Tuesday, October 8, 2019

Stopping travel and expense 'leakage' before it becomes a big loss

Robert Freedman@RobertFreedman

Employees typically submit $10,150 a year in reimbursements. Make sure your T&E policy provides tools for reining in unnecessary expenses.

If you haven't reviewed your travel and expense (T&E) policy recently, make doing so a priority because the cost of "leakage" to your company is likely greater than you think, T&E consultant Oren Geshuri said last week in a CFO.com webinar.

As much as 12% of a typical company's operational costs — about $10,150 per employee per year — are T&E related, and about 5% of that is lost to fraud, said Geshuri, director of technology and media services at the Lyndon Group.

It takes companies between 18 and 24 months to detect fraud, and by the time they do, the loss averages about $26,000.

Even separate from fraud, T&E leakage can be costly. About 6% of T&E annually, or about $60,000 for every $1 million in expenses, is out of compliance in some way, often because of duplicated out-of-pocket employee expenses. The typical duplicate reimbursement is about $50.

There are other risks if your T&E policy isn't well thought through: You can end up paying for costs your company doesn't want to pay for, like spousal travel, or losing money when employees keep airline or other travel credits they earn while working.

Review your policy

Geshuri recommends you review your policy once a year, for a number of reasons. One, it gives you a chance to learn what's working and what’s not​ from employees who travel a lot. Is it easy to understand? Is it easy to submit reimbursement requests? Do the policies make sense?

"Once a year, bring in some of your power users, your road warriors, and sit them down and have a conversation," Geshuri said. "How did we do this year? Where were your pain points?"

Geshuri also recommends you use a corporate card program, if you're not already. "There's a common misconception that giving corporate cards out actually loses control or replaces control, but it's quite the opposite," he said. "It’s very well known now that [it] actually helps you funnel spend."

Using a corporate card helps you integrate T&E data, validate costs, and exercise tighter controls, Geshuri said.

Policy essentials

When you sit down to rewrite your policy, make sure it covers the following:

  • Business travel. How far in advance do you want employees to make a reservation? Do you let them book first class if, for example, they need the leg room? If they get a credit, do they keep it or does it go back to the company? Should you pay for TSA pre-check? Have you set a policy on using Airbnb, Lyft, Uber and other app-based options?
  • Corporate cards. Spell out your rules of card use. For new employees, have a probation period during which they're subject to a lower limit.
  • Contingency planning. Think through what you want employees to do when emergencies or other unforeseen events arise while they're traveling for work. What should you require them to do if you alert them to an emergency they might not be aware of when they reach their destination?
  • Personal issues. How do you treat travel when an employee's spouse or partner accompanies them, or when they add personal travel to their work travel?

Administrative guidelines. Do you want receipts included for expenses under $75? That's the threshold set by the IRS. How soon after travel do you expect reimbursements to be submitted?

Reduce ambiguity

When revising your policy, make sure it includes or addresses these essential elements: a statement of purpose, company expectations and policy compliance, areas of ambiguity and key subject areas. These subject areas include travel, travel-related expenses, accommodations, and food and entertainment.

Also, make sure to check the language you're using. Geshuri recommends you keep the language simple, written at about a fifth-grade reading level, to reduce the risk employees don't understand it. "Don't let a lawyer write this," he said. "It should be a cross functional effort: HR, procurement" and other executives.

Be careful to use the same language in your policy that you use in your expense reporting system, Geshuri said. If your reporting system categorizes employee meals in 10 ways, use those same 10 categories in your policy.

"You can't manage your bottom line if you don't know where your money is going," he said. "Employee initiated spend you can’t see until after it's spent." That makes a strong T&E
policy the only way to govern this big part of your operating costs before you incur them.

Deepak Chopra: Your bad money habits could be hurting your health

Source: https://tinyurl.com/y6tvhzgg


Why financial wellness is important to your health, according to Deepak Chopra

If you’re worrying about money, you’re not alone. Finances are often cited as the No. 1 cause of stress.

Yet, that anxiety may be doing more than keeping you up at night. It is also likely affecting your overall well-being.

“If you’re stressed about your finances, of course that’s going to cause your blood pressure to go up and put you at risk for so many diseases,” said health and wellness guru Deepak Chopra, co-founder of The Chopra Center for Wellbeing and founder of The Chopra Foundation.

