CFOs focussed on cutting expenses: survey

Chief Financial Officers (CFOs) in India are now placing equal priority on expense management as much as they are focussed on increasing revenues, a survey commissioned by American Express shows.

The International Marketing Association (IMA)-conducted survey, which covered about 100 CFOs with corporates having turnover of at least ₹600 crore, shows that there is 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 respondents said that 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 CFOs said processes are not fully automated (end-to-end) to catch non-compliance in policies,” Saru Kaushal, Vice-President and General Manager, Global Corporate Payments, American Express India, told BusinessLine .

This presents scope for end-to-end digital automation so that process efficiency can be achieved, she said. It is because of partial automation that leakages happen, she added.

Focus on expenses CFOs are equally focussed on bringing down expenses and optimally managing them as much as they are focused on increasing revenues, the survey found. “Now equal amount of attention is being paid to reducing expenses on travel and entertainment. Normally, so much attention is not given to expense management as to revenue enhancement,” Kaushal said.

The findings have thrown open three or four opportunities for American Express, “which where we are hoping to look at,” Kaushal said. “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, lot of spend leakage happens from the time the employee joins to the time the employee gets the card about 120-180 days later,” she said.

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

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

Cautious optimism Emerging from a phase of growth in the medium range, India’s corporates today are cautiously optimistic. As many as 77 per cent of the CFOs interviewed expected an increase in revenue in 2017-18; almost a third expect to grow over 20 per cent.

However, 18 per cent of respondents expected revenue to shrink year-on-year, signalling 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 of cost savings.

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

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