In the months since the COVID-19 pandemic struck worldwide, the fundamental assumptions used in finance operations are changing rapidly. The data scientists at Oversight are uniquely positioned to study and understand the changing landscape of employee spend across the spectrum of companies worldwide.
We’ve published insights about these shifting trends – the result of customer interviews, market observations and data-driven analysis — on a regular basis since April, as Oversight’s Spend Insights Report. The reports seek to provide organizations with a focused profile of the changing dynamics of employee spend and risk.
So, what’s changed in how businesses are spending money?
Pretty much everything. Our findings show that the shift in organizational spend across the country was sweeping and immediate. It came without warning, without planning and without precedent. For nearly every finance team in America, the world of “business as usual” was turned on its ear.
What can we learn from the shifting patterns in spend, risk and business continuity in the time of COVID-19? The time has come to define and understand our new baselines.
Down is up, up is down
With the news of a global shutdown came significant spend changes. First came the major downshift in travel expenses, followed in rapid succession by a flurry of other spend activity as organizations around the country focused almost immediately on the provision of business continuity.
As employees around the world adjusted on-the-fly to new rules and regulations, restrictions, closures and remote work as a necessity, it created an “Alice in Wonderland” effect where the traditional traveling employees who often spent the most were suddenly grounded while new spenders came online. The spend once defined as potentially “unusual” – like high levels of personal out-of-pocket expenditures – is now in many cases essential, while what once was “usual” spend – like marketing events and sales visits – are now likely being constrained.
Understand the pattern change
With these sudden transitions come significant changes that upend years of data on spend patterns and the risk profiles of an organization.
Financial teams should now make a focused effort to dig into their policies and go-forward business needs to understand where to make adjustments. Many organizations are adding a COVID-19 expense type to account for things like the rise in grocery store expenses, office supply purchases and delivery services like Uber Eats and DoorDash. Others are rewriting policies to limit historical spending patterns, like food delivery when working after a particular time of day, or furniture requests filed under office supplies.
Whatever the unique situation at your organization may be, be sure to balance your business continuity and employee work-from-home support with the need to keep control over organizational spend and risk.
Dive into “miscellaneous” and new categories of spend
Most organizations did not anticipate their workforce would go to a complete work-from-home model in 2020. And yet, nearly carte blanche permission was required for many thousands of individuals around the country, in the spirit of ensuring business continuity, to build home offices, buy computer monitors and sign contracts for better internet connectivity.
The shift was a needed fast flex, but one that upends how and where companies spend money. When you look at the new categories of spend coming online, the out-of-pocket and “miscellaneous” categories will extend well beyond the pandemic as organizations re-think their longer-term work-from-home options.
New spenders mean new risk
For organizations that enabled work-from-home for professional staff, much of the new spending likely came from employees who have rarely filled out expense reports and have never been privy to the organization’s typical scrutiny around spend. Those employees are more likely to make mistakes than the established or known spenders prior to the pandemic, and their spend poses a new source of risk for the organization.
In the wake of the pandemic, organizations with employees making purchases for the first time should focus risk mitigation on high dollar exceptions and plan to take a close look at activities in the coming months to identify examples of potentially risky behavior. The reality of the pandemic is that many organizations cut hours, salaries, commissions and sales outlooks. These factors and the new people submitting work-from-home expenses could together spell more exposure to fraud, waste and misuse organizationally.
Gain better visibility
The good news is that the dust is settling. Those that were needing home office equipment likely now have made most of their purchases. The largest burst of “business continuity spending” is likely behind us.
For those organizations that already had automated continuous monitoring tools place in place before the pandemic, the pivot into new spending patterns has been more seamless. Organizations that lack that visibility are likely struggling to understand the shifting realities of spend and risk in their organization.
As the situation remains fluid across each of these changing norms, no matter where on the curve your organization sits, you must make every effort to keep up in real-time with the changing patterns of spend. The need to recalibrate categories of good and bad spend, and to understand better where your new risk profile lies is critical.
For more information on the shifting tides in spend risk, check out our monthly Spend Insights Reports at oversight.com/resources.