A number of illnesses — such as migraines, digestive problems and heart disease — have been associated with stress.

People who are financially secure spend money on experiences, not necessarily on products.

The good news is that there are things you can do — both with your finances and to get your stress under control, according to Chopra, a New York Times best-selling author whose books include “Perfect Health” and his latest, “Metahuman: Unleashing Your Infinite Potential.”
Live within your means

Americans owe more than $4 trillion in consumer debt as of July 2019, according to the Federal Reserve.

The use of credit cards is also rising among young adults — 52% of those in their 20s now have credit cards, compared to 41% in 2012, data from the New York Fed show.

However, to be financially well, you should live within your means, Chopra said.

Those who are financially secure “usually don’t spend money that they haven’t earned, to buy things that they don’t need, to impress people that they don’t like,” he said.

Save money

While every financial expert advises saving money, including for emergencies and retirement, it may be easier said than done.

In fact, 28% of Americans have no emergency savings, a July survey from personal financial website Bankrate.com found.

When it comes to retirement, 26% of non-retirees say they have nothing saved, according to the Fed.

However, saving is crucial to your financial health.

“I have also seen in my life that in cultures where people save 10% of their monthly salary and put it in reasonably low-risk investments, in the long term they do much better,” Chopra said.

Protect yourself

Financial security is more than just money in the bank or in investments. It also means protecting yourself with insurance in case you are disabled or get sick, Chopra said.

You may get health insurance through your employer or you can purchase it through the health-care exchanges made available through the Affordable Care Act.

Disability insurance is also important: One in 4 adults will become disabled at some point before they reach retirement age, according to the Social Security Administration. There are both short- and long-term plans, which may also be offered through your employer.

If you are buying any insurance on your own, be sure to do your homework and shop around for the best plans that work for you.

Spend on experiences

Being financially healthy doesn’t mean you can’t spend money.

However, Chopra suggests laying out cash on things like restaurants and vacations, rather than on physical objects.

“People who are financially secure spend money on experiences, not necessarily on products … particularly experiences that enhance your social well-being and physical well-being,” he said.


The best way to address your stress is to meditate, according to Chopra.

It decreases blood pressure, hypertension and insomnia — as well as reduces the production of stress hormones, like adrenaline and cortisol, he notes.

Deepak Chopra leads a meditation in Telluride, Colorado.
Courtesy: Deepak Chopra

Chopra has also advised to stop multitasking. Instead, focus on one thing at a time.

If you find you are starting to go down the stress rabbit hole, then stop what you are doing, take a few deep breaths, observe the sensations in your body and smile, and then proceed with awareness and compassion, he wrote on The Chopra Center website.

Increase joy

By increasing your joy, you’ll be less likely to get caught up in any of the ups and downs of the stock market, Chopra said.

To do that, there are a few things in particular you should focus on: pay attention to people, show appreciation and tell others you care about them.

“That’s the fastest way to be happy — to make other people happy,” he said.

Wednesday, October 2, 2019

New report charts economic impact of Hispanic Americans

The total economic output of Latinos in the United States was $2.3 trillion in 2017, up from $2.1 trillion, according to a new report. Sol Trujillo of Latino Donor Collaborative joins Morning Joe to discuss.

Friday, September 20, 2019

CFOs operating more like chief strategy officers, study finds

AUTHOR Jane Thier@thier_jane

Dive Brief:

1) Finance leaders are becoming more concerned about security, data and internal customers, consulting firm Protiviti found in its annual Finance Trends Survey released last week.

2) More than 70% of CFOs and VPs of finance named “strategic planning” as one of their highest priority areas in which they wanted to improve their capabilities, highlighting the need for these finance leaders to focus on strategic matters as much as day-to-day finance and transactional matters, Protiviti found.

3) The survey involved 817 CFOs and finance executives of public and private companies, with 58% of those companies generating revenue over $1 billion.

Dive Insight:

“CFOs can’t just focus on data analytics instead of their previous duties," Chris Wright, a Protiviti managing director and global leader of the firm’s Business Performance Improvement practice, told CFO Dive. "They must add them together, [even if that means finding] ways to automate some of the older responsibilities.

