Companies

CFOs equally focused on expense reduction, reveals Amex-IMA study

K.R.Srivats New Delhi | Updated on January 09, 2018 Published on October 31, 2017

Indian Chief Financial Officers (CFOs) are now placing equal priority on expense management as much as they are focused on increasing revenues, a new survey commissioned by American Express has revealed.

The survey conducted by the International Marketing Association (IMA) -- which covered about 100 CFOs with corporates having turnover of at least Rs 600 crore -- clearly brings out the ample room for ushering in efficiencies in expense management, especially on travel, which is seen as among the top three controllable expenditures for corporates.

As many as 47 per cent of the respondents said end-to-end automation does not exist in their enterprises, reflecting the scope for players such as American Express to provide automated expense management solutions to such companies.

"What stood out in the survey was that 47 per cent of the CFOs are saying processes are not fully automated (end-to-end) to catch non-compliance in policies. They (CFOs) are spending so much time because the processes are semi-automated," Saru Kaushal, Vice-President and General Manager, Global Corporate Payments, American Express India told BusinessLine while discussing the findings of the Survey.

This presents an opportunity to go after end-to-end digital automation so that process efficiency can be achieved in their companies, she added. It is because of partial automation that leakages happen, according to Kaushal.

The other interesting dimension brought out by the Survey is that CFOs are equally focused on bringing down expenses and optimally managing them as much as they are focused on increasing revenues.

"Now equal amount of attention is being paid to reducing expenses in travel and entertainment. We have never seen in the past equal amount of attention being paid to expense management as well as revenue enhancement," she said.

NEW SOLUTIONS

The Survey findings have thrown open three or four opportunities for American Express, "which we are hoping to look at", according to Kaushal.

" We are trying to make sure that all employees who join a company immediately get a corporate card as part of the joining kit. That will take away the inefficiencies. Now, a lot of spend leakage happens from the time the employee joins to the time the employee gets the card, about 120-180 days are gone," she said.

American Express is also looking to offer consulting services to companies for better refund management, such as airline ticket refunds, etc.

CFOs are also increasingly adopting corporate cards as part of their expense management strategy.

Emerging from a phase of growth in the medium range, India's corporates today are cautiously optimistic. As much as 77 per cent of the CFOs interviewed expect an increase in revenue in 2017-18; almost a third expect to grow over 20 per cent. That said, 18 per cent of respondent CFOs expect revenue to shrink year-on-year, signalling a categorical need to concentrate on bottomline and profitability.

Coupled with the fact that 64 per cent of respondent CFOs expect expenses to increase -- a quarter of them by over 20 per cent -- strategies are increasingly focused on minimising extravagance and reining in expenditure.

CFOs across the country are also ensuring that business units jointly share the responsibility for cost savings.

In a rising trend, over 20 per cent of respondent CFOs have fully transferred the responsibility of adherence to expense management policies to units that budget for spends in the first place.

Srivats.kr@thehindu.co.in

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Published on October 31, 2017
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