What is Cross-Functional Expensing
The Fintech SaaS (expense) tools market has evolved tremendously over the past two decades. Many companies, such as PayFit, Brex, PayBoy, Kledo, HReasily, and many others, have developed some of the most sophisticated expense tools we have ever seen. The choices are endless, so much so that, on average, companies use 3-4 tools to manage their expenses. On the face of it, this is a CFO and HR teams' heaven. But is it? Good question…bear with me.
Over the past two decades, two categories have emerged to deal with expenses. One category was named Expense Management, and the other was HR Compensation and Pay.
Some of the leading companies in these two categories are PayBoy, Gusto, Swingvy, Aspire, Brex, and a few more.
What is the problem with too many categories and tools?
In general, there is nothing wrong with an abundance of tools and categories. However, when it comes to expense operations, the more options you have, the slower and riskier the process becomes--especially with two critical teams such as HR and Finance.
Let's shed some light on the topic, shall we?
As the years passed, expense-operations categories created a fragmented ecosystem of tools for many companies. As brilliant and efficient as these tools are, they created a gap between HR and Finance teams and made employees very frustrated with each other (don't believe me? I challenge you to go to your HR or Finance person on your team to ask them about their frustrations).
Just like when Sales and Marketing didn't use to get along with each other (it is behind us, right?), this gap created the same "conflict" between HR and Finance teams.
The "conflict" between the two teams has only grown over the decades. Reimbursements, treasury (cash) management, cash forecasting, managing budgets, approvals, issuing corporate cards, onboarding new employees, recruiting budgets, paying salaries, and paying bonuses and commissions all turned into a silo operation (for a large part), where each team will use a different tool to do things. Usually, the two teams would meet weekly to align, send unlimited daily slack/email messages to each other, and often get frustrated.
As a result, expense operations will get messy quite quickly and often. Expense requests will come through emails, slack messages, and WhatsApp messages. Employees will work on different (personal) excel spreadsheets to track numbers, creating a fragmented environment of expense data, every CFO's biggest nightmare.
Speaking of CFOs, here's a crazy stat for you, did you know that 50% of CFOs' time is spent handling HR-related functions? 50%!!
And while we're on the topic of stats, here's another crazy stat: on average, a 50-employee company will spend anywhere between $13,000 to $15,000 annually on two SaaS tools to manage Finance and HR expenses! (The price will increase if they have 3-4 tools.)
It doesn't make any sense.
Francis and I experienced these pain points when we held roles in various companies. In our heads, it didn't make sense. We asked ourselves a simple (and hard-to-answer) question: why? Why would anyone risk making expense errors by working in a silo environment with multiple tools and players? Our answer was very simple; they wouldn't.
Our vision was clear as day. We wanted to create a world where Finance and HR teams work in a cross-functional environment using a single tool. We wanted to create a process where both teams have unified terminology and processes to do the job. We called it cross-functional expensing. And this is what Bursement is all about.
What is Cross-Functional Expensing?
Cross-Functional Expensing is a new category in Fintech. It is an environment designed to break data silos and give CFOs full visibility and control over all expenses in the company so they can make faster and error-free decisions on the go. The idea is to have all expense operations run in one closed-loop environment across all employees and teams.
One of the most important benefits of working in a cross-functional expensing environment is the bridge it builds between HR and Finance teams. These two teams are more connected than you think.
Finance's language is mainly number driven, as opposed to HR, which views employees as a Human return on investment. Although these seem to be two opposing sides of the spectrum, they do overlap.
Finance and HR teams work towards a common goal of higher workforce performance, which often leads to profitability. HR teams must consider the cost and benefits of attracting, recruiting, and onboarding new talents, and so does the Finance team.
Hiring new talents is not (and should not) be the end goal for HR teams; impacting profitability is, and thus they need to speak the language of the Finance team and vice versa. This can only happen when both teams work with a single tool in a connected work environment.
Approvals are another issue for these two teams. Take, for example, "leaves." How do they fit into the CFO's cash management if they happen on an HR tool first and only later get to feed into the CFO's dashboard? Does it make sense to have them operate on the same platform so they feed into all expense operations decisions? We think so.
In conclusion
Cross-functional expensing is a way to help companies reduce expense errors and increase efficiency in the already fast-paced work environment they operate. Moreover, it reduces tensions between teams and creates a collaborative process across all expenses in the company.