.

4)      Lack of performance by either supplier or client or both.

5)      Better deals elsewhere.

That’s just five reasons that are pretty standard for contracts terminating. Nothing lasts forever.

When there are assets involved, it’s even more imperative that this forms part of your procurement process. People’s jobs could depend on it.

Then there’s the issue of who owns what as there are many business supplies for which you are loaned equipment from a service provider for them to take care of supplies and maintenance. If that’s the case, there will be ownership issues and equipment to be transferred back… not to mention any costs involved in contract cancellation without a good reason for doing so before the contractual period is met. These are your early termination fees and they are fairly typical for large supplies that are critical to business functions.

How to raise the issue of disengagement during negotiations

As you’ll understand, losing contracts is not something any supplier wants to discuss because it implies you’re leaving or not really keen on the idea of working together.

It’s not necessarily meaning you are parting though. It’s only a process you want to put in place to ensure you continue getting value. And that your potential suppliers aren’t too eager or blind sighted by the revenue projections that they fail to consider the risk.

Instead of calling it a disengagement process to address an exit strategy, you can call it a re-engagement process.

All you do here is assign a named contact from your company to deal with the re-negotiation process. It can involve opening up your horizons to others in the field and inviting your supplier’s competitors to enter the tendering process, whilst your current supplier is actively engaged in the process. That will help them feel more comfortable with continuing with your processes, and with your support. 

Even if they don’t have that, it’ll force them to be competitive in the tendering process. Their advantage is they will have the data to know how much it’s costing to supply your company, for which they may be able to provide an even better proposal. Either way, existing suppliers are in a good position for re-entering the tendering process to renew contracts. Just because you have existing suppliers in place should never mean that you stick by them through loyalty, unless there’s a significant advantage to your company for doing so.

Why?

Because…

It's stability for both businesses

Both suppliers and clients need stability and that’s what the exit strategy meeting is designed for. To ensure business continuity, even during a re-tendering process.

No service disruption is one stipulation to ensure is covered within your contract. The other is that any employees involved in the transitions are aware of what’s happening and kept in-the-know. This is particularly of interest to the recruitment sector when staff may be on two year contracts through a temporary staffing agency. Even if your supplier needs to have staff on premises to ensure service delivery with minimum fuss, ensure the people they have in place, know what’s happening with their jobs.

Always ensure everyone involved with the contract knows where they stand, are involved in the process, and aware of what happens, when things happen, and also that the “what ifs” are addressed. Any questions, have them answered and sooner rather than later.

The more that both companies (and employees) know about the contractual obligations and the disengagement process, the more comfortable the relationship will be as there won’t be any fear of the unknown involved.

Keep things simple and discuss exit plans during the negotiation stages of contracting out.  

Image courtesy of psow.edu.

A 5-Step Process For Vetting And Managing Potential Supplier Risk

The financial viability of your business could be jeopardised by any of your suppliers. For that reason, it’s important to consider the long term impact of any contracts you’re considering entering into.

While suppliers will generally look at long term contracts for business critical supplies, you shouldn’t assume they will be operational for the duration of the contract terms you agree to.

If you do, you’re putting your business at major risk.

5 Questions to Answer to Assess the Risk Potential Suppliers Pose

1.      What impact does the contract have for business continuity?

The more serious the suppliers are for your business continuity, the more effort, resources, planning and collaboration will be needed to ensure potential partners are suitable to be supplying your business.

They need to be able to accommodate you for the duration of the contract, but you need to be sure you know the risk you’re entering into the instant you sign a contract.

Identify the risk first. A scorecard system will be the easiest with three scoring high risk, and one indicating low risk.

In practice, a managed print service for a local optician would score low because it’s not high on their list of priorities for supplies. A print shop though couldn’t survive without the printers therefore that would score a three on the risk score and signify a high risk, needing a thorough process in place to identify the most stable business partner for the long-term.

