High technology companies face a unique set of challenges that differentiate them from companies operating in other verticals. These challenges affect all areas of business, including expense management.
In this article, we will cover the specific challenges related to expense management for high technology companies, while also showing how cloud-based expense management software helps tech companies turn these challenges into competitive advantages.
High-tech companies are highly susceptible to cash flow and economic variances
The overarching goal of most high-tech companies is to get funding, grow rapidly and maintain an acceptable operating margin. A common challenge in this evolutionary chain of events is the long lead time between getting funding and growing rapidly.
Compared to other industries, the typical cash cycle is uneven for those in the high-tech industry. Heavy cash outflows are common during product development phases, and large cash inflows are common once sales begin. These uneven cash flows are familiar to startups and senior firms alike.
Adding to the cash flow risk is the fundamental shift from enterprise spending to discretionary spending. With tech now heavily skewed toward consumer demand, volatile local economies and shifting consumer preferences have a greater impact on sales. To stay competitive, today’s high-tech companies must assure consistent, adequate funding for research and product development.
How high-tech companies take control of cash flow
Although heavy cash outflows are expected, heavy cash outflows with little visibility into spend is downright dangerous. Tighter expense tracking is the logical answer, but without the right solution, it’s not always realistic. Delayed manual processing, pending expense claims, and a lack of forecasting capabilities can make the “current state” of cash flow anything but current.
With cloud-based expense management, CEOs and CFOs can better:
- Identify the types of spend responsible for increasing profitability
- Access data and key insights needed to secure funding
- Use accurate, real-time snapshots to better protect the financial well-being of the company
- Identify specific cost-cutting opportunities
- Implement a tailored expense management system which regulates spend on its own
With automated processes in place, expenses are charged back to clients within required timelines, leading to faster cash inflows and higher profit margins.
Real-time access to accurate insights allows leadership to make informed decisions faster, whether it’s capitalizing on a timely opportunity, or passing on a potentially devastating decision.
Challenges with recruiting, scalable growth and employee retention
The high-tech sector has one of the largest talent deficits across all industries. Recruiting is highly competitive, and most firms struggle to attract and retain qualified staff.
Growth patterns only add to the recruiting challenge. Most high-tech firms start lean and are forced to grow rapidly in the early years. This rapid growth can make it difficult to scale training, communication and workflow best practices.
High-tech firms are also more apt to have a mobile workforce. According to the Kaufman Foundation, high-tech firm formations are becoming increasingly geographically dispersed, while the opposite is true for the private sector in general. According to PayScale, the median age of workers at many high-tech firms is less than 35. This young, digital-native workforce is accustomed to, and demands, mobile and cloud applications to not only perform work, but also collaborate with colleagues remotely.
How high-tech companies can scale growth and satisfy employee demands
Most high-tech companies are being forced to shift from the Information Age (informing model) to a Communication Age (communicating and engaging model). This shift makes it necessary for tech firms to adopt cloud-based, social business applications with a new level of urgency. The good news is that more than 70% of high-tech firms have adopted cloud applications and found little-to-no difficulty in integrating them into their business strategy and operations, according to KPMG’s 2013 Technology Industry Outlook Survey.
Using a high-tech expense management solution enables high-tech firms to:
Gain productivity. According to Aberdeen Group, companies that embrace automation reclaim lost productivity in the neighborhood of two days.
Invest in revenue producers rather than administrative personnel. Cloud-based expense management is automated and integrated, significantly reducing administrative workload. Executives and sales professionals can streamline personal expense management tasks via a mobile solution, which increases job satisfaction and allows more time for mission critical tasks that drive revenue.
Increase adoption of, and adherence to, a company-specific T&E policy. The rules are built into the system, meaning spend and expense-related workflow is both performed and regulated in real time, from anywhere. This takes another heavy burden off administrative personnel who would otherwise be forced to police the policy and resolve errors. Revenue producers spend less time with tedious tasks and error resolution because workflow and compliance are managed on the front end. Product development spend policy can be easily adapted to ensure cash outflow is directly aligned with top organizational goals, especially in times of lower cash inflows.
Collaborate and manage workflow in real time. High-tech expense management solutions can sync with hundreds of social business apps. Using a single interface, employees can arrange travel and lodging with pre-approved airlines, hotels and transportation companies. Cloud-based travel management allows colleagues to sync itineraries and share relevant or timely travel-related notes. These tools are especially necessary for geographically dispersed workforces.
Recruit and retain top talent. In a highly competitive field, HR and sales executives use cloud and social business applications as a selling point for potential recruits. The young, digitally native workforce of the high-tech industry has a strong affinity for cloud applications that allow for collaboration and enable mobile workflow.
Although high-tech firms face a unique set of challenges, the five-year forecast is bright. Using cloud-based expense management software, high-tech companies can control cash flow, scale operations, and adopt efficient workflows that lessen administrative requirements and increase profitability.
Now your high-tech company (big or small) can experience the high-tech expense management solution trusted by over 20,000 companies worldwide. Start your Concur 30-day test drive and see for yourself what expense management software can do for your organization.