“If you’re trying to go from a 10-person company to a 50-person company, how do you grow without having to hire more people to do very manual tasks?,” asks Murray.
The answer, he says, is in delivering efficiencies through process automation.
Joining the My Business Podcast, Murray explores:
- How to make back-office functions cheaper and more efficient
- Ways to simplify the audit process
- The concerns many business owners have around cloud-based data storage
- How transparent expenses management can improve cash flow
Plus loads more!
Adam Zuchetti: Welcome to the My Business Podcast. Thanks for tuning in everyone. It's Adam Zuchetti here in the chair as usual. We've gone for a bit of a different tack today. We usually get a business owner in to discuss their own business and how they operate, but today, we've gone for someone who deals a lot with SMEs and so, we wanted to pick his brains. Andy, do you want to introduce today's guest for us?
Andy Scott: Yeah, absolutely. Look, Adam, you know I love people that solve problems, mostly because I like causing problems and it's important for me to know there's someone around to solve the problems. Look, something that I always notice in my job is things with expenses – I'm always spending the company's money to do stuff. I've got to report what I've done. I've got to get it back. I've got to claim it. Look, it can become problematic and difficult and difficult for business owners as well. I'm really pleased today that we've got today's guest in who’s got an awful lot of experience in this. They actually started their firm in an American garage in 1993, which makes him very old in this space. They came to Australia in 2004. They've got about 100 employees in the country and all up, about 700 clients I think they have in Australia right now, but enough of my yakking, Adam. Introduce today's guest.
Adam Zuchetti: We've got Murray Warner from Concur in the studio. Thanks so much for coming in, Murray.
Murray Warner: Hey, guys. Thanks for having me.
Adam Zuchetti: Concur operates in the expenses area and you were saying just off air, Murray, that SMEs are actually more profitable for your business than corporates. This indicates that SMEs and smaller businesses in particular have a really big problem with expenses rather than businesses at the larger end of the scale.
Murray Warner: Yeah, it's a big problem for them and one of the reasons it's a big problem is that they, not being able to automate some of the processes they have really impedes their ability to grow. If you're trying to go from a 10-person company to a 50-person company, how do you grow without having to hire more people to do very manual tasks, and that's where systems come into place. I think where the world's changed quite a lot over the last six or seven years is the advent of cloud-based software. You don't have to install anything. It's easy to buy. It's easy to get up and running, and you can use it quite inexpensively to solve a lot of problems that really has only been open to very large corporations up until the last five or six years.
Andy Scott: Is that a development that you've seen? Because a lot of business owners when they start, obviously, they're small and the back of a note pad or just something that they've knocked up on Excel is an easy and quick way to do things. You haven't got time to be engaging all this stuff. Have you noticed, certainly in the time that you've been around the software industry that the speed, you can do this now and the accessibility for smaller firms can really become an effective changer to, as we say, fix up what can be a problem?
Murray Warner: The difference that's happened is the software world, think of Silicon Valley and all the offshoots that happen all over the world … It's moved from taking a piece of software that you have to install and update and pay maintenance on, so it's a product that you bought, something you bought and it's evolved from that into being a service. So if the service is no good, just like an app on your phone, you turn it off and you find a different one and the companies, that are really good at providing business apps and solutions to SMEs are really focusing on what that service element looks like and hey, is this actually driving a positive result for your small business?
Andy Scott: In terms of typical clients for you, what are some of the ... And you must hear, not necessarily what do Concur do to fix it, but what are some of the typical problems that your team will hear again and again that businesses experience?
Murray Warner: Aside from growth and them trying to figure out how do we grow our business, one way that a lot of companies will look at it, they'll say, “How can we be more efficient?” Maybe you can put a piece of software in place that'll make a back office function more efficient like somebody in finance, maybe they're not spending so much time, for example, checking receipts or doing tax calculations. But if you think broader than that, if you think about if someone takes a business trip, what are all the different elements of that that are involved? If you're a salesperson, what's the function they have to go through as a sales person to book a trip or to collect a receipt or to book a taxi or to do an expense report? It's not just the time of doing the admin work behind the scenes. It's really what's the cost to your business if, for example, your sales team or your head of marketing or your managing director is spending their time on these mundane tasks.
Andy Scott: That becomes the point as well because, and I know this from direct experience, my travels as well. You do, you're conscious all the time, get a receipt, get a receipt, get a receipt, get a receipt because ... Then you come home with a wallet full of receipts, but you haven't made notes on as you've been travelling because you're trying to do it quickly and then, you've suddenly got to reconcile that with, as I said at the beginning, business's money that you've been spending in doing that stuff as well.
