What’s the old adage, ‘when poverty comes in at the door, love flies out the window’? We’d have expected her to take flight at the first sign of the pandemic, which impacted so many businesses. No doubt, many have suffered while others shuttered. Love, though, seems to be sticking around—according to a recent snapshot of over 500 companies we took in February 2021.
We asked a mix of small, medium, and large organizations a few questions about their spending habits and plans in response to the pandemic. What we found might be counter-intuitive.
Supplier loyalty endures
In the face of adversity, the standard playbook is to review all the suppliers to find alternatives at a lower cost. Only 20% of those surveyed planned to put their business out to tender. Many (49%) planned to stay loyal but would review supplier payment terms to ease cash flow. While 44% planned to assess their customer payment terms to bring in funds more promptly. This is good practice in any conditions—but in the teeth of the pandemic-induced downturn, it’s not the wholesale churn one might expect.
Reduced anticipation of fraudulent expenses
What about employees? Perhaps they might submit more fraudulent expense claims during these tough times? No, only 16% of the companies expected an uptick in expense fraud. In fact, 21% felt it was likely to go down as a result of the pandemic. Perhaps they felt staff would be more cautious about such policy violations and less likely to game the system to maintain their position.
What is likely to increase? The cost of regulatory compliance, which 40% felt would go up as a direct result of the pandemic. Similarly, costs associated with employee duty of care when they travel were marked by 42% as likely to see an uptick. This is understandable as companies take precautions such as increased testing, social distancing, and protective equipment.
Other operating expense line items that are expected to increase include salaries, benefits and wages (48% of respondents), travel (37%), and advertising and promotion (34%). These are all signs of increased activity. With 9%, rent was perceived to be the expense least likely to. This suggests continued plans to maintain remote and hybrid work policies, with the cost benefits those can bring.
Procurement’s role in ESG
Many organizations, particularly smaller ones, are not yet at the stage of having formalized ESG programs (environmental, social, and corporate governance). Encouragingly, among those who do have a formalized plan, there is evidence of a broad understanding of procurement’s role. Over one-third (38%) of this group had ‘targeted purchasing’ as part of their ESG program, with a further 13% stating that procurement was built into their policies at great length. Only 6% of this group omitted procurement from ESG.
How do you enforce or encourage this targeted spend? The most popular method adopted by 14% of companies with ESG programs is to build them into policies with corporate spending cards. 13% rely on reporting about their spend broken down by business unit. 10% have approved supplier relationships that support their goals. Only 5% go so far as to have specific procurement incentives targeted at their environment and social goals. It’s encouraging to see, even now, organizations taking a long-term view and recognizing the impact their spending can have on social and climate justice.
Though 500 companies represent just a fraction of the millions in America, it’s clear from this sample that companies are staying loyal to their suppliers, trusting their staff, and continuing to pay it forward with their ESG policies.
Challenges have come through the door—but love, at least for now, seems to be sticking around.
Get the latest insights from our 2021 Travel and Expense Trends Report, or view the infographic below.
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Our choice of Chrome River EXPENSE was made in part due to the very user-friendly interface, easy configurability, and the clear commitment to impactful customer service – all aspects in which Chrome River was the clear winner. While Chrome River is not as large as some of the other vendors we considered, we found that to be a benefit and our due diligence showed that it could support us as well as any large players in the space, along with a personalized level of customer care.
We are excited to be able to enforce much more stringent compliance to our expense guidelines and significantly enhance our expense reporting and analytics. By automating these processes, we will be able to free up AP time formerly spent on manual administrative tasks, and enhance the role by being much more strategic.