In today's rapidly evolving business landscape, the convenience of online purchasing has become increasingly popular among companies. However, this surge in digital transactions has led to a new challenge - maintaining an overview of all the different subscriptions and purchases paid by card. While some organisations attempt to manage these through their Travel Expense Management (TEM) systems, it is important to recognise that including subscriptions and recurring payments within a TEM system can present several challenges. In this blog post, we will delve into the reasons why managing subscriptions is better outside of a TEM system...
Approval happens after the purchase:
One of the primary reasons why subscriptions should not be managed in a TEM system is the issue of post-approval, where approvals occur after the purchase has already been made. Managers or other approvers want to be able to evaluate if this is something worth prioritizing, which is not really possible if the purchase has already been made.
The right tool offers automated pre-approvals that obey business rules. This way, every employee purchases within budget and only subscriptions that comply with the organisation's procurement policies.
Difficult Cost Allocation:
Another challenge arises when trying to allocate costs correctly to the appropriate business unit, cost centre, department or similar. TEM systems do not enable it in a simple way, and often costs simply be allocated to the person owning the card, which may or may not be correct. Without proper cost allocation, organisations may face inaccuracies in financial reporting and budgeting.
With the right tool, you can assign your purchase to the appropriate cost centres, departments, or similar categories prior to making the purchase. This allows you to maintain control, as the purchase will only be authorised if the request is approved and the cost is allocated correctly.
Lack of Overview:
Handling the payment of subscriptions in a TEM system also hampers the ability to have a comprehensive overview of all the subscriptions within the organisation. This lack of visibility can lead to missed opportunities for cost optimization and increased risks. Additionally, it becomes challenging to track and manage subscription renewals effectively.
With the right tool, you can easily oversee all your recurring subscription payments and online purchases in one convenient solution. A virtual card-based solution is particularly beneficial as it provides a comprehensive overview. By using one card for each purchase or subscription, you gain transparency, control over your spending, and automated documentation for financial purposes. This ensures that you have a clear understanding of your payment activities and simplifies the management of your finances.
Dependency on Employees:
When an employee leaves the organisation, their departure can have unintended consequences for important subscriptions. If the employee's card is closed, these subscriptions may "cancel" or become inaccessible, causing disruptions to essential or even business-critical services. Separating subscriptions from the TEM system helps mitigate this risk and ensures continuity even during employee transitions.
With the right tool, you can easily identify the owners of a subscription and transfer ownership seamlessly. This prevents critical subscriptions from stopping or being interrupted.
Collecting receipts for subscriptions can be a cumbersome task within a TEM system. TEM systems focus on the individual transaction on a card and have no way of grouping the transaction together with the correct subscription. Especially recurring payments for marketing spend can be almost impossible to allocate to the correct campaign if all these transactions are handled in the TEM system.
As previously mentioned, using the appropriate tool allows for one card to be linked to one subscription, automatically connecting transactions to subscriptions. This also provides a foundation for automated receipt collection from a designated email inbox, saving time for both employees and finance.
Lastly, including subscriptions in a TEM system makes it difficult to perform compliance checks before making a purchase. Compliance requirements such as GDPR and IT security approvals need to be ensured prior to the purchase being made. By separating subscriptions from the TEM system, organisations can ensure that all necessary compliance checks are conducted in a timely manner.
The appropriate tool allows you to incorporate compliance checks for maintaining business rules. These checks should be integrated into an automated approval process, ensuring a smooth user experience and facilitating compliance throughout the organization.
Use the right tool for the job. While a Travel Expense Management system is essential for efficient handle travel spend and smaller expenses made on the go by employees, including subscriptions or recurring payments within this system can create several challenges. From post-approval issues to difficulties in cost allocation and lack of overview, there are compelling reasons to keep subscriptions separate.