Adam Zuchetti: Yeah, it becomes difficult at the end of the month if you've got this shoebox to sort through. Obviously, another element to this is that everyone's afraid of the tax man, both the employer and the employee are just thinking, “Well, if we get this wrong, there's FBT, there's all the different things that come into this.” Talk us through that element and how the tax element can really be simplified and made more efficient.
Murray Warner: Probably 99 per cent of the companies that we talk to if not more … Everyone has a way to reimburse employees. You need to buy things on behalf of the company and you need to find a way to get reimbursed. Usually, the company doesn't know about it until someone keys it into the financial system, usually manually as well.
What's happening today is that for every single expense report that comes through from an employee, generally, there'll be a person who manually goes through every single receipt and verifies that what's in the expense report is what's on the receipt, and they check for a couple of things. One, that it's in policy, that they're allowed to do it, but they also check things like was GST paid on this or was there some entertainment that may impact some fringe benefit tax that the company will need to account for? There are systems in place that would allow that to be automated so that wouldn't require a person to go through every single line item of every single expense report of every single employee for those taxes to be calculated.
What most companies do today is they leave a lot of money on the table for both GST and fringe benefit tax. They look at the risk versus the reward in terms of the time spent on trying to calculate all that tax and they basically say, "Alright, let's just shoot for the middle because it's too hard to actually work out to check thousands and thousands of line items. Let's shoot for the middle and hope for the best," which for a lot of companies we find when we sit down and take them through a calculation on what they could do, that they can leave, a lot of money can pour back into the business.
Andy Scott: I think you've hit a key point there because, look, mistakes happen and malicious action happens as well. Employees do take employers for a ride when they think there's no one checking and doing that potentially and that's a big problem for businesses. We've spoken about as a manual system with checking receipts and data entering, and what sort of technology easily is there now that businesses can apply that gets around that manual side of looking at things?
Murray Warner: There's certainly optical character recognition. What that basically means is the ability to read receipts and have a machine do it effectively as opposed to somebody having to key in data off a wadded-up piece of paper. That exists. There's a lot of system smarts that are available in the market that would allow expenses to effectively write themselves, to pull data from a corporate card, to be able to look at data that's gleaned off a receipt that someone's taken a picture of to be all matched up together and automatically audit it as well. A lot of that piece can go away completely.
Adam Zuchetti: Are there limitations around in terms of scanning receipts? I've had say a receipt in my pocket for a month and you know that crappy paper that fades really quickly. In terms of actually capturing the information on the receipt, are there limitations around how that can be done?
Murray Warner: Yeah. To a certain extent, it needs to be somewhat legible, but in the case where it can't be picked up by a camera, certainly, you can take a picture and an auditor can have a look at it and can go and manually key in data outside of that. But I think one of the paths that at least my company, Concur, has gone down is that a recognition that people are going to lose receipts whether on purpose or not and generally I would say, most people try to do the right thing most of the time. If they know the rules and they're clear, they'll try to do the right thing. You get very few bad apples in my experience that are trying to jig the system.
To be able to take a system that can go and read receipts for you or I guess take a path that we have, which is, let's go and find the companies that produce receipts and have them electronically send them to Concur, think about the scenario where you're going to jump in an Ingogo taxi or an Uber and without ... All you do is ... You don't even have to swipe your credit card – you simply just get out of the car and walk away. But what if Uber or Ingogo was automatically sending a receipt electronically from their system into your expense report automatically and matching it with your corporate card transaction? You never have to touch it. That's the ideal scenario. You never even have to take a picture.
Adam Zuchetti: Is this basically the beginning of the end for a physical receipt?
Murray Warner: That's our hope. Certainly in Australia, the rule is if you're getting a picture of a receipt, that's good enough for GST reclaim purposes, but if you're certainly getting an electronic copy of it, that's gold because it takes away the whole element of really the fraud component or a mis-keying of data that might be in there.
Andy Scott: In terms of, because this stuff as we spoke in the beginning when you guys started out, I think you were selling boxes of CDs and software out of a garage in Seattle. Has the technology now got to a point – and not just in the central basis – but the fact that we've all got this technology in our pockets, science fiction machines even 10 years ago, has this now put this processing in touch of everybody?
Murray Warner: Yes, it has. The big pivot that I see in our business isn't coming out with necessarily a new feature or function within an expense tool. Where I see the world going is that there's a lot of amazing apps that are out there. Some of them, my company's written a few of them, but there's thousands, tens of thousands out there that are very good and very applicable to your business and I see the world going to a place where ... My company can't write all the software that's needed in the world, neither can any other company, and it's really a case of how do you get cloud software and apps to interact with one another, to take useful data from one system like an expense management system and feed other systems that may also be useful.
