TORONTO, ONTARIO and LOS ANGELES, CALIFORNIA--(Marketwire - Dec. 12, 2012) - Incurring expenses on behalf of a client is part of the cost of doing business. While many of those costs – such as travel and entertainment (T&E) expenses – can be passed along to the client, the majority of professional services organizations utilize error-prone systems that are costing them money.
A recent survey of professional services businesses by BMO Financial Group (TSX:BMO)(NYSE:BMO), and Chrome River Technologies, a leading provider of online expense reporting and invoice management services, revealed that while companies understand the need to spend on behalf of their clients, there is some confusion around which costs can be billed back to the client due to traveling professionals who frequently aren't aware of their own internal expense policies or their customers' policies. This can be attributed to the lack of visibility to their policies, because the policies are not built into a manual expense process like they are in an automated expense system.
According to the survey results, 51 per cent of respondents reported that their clients have different or unique spending policies they must follow when working on their behalf. Managing and understanding multiple policies coupled with in-house antiquated methods for reconciling client billable expenses equals the perfect recipe for long reimbursement cycles and lost revenue, as well as the risk of charging expenses to the client that are disallowed – even possible fraud.
The survey found that 87 per cent of organizations rely on manual expense report processes – either paper-based, or using spreadsheets and/or email. Results also revealed that professional services organizations quite often play the role of a bank for its clients. They typically float the expenses incurred on a client's behalf for a month or more before being reimbursed, placing the up-front financial burden on the professional services organization and its employees. Two out of three survey respondents stated that it takes three or more weeks to get reimbursed, and 55 per cent of respondents have difficulty tracking what is billable versus what isn't.
"Despite the availability of cost-tracking, budgeting and reporting software many professional services business – particularly those with fewer than 500 employees – still rely on manual, paper-based processes to manage client billable expenses," said Terry Wellesley, Executive Managing Director, BMO Financial Group. "Paper-based expense tracking opens the door to the potential for lost funds. Receipts can get lost, travelers question what can be expensed, and reimbursement is delayed. At the end of the day, the services organization is left holding the bill.
"Travel and reimbursement are getting more complex – the majority of professional services organizations rely on error-prone systems that are costing money," said Mr. Wellesley. "Business travel is increasing, but companies are not investing in new processes and systems to improve how billable expenses are managed."
There are steps companies can take to improve the expense reconciliation and reimbursement process. Companies that adopt a corporate card program, paired with a sophisticated expense management system that handles all of the specialized requirements of professional services organizations can eliminate the need to manually reconcile expenses, reduce the risk of fraud, make more timely reimbursements to employees, and reduce the possibility of customer audit of expense reports; 60 per cent of survey respondents report already using a corporate card for all purchases.
About Chrome River Technologies
Chrome River Technologies, Inc. provides expense reporting and invoice automation solutions that uniquely combine the latest available internet technologies with over 25 years of financial systems experience. Chrome River delivers immediate payback via a "Software as a Service" delivery model that requires no hardware, no software, and no long-term commitment. This unique service is easily configurable to meet the needs of organizations worldwide with complex expense management policies and collaborative approval processes. Additional information about Chrome River Technologies, Inc. and its solutions may be obtained by phone at 1.888.781.0088 or by visiting the company website at www.chromeriver.com.
About BMO Financial Group
Established in 1817 as Bank of Montreal, BMO Financial Group is a highly-diversified North American financial services organization. With total assets of Cdn$525 billion as at October 31, 2012, and more than 46,000 employees, BMO Financial Group provides a broad range of retail banking, wealth management and investment banking products and solutions, and is a leading commercial card and payment solutions provider in North America. With products widely used by corporations, non-profit and government-sector organizations to manage, control and gain better visibility into their commercial spending and payments. For more information, visit www.bmo.com/spendandpayment.