2.      How easy can you get an alternative supplier in place?

The ease of switching is another noteworthy consideration for assessing risk. If your partner falls apart on you and can’t deliver on the goods or services they’re contractually obliged to deliver, can you get an alternative in place rapidly?

If not, it may be a better idea to diversify your supplies between suppliers so that your business isn’t entirely reliant on one supplier. There’s a backup in place should one fall through.

For the initial contract agreement, you’ll know the time frame it has taken to get things rolling. Three months isn’t unusual for a tendering process to take, and they can run longer. The longer it will take you to get a new supplier in place for business continuity, the higher the risk will be.

3.      How competitive is the sector you are contracting out to?

When you’re dealing with smaller sized firms, you need to consider whether they’re going to last. It’s not something you’ll feel comfortable about discussing with potential partners during negotiations, but you can’t avoid it. In competitive industries, where the competition is fierce, such as the security sector where price undercutting is typical – you need to assess whether your partner will be around for the duration of your contract, or if they’re planning to exit and sell their business on.

Some sectors are highly competitive, others not so much. This should form part of your research process when evaluating potential suppliers so you know when you go into discussions, the level of competition they are up against for survival. And don’t be afraid to ask them about survival plans if there are some really competitive bids coming at you during the tendering process.

4.      Will your contract leave your supplier too reliant on Your TCV?

TCV = Total Contract Value. Diversification is a necessity in business therefore, if you discover your contract is going to be the one keeping your partner operational then the relationship may not be mutually beneficial.

Mutually Beneficial Supplier Relationship is only one of the eight principles of a quality management system in respect of ISO 9001.

Early stage start-up businesses are often overly keen to get out of negotiations and get the contract agreed that they neglect to take time out for considering long-term risks that will be associated with your contract fulfilment.

Ensure your partners are not going to be dependent on your contract for services or goods for them to remain operational.

As a rule, the higher your TCV is, the larger a supplier you will need. The reason being, the larger your contract value, the more cost there will be for service or product delivery. Should any of your suppliers be too reliant on your contract, investors (like the bank) will be reluctant to provide financial support (if they ever need it) due to the lack of revenue diversification.

5.      Intellectual Property Protection – Who owns what and who’s managing it?

IP protection is an important part of on-boarding new suppliers. In certain situations, they may be getting more information from your company that could prove dangerous later if your IP isn’t managed effectively.

Take contract manufacturing, as this report highlights. If you don’t own, as in really own your intellectual property, come the end of your contract, your supplier could be in a position to enter your market and become your competitor using the technology or information your company owns. There is a risk you breed your own competitor and those are the worst threat you can have because they’ll be a direct copy of your product or service.

Always protect your intellectual property.

For early stage start-ups that have neglected this part and need to know more, or if you’re late on learning about IP protection, see the Government overview of what it is and your protection options here.

Image courtesy of nfib.com.

The Impact Of Prolonged Shutdown At Rough Gas Storage Facility

British Gas is a subsidiary of Centrica. Centrica manages the Rough gas storage facility and recently announced a prolonged closure of the site. Read on for a deeper insight into what this means to wholesale gas prices, which will affect consumer energy bills.

Centrica has confirmed the Rough gas storage facility - the UK’s largest long range gas storage facility - has been closed until 3^rd August 2016 for further testing.

The site has been experiencing technical difficulties since last year, however, further tests have revealed additional problems with the wells storing gas. Following the closure, Centrica estimates that at least four of their wells (out of thirty) will be operational by November, which should make up to a third of its shortfall.

An enhanced testing programme of the wells is expected to be completed by March/April of 2017.

As a result, wholesale gas prices, which are already volatile, are now even more volatile. The impact is expected to affect customer’s energy bills, if not this year, then most certainly in 2017.

Why the expected energy price rise?

Because it happened just a few years back when it was reported that Britain nearly ran out of gas. According to Rob Hastings of The Crown Estate, the country was six hours away from running out of gas. 