An example would be, “Hey, I need to book a trip.” Yes, you can do that in our software, but who else needs to know about that trip? International SOS may need to be there from a duty of care perspective. The people that issue visas because you're travelling to India may need to know that as well. How do you make that really simple for a business traveller who's going there for work? How do you automatically get that visa done and notify people where you're going? That's a way more valuable system than all of these systems that most companies have today that operate in pretty much isolation.
Adam Zuchetti: What are the real fundamental cost savings available by taking expenses on the cloud? I'm thinking we did a story on mybusiness.com.au last year, that I think was looking specifically at a travel expenses app or something like that. They were saying they had roughly a 30 per cent saving, cost saving when you add up the time on both the employee's side of inputting the data and then the analysis and reporting side for the employers. Are you finding those kind of figures, those kind of savings available to businesses through your processes?
Murray Warner: Most of them pay for their system, like a system like ours in three months. It's a massive difference between doing a manual process where you might book your trip over the phone and then you do your expense report out of a shoebox and a spreadsheet. So if you take into account the time involved of the person who's actually travelling, but also look at the time of everybody else who needs to check it and do the taxes, do the policy controls, manually key in all the data – if you add up all those salaries and how much time it takes per claim, there's some studies out there of how much that costs. I can't remember from all the cobwebs in my brain, but there's roughly $50 probably cost per claim and we can charge a fraction of that.
Adam Zuchetti: Now another thing that is interesting about technology and business is that a lot of SME owners, they recognise I suppose the theoretical savings and efficiencies that technology brings, but the major bug barriers: I just can't afford the time to transition my business, my staff, everyone onto this new platform. Is that a kind of pushback that you're facing at all?
Murray Warner: Not really. The whole point of being a service I think is you have to make it crazy easy for a company to put it in place. If it takes any longer than 20 working days to roll out, if it takes more than 8 or 10 hours of a company's time to tell you what the requirements is and how they want it to work, and if the app isn't so dead easy that you don't need to train anybody, I don't think you're quite doing it right yet would be my answer.
Adam Zuchetti: All right. There's another point here that we wanted to touch on which is audits. We've discussed time savings, efficiencies – even cost savings, but when it comes to an actual audit, I think that a lot of people traditionally like having the physical paper there because they just feel ... I don't know, there's some sort of familial connection with paper receipts and things like that, but how does cloud-based systems really help to ensure that an audit is going to be effective for a business owner?
Murray Warner: The problem with audits is that they're generally paid for by the company with their own staff quite often. If they're going to go audit receipts, it's usually done by somebody in finance. In Australia, you have to keep your receipts for seven years and so then, you've got the question around storage. If you want to go audit something from two years ago, that storage is usually off site or buried somewhere, but which box do you dig through to find those 20 receipts that you're interested in for a particular employee? It's a bit of a nightmare.
Where our system comes into place would be being able to put all of those receipts online in a searchable format. If you wanted to keep them into infinity, you can. There's no cost for storage, but being able to look up something very quickly and either audit it yourself or outsource the audit to my company or any other company out there that does auditing, there's certainly the ability to do that.
From a business owner, it's, “How do I get back to the core function of our business? What's our mission as a company? What widget are we selling and how many people do I have moving in that same direction to try to be successful at selling that widget?” Everything else we're doing outside of that, auditing receipts and checking policies, are they things that we can outsource for a reasonable price or use technology to make it more efficient?
Adam Zuchetti: The gaps in terms of getting everybody onto the one system in terms of you might have a Windows PC in the office. You've got some of your sales guys really prefer iPads and then, the other side of the business likes Android and then you've got other things in the midst. Is it really difficult to bring all those different devices and operating systems together to operate quite seamlessly right across the business?
Murray Warner: It's difficult if you don't support all of them. Yeah, that's a big problem, but you have to go and support all the browsers. If people are using Macs or PCs or whatever and you have to support all of the different mobile operating systems as well. As long as you do that, I mean a system like ours, a system like expenses generally, literally anyone in the company could submit an expense report whether it's for a pint of milk or an airfare and so, you need to have a system that's accessible that they can all use with whatever medium they want.
Adam Zuchetti: You've mentioned travel. Is that what you found the business owners are saying has been the really major bugbear when it comes to expenses or are there other types of expenses that cloud-based software is really enabling them to facilitate a lot easier?
