Expense management : Cash Advances— Are they draining your working capital ?

Are there too many leakages, unaccounted spend and lack of visibility into where the advances are spent?

Vivek Singh, CFO of a large pharmaceutical company is in a dilemma. He is known in the industry, for efficient management of working capital and running a tight ship. But there has been one aspect of business that he has not been happy about and his reconciliation team has been complaining frequently.

His company issues expense advances to field staff of sales and logistics teams. The advance amount varies from Rs.25,000 to Rs.50,000 per employee. As the field team size is large, the working capital distributed to the staff, upfront, is a fairly large amount. Employees incur spend and submit bills on monthly basis to the Accounts team.

On paper this is supposed to work smooth. But over time, feedback from accounts & reconciliation team has been that (1) the bill receipts submitted by field staff account only for 90% of the spend (2) at least 20–30% of bills are manual and difficult to verify the authenticity (3) process of communication with the employees on clarification is cumbersome, time taking and often lost in mails. (4) the whole process is manual and person-dependent causing inefficiencies.

On top of these, CFO had to deal with the issue of large amount going out as advances, from the working capital available.

Vivek decided to deploy ROKA expense management solution to address these issues. The solution was primarily aimed at (1) reducing working capital outgo upfront (2) bring real-time visibility into spend (3) better dashboards to be able to analyse spend, configure daily, weekly and monthly limits (4) one-click disabling of employees who leave (4) automated bill submission and review at transaction level, including the merchant (5) app based conversations with employee and digital bill upload/review options.

Within a month of deployment, Vivek’s team has been able to gain full control over the spend, plug leakages and bring efficiencies into overall expense workflow — from allocation all the way to approvals.

The working capital requirement is estimated to have come down by 30% on advances and leakages plugged to the tune of 85%. This also ensured people do not have to use their own credit cards to meet spike in expenses.

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