Where Our Gas Comes From

Image courtesy: http://www.thisismoney.co.uk/money/bills/article-2297420/Gas-bills-rise-200-British-reserves-run-dry-36-HOURS.html

The UK’s other main source of gas is imports of liquefied natural gas (LGN) with the largest source being Qatar. Experts believed that the UK marginally escaped a major gas shortage in 2013 because a ship from Qatar arrived just before supplies run dry.

Shipping in LNG from overseas is the most expensive gas supply we have. It can take a ship two-weeks at sea before it reaches onshore storage facilities.

How our gas infrastructure works

The UK has a diverse range of methods to get gas into storage facilities. It’s drawn from major pipelines connected to Norway, Belgium, and the Netherlands. There’s also Liquefied Natural Gas (LNG) imported via tankers with the largest supplier coming from Qatar.

Injections (when gas is put into storage) happen in the summer months when prices are lower due to demand being less. Demand increases in the winter months and wholesale gas prices rise as a result. 

Injections of gas go into storage facilities in the summer months and are subsequently withdrawn in winter months when demand is higher.

There are eight major gas storage facilities in the UK, each located in the South.

1.       Hatfield Moor

2.       Hornsea

3.       Aldborough

4.       Rough

5.       Humbly Grove

6.       Avonmouth

7.       Hole House Farm

8.       Holford

These are categorised as:

·         Short range – The only short range site in the UK is Avonmouth. This is an onshore site storing liquefied gas. Gas here can be condensed from the National Transmission system and later when it’s needed, it can be revaporised to be delivered back into the National Transmission System.

·         Medium range – These sites are commercially operated. The injection/withdrawal times are shorter and they can react quickly to a surge in demand.

·         Long range – Rough is the UK’s only long range gas storage facility. Gas is injected into it in the summer months where it’s stored until it’s needed in the winter months when demand rises.

Back in March 2013 when gas supplies ran dangerously low, the market reacted with a 7% increase in wholesale gas prices from the period of May 2013 to April 2014. Fifty percent of that increase happened in March when Britain was in the brink of harsh cold weather putting significant demand on gas supplies.

Understanding Wholesale Gas Prices and its Impact on your Energy Bill

According to uSwitch.com, “45% of the average energy bill is made up of the cost of wholesale gas, supply costs and profit margins”.

Energy suppliers need to pay for the gas supply they’ll be providing in advance of it being used. They absorb the higher wholesale gas prices and later pass that increase onto customers to protect their profit margins and operational costs.

Because energy firms can buy gas wholesale sometimes years in advance, increases and decreases don’t happen immediately. They can take a few winters to become apparent on your energy bill.

Where the real issue lies is when the energy supplier is facing higher supply costs to buy the gas wholesale and business customers in particular who generally use more and pay more on commercial tariffs find themselves having to renew contracts often bringing 12-month contractual agreements at a higher cost.

It should be noted though that under Ofgem rules, suppliers are required to provide customers with 30-days’ notice of price changes. Even if you are under contract with your supplier, you can switch provider during that 30-day window to a cheaper supplier.

The cheaper supplier will be the firm with more gas paid for in advance, but because volumes change, so too will the best energy supplier prices for gas change.

Since the price increases seen in 2013 to energy prices, wholesale prices have dropped significantly. Over the past few years, there has been a steady decrease to the prices.

A report by Reuters back at the start of July indicated that the gas prices were declining due to improved supply and less demand.

The recent announcement from Centrica about the prolonged closure of the Rough storage facility puts doubt on the demise of wholesale prices as there’s no longer certainty in the gas market that the UK has sufficient storage capacity as the Rough Reservoir is the largest gas storage facility the UK has.

This is a significant market change that’s already caused a rise in wholesale gas prices. It’s only a matter of time before energy suppliers pass the operational increases onto customers.

Should supply be expected to face a crisis, the only storage facilities will be short and medium range gas storage centres. That could see more imports of LGN, which is the most expensive gas supply to the UK. If that does happen, we can expect to see a significant rise to wholesale gas prices, which will eventually see consumer energy prices rise by a considerable amount.