"These new CFO duties shouldn’t be [to the detriment of the finance team], they’re opportunities for the CFO staff to sharpen their own skills," Wright said. "They make the CFO a better boss and the finance team a better place to be, and that can have larger applications for retention and morale.”

Across the board, finance professionals prioritize data security and internal customer service: 84% of CFOs and VPs of finance and 77% of other finance professionals ranked security and data privacy as top priorities.

“A data breach — whether related to financial or non-financial data — can have severe financial and reputational ramifications and as cyber risks increase, finance leaders must adequately budget, allocate resources and prioritize company-wide security and data protection measures,” Wright said in the survey report.

Data is increasingly informing strategic decision-making within organizations, the study said. As a result, CFOs' internal customers — typically other executives within the organization — are increasingly requesting that the finance function “provide real-time information with specific insights, metrics and enhanced data analytics about the organization’s financial and operational performance,” the report said.

Nearly 80% of CFOs and VPs of finance, and 70% of other finance professionals, cited enhanced data analytics as a priority for the finance function to improve knowledge and capabilities. Meeting the changing demands and expectations of internal customers is also a top area driving finance workforce increases.

Twenty-eight percent of CFOs and finance VPs plan to downsize their workforce in the next year due to new efficiencies achieved through robotic process automation (RPA) implementation. “We think RPA integration is related to the growing duties of the CFO,” Wright told CFO Dive. “If you automate, you have more time. [These developments] must be framed in context of budget.”

Wright encourages finance leaders to think of RPA as an opportunity to outsource menial tasks, rather than vital jobs, “because [with RPA], your job then gets elevated to do more important things,” Wright said.

“This is a peer-to-peer report, CFOs to CFOs, their own view of their own responsibilities,” Wright said. “CFOs should understand that this is not a lofty view of an aspiration created by visionaries. It’s a reality-based view of what can happen, because there are companies that are doing it.”

Monday, September 16, 2019

Lesson learned: 'Watch your balance sheet like a hawk,' CFO says


Amplify Credit Union's CFO John Orton argues your income statement won't give you the heads-up you need when sales drop and debt service obligations start to mount.

In the aftermath of the September 11 attacks, John Orton's fast-growing business took a nose-dive.

He was part owner of a private equity-backed company that was going around the country acquiring antique malls and using increased sales to service its expanding debt load. But consumer interest in antiques, a discretionary purchase that tends to do well when people are feeling upbeat and confident, waned in the uncertain and fearful environment that followed the attacks and pushed his company into bankruptcy.

But Orton, the long-time CFO of Amplify Credit Union in Austin, Texas, learned a lesson from his earlier company’s struggles. That lesson has helped him be a better finance executive, he believes.

“We thought we were on a trajectory for an IPO at some point when roll-ups were a little more in vogue,” he said in a CFO Thought Leader podcast last week. “Aside from the national tragedy, we saw in the months after 9/11 our sales fall by half. We had leases going up. We had debt payments due on our mergers. So, it put our business into a tailspin. The world went from rose-colored glasses to a chapter 11 filing within four years.”

His mistake, Orton said, was his focus on the income statement almost to the exclusion of everything else. What he should have been focusing on just as much was the balance sheet, because that would have alerted him to trouble down the road in the event of a fall in sales.

“We were very focused on delivering income, and EBITDA, and sales growth, and consummating mergers to keep our venture capital partners happy, grow the business, and try to get bought out or go to an IPO,” he said.

“So, the way we looked at the balance sheet was an afterthought. What snuck up on us was, as we were going past 2001 and into 2002 and 2003, we had a lot of debt service coming due on acquisitions that we’d done in the years prior, and so that, plus a 12% yield to our VC investors, really created a situation where we had a high fixed-cost business.”

Orton said that, had he been more forward-looking, he would have seen his debt service doubling and tripling over the following few years and that was unsustainable in all but the most optimistic scenarios.

“You have to watch your balance sheet like a hawk, and not just your current commitments,” he said. “If I had been more forward-looking, I would have seen in 2002 and 2003 that my debt service was going to double or triple. I think we were under the illusion that, as the business continued to grow and succeed, all the debt service would be taken care of by sales growth, and when that didn’t materialize ... wow, we were upside-down in a hurry.”