Murray Warner: Outside of salaries, what you're paying in payroll, about 15 per cent of most companies they pay in T&E, so travelling expenses, entertainment type expenses. The other 85 per cent is usually getting paid into some type of supplier. It could be the person washing the windows. It could be legal fees. It could be people providing materials for whatever you're building. I think from a Concur perspective, we would look at that as spend that's happening. Then the question becomes how do we manage that better? Is there a story that we can give to a company to make them be able to have a multiplier on the money that they're spending there?
Adam Zuchetti: Andy, have you got anything -
Andy Scott: Yeah. Look, there's a couple of things. Just to go back on your point about storage and stuff earlier, and I suppose the analogy being that even though people have known generally banks are the safest place to put your money, people still leave their money under the mattress. What sort of pushbacks do you get from the idea of people: I've got my receipts in my boxes and I know it's a warehouse of boxes, but I'm nervous about handing them over for them to disappear in the cloud? What sort of concerns do a lot of business owners give you about that transition that they make?
Murray Warner: It's a question they probably always ask and usually the discussion is, "Okay, tell me where you store your receipts," and they'll talk about the backroom that they have and how it's organised. We generally start a discussion about things like ISO compliance and things like that. We might bring up an example of maybe a big federal government client that we have that is very particular about where their data is stored and how it's stored, and the types of certifications that you would need to have in place, not for just a single company trying to keep track of their receipts. You may spend some money to make sure it's a nice warehouse and there's no leaks in the roof, but what would you do if you had 40,000 customers that are processing billions through a system, think about the security that you need to put in place to make sure that those don't get lost. Our response would be we would probably spend a thousand times more making sure those receipts aren't loss and are accessible than any individual company ever could because it wouldn't really be feasible for a company to do it.
Andy Scott: Obviously, you've seen the cloud develop and software and stuff. Do you think that's the key benefit that all small businesses can take, not just from your service, but from similar services, in competing services? They've got that scale that they can access now without the investment required to build it themselves?
Murray Warner: It's massive. You guys, I'm sure you've had a look at companies like Xero and MYOB in this market and what they've been able to do for small businesses. Every business needs to have a financial system to record the books and the ability to take a cloud-based system like one of those and there's others and be able to turn it on relatively easy and make beautiful software is really for all the small businesses I talk to, they're like, "Wow, this is amazing that you can buy this online, get help at 2:00 in the morning when you're trying to set it up and be ready to open your doors the next day for business is a pretty amazing thing." The financial system, where they keep their books is the core of every business. You need one of those. You can't do it on a spreadsheet. Once you have that, building outside of that, looking at other processes inside the business that you can go and automate, there's a lot of different tools that are out there and Concur is just one of them, but there's other ones as well that are fantastic for a small business.
Adam Zuchetti: In your experience, just to wrap up here, are there any really big do's and equally big don'ts that you would recommend business owners look at when it comes to managing expenses?
Murray Warner: Yeah, that's a good question. For do's, things that they should definitely be doing, I would say a lot of people that buy systems like our expense system that the people that would generally buy our system would be somebody who's either running the finance department, could be a controller, could be a CFO, could be the MD who's running a small business and usually their biggest headache isn't that this is inefficient. That's not what they worry about generally. They're really looking for a way to be able to know that people are doing the right thing and having visibility and knowing that there's something in place doing the checks without having to necessarily rely on people. They need to be able to give people tools that they feel happy with when they're at work. They're not moaning that they spent all day Sunday doing their expense report so they're unhappy.
If you give them a really good tool that they like using as much as you can like doing your expenses, what if you didn't have to? What if you take a picture of the receipt and your expense report's done? That's a great thing. It makes them happy. What if you know that that system has controls around it? It has the ability to check your policy, do all of your taxes, be able to take away all the manual data entry, that's a good thing. How do you get something that's very ... where your travel policies and what they're allowed to do are built in because people you think are probably going to do the right thing and if you tell them when they don't, they're probably okay with that. I think being clear and concise on what your policies are, putting in a system that's easy to use, it makes it painless really is something you definitely want to do.
Things I wouldn't do, the people that often buy our systems are very much from a finance world and they've spent sometimes years and years and years being extremely frustrated with people who submit expense reports that are incomplete, don't have receipts, broke the policy, didn't have tax information, and so they're angry and they're going to fix this problem and they will buy expense systems and they will put 29 different rules in there that almost make the system unusable at times because no matter what you've done, you've broken a rule. Part of it is yes, people try to do the right thing, try to make it open, try to above all make it easy to use because at the end of the day, you can capture anything where people have gone astray.
Adam Zuchetti: Fantastic. Murray, I think we'll leave it there. If anyone's got any more questions about what we've discussed, where can they find you?
Murray Warner: They can certainly hit out concur.com.au website or share my details.