In the corporate ecosystem, one of the most persistent and often underestimated challenges is the control of expenses and efficient management of funds. These items, seemingly minor compared to large investments or operating costs, become a constant source of financial leaks if they are not managed properly.
The problem lies in its nature. Many expenses include meals, travel, accommodations, and events intended to strengthen business relationships or represent the company before third parties. Although necessary, these disbursements are not closely monitored, in part because they occur outside of more formal operational processes. In a business environment where every peso counts, especially in inflationary contexts, not having effective supervision can significantly erode companies’ profitability.
Poor management of corporate expenses manifests itself in various ways, depending on the operation of each company. But at Kuru we notice patterns that occur more frequently in companies:
- Sending funds intended for corporate expenses to personal accounts of collaborators.
- Use of employees’ personal cards to cover corporate expenses.
- Use of company money outside of business hours and days.
- Purchases in items or for concepts that are not permitted.
- Receipts lost, damaged or with inconsistent information regarding the reported expense
Additionally, many of these inconveniences lead to friction with employees since errors, poorly executed expenses, or expenses that do not correspond to the company’s policy generate adjustments or deductions in the employee’s salary, causing discomfort on both parties.
Why are they so difficult to control? The main challenge in these expenses lies in their flexibility. Unlike fixed costs, such as salaries or rent, some expenses are variable and often unpredictable. Additionally, they tend to be tied to individual decisions, such as an impromptu meeting or choosing a restaurant for a corporate lunch. Without clear limits, these expenses can get out of control, especially when there are no well-defined internal policies.
Another factor that complicates its management is the lack of appropriate technological tools. Many companies still depend on manual systems for reimbursement of travel expenses or recording expenses, which not only increases the possibility of errors, but also makes it difficult to analyze patterns and trends over time, spending between 200 and 400 annually hours in these administrative processes.
For example, commercial teams, which frequently spend on fuel, lunches and other travel expenses, spend 1 to 2 hours per week reporting their expenses. This represents 5% of your work time, time that could be dedicated to your main activity. Additionally, in companies with a high proportion of employees reporting expenses, at least one administration person is required for every 25 employees, whose job is exclusively to manage reports and related processes.
Although these expenses incurred by collaborators represent a fraction of the total budget, their accumulation has a significant impact. For companies that have large commercial teams, or with significant amounts of staff working in a decentralized manner, it can represent 2% of the company’s total expenses. Poor management generates hidden costs, such as duplicate payments, excessive expenses in non-essential categories or even internal fraud. This lack of control not only affects finances, but also the transparency of operations, making internal and external audits difficult.
What can companies do? We see that the industries where we are finding the most traction are: pharmaceuticals, mining, oil & gas, logistics, and professional services. Although the impact of corporate expenses varies depending on the size of the organization:
– Small and medium-sized companies: The main challenge is accessing corporate payment methods. Bank credit cards are often limited or insufficient for operational needs, forcing employees to use their personal accounts. This generates contingencies and fiscal risks for both parties.
– Large companies: The main problem is control, since the volume of people making decentralized expenses increases considerably. The money flows involved are significant compared to other operating costs, requiring robust systems to prevent abuse or errors.
In the Argentine context, where inflation and exchange rate fluctuations are common, representation expenses can become even more difficult to forecast and adjust. A trip abroad, for example, can involve dollar costs that skyrocket in a matter of weeks, directly impacting the company’s cash flow.
In technological terms, digital tools can make a big difference. Apps and platforms that allow you to record, monitor and analyze expenses in real time offer a level of visibility that traditional methods simply cannot match. Additionally, these solutions are often integrated with broader business management systems, facilitating monitoring and data-driven decision making.
* Luis Ariel Peralta Aliano is CCO of Kuru.
by Luis Ariel Peralta Aliano