Orton said the company emerged from Chapter 11 bankruptcy protection in a relatively good position, in part because of the company's decision to be open about all aspects of the process. “It took about nine months to get through that,” Orton said. “Only about 20% of companies that enter Chapter 11 successfully exit. I actually went around to our different sites, put on roadshows with our employees and key customers right after the filing, and provided monthly updates to them. I think that open line of communication kept a lot of key customers from leaving.”

Early lesson in accountability

Orton credited his appreciation for openness to two negative experiences he had when he first started out in business in the early 1980s. In an early job out of college, at Arthur Andersen, where he worked as a COBOL computer coder, his manager was so frustrated with his performance he threw a book at him and walked out. “It was about 11:30 at night and we were the last two people there,” he said.

In his next job, this time working in the finance department, the company, saddled with a massive inventory problem, instituted widespread layoffs in a heavy-handed way that left a sour taste in employees’ mouths. “No notice, no severance, no nothing,” he said. “It made me realize you can be successful in business without being a jerk.”

Orton says he tries to make openness a characteristic of everything he does and he thinks it’s been a major part of any success he’s had over the years.

At Amplify, when Orton came on board, around 2006, the company had about $300 million in assets. Today, it’s at $1 billion, making it one of the larger credit unions in the country.

During that time, the company has shifted, as most financial institutions have, from a bricks-and-mortar focus to an online and mobile focus.

“It’s been a very digital-first approach for us,” he said. “Boring banks and credit unions by necessity are having to become much more technically oriented.”

He said he works with Salesforce on its CMS, a company called Fiserv on its core banking applications, and a company called Q2 on its mobile applications — this last one a must to stay relevant to millennials. “You can check your deposit balances, your loan application, and you can even do a loan application on a mobile device and we can push notices to you if your account balances get below a certain level,” he said.

Amplify had some 90 applications tied to its core system when he started and now the goal is to whittle that down to about 30 so it’s more manageable, better integrated, and easier for everyone to learn.

“We used to take more of a best-of-breed approach no matter what the application was but then you end up with IT systems that are pretty unwieldy,” he said. “That is a lot of vendors to manage, a lot of training for new employees. We decided that, an application that meets 80% to 90% of need, but maybe slightly short of best-in-breed, but integrates better, is just a better long-term solution for us, easier to manage, probably lower cost, and hopefully, since it’s integrated, easier to use for our customers.”

His role in this process has been to review and negotiate contracts with the vendors, and then track whether the technology is having the results the executive team wanted.

“I’m known as the accountability guy that looks back at ROIs on investments and says, ‘Well, did we achieve the customer growth that we expected to see? Did we see the loan or deposit growth? The increase in service offerings? The number of products per household?' So, I’m the guy who follows behind these investment projects to make sure we’re getting the results we expected, and if not, I want to know where we got off track and what we can do to deliver the investment returns we were expecting.”

The company is hoping the technology will enable it to keep competing even as its competition changes. In addition to other credit unions and community banks, it’s competing against newer online players, like Ally and Marcus.

“A lot of our customers are looking at our rates and looking at those [online players] and in some cases saying, ‘Can you match what I can get at Ally for this two-year CD?’” he said. 

A role for RPA

Going forward, robotic process automation (RPA) is expected to play an increasing role in his company. He’s using it to automate repetitive accounting and finance tasks.

“In the accounting world, we’ve all done reconciliation at some point in our careers and it’s a pretty mundane, low value-add task,” he said, “but you can now — and we’re doing this at Amplify — deploy software that will take sets of numbers and look for commonalities and reconcile the deviations and then at the end of the process, if they can’t perfectly reconcile the account, it’ll spit out the open items to be reconciled, and then you can add human value at the end. So, I see a lot of potential for us.”

The next deployment for RPA will be in loan application processing. “We can have software scan loan apps and summarize information and be given an initial recommendation on a loan,” he said. “And then we would have a loan officer look at that, and if everything looks good, check the box, and the loan is approved for funding. So I think in our industry and certainly others, RPA is going to play an increasing role and to me that’s exciting.”

One bit of advice Orton had for young finance executives is to get out of their comfort zone and get training in communications, including public speaking, because as much as finance skills are important, so is being able to tell the story of the company, because that’s what builds trust.

“As finance people, we tend to be introverted, but it’s important to be good communicators,” he said.