Finance heads prioritise expenses

UK’s small and mid-sized businesses are under pressure to make savings but say they miss out on discounts enjoyed by larger firms, New American Express Survey shows

• VAT increase catalyst for more than half (56%) of firms to put balance sheet under scrutiny
• Nearly two thirds (63%) of financial decision makers say they could do more to achieve savings from suppliers
• Six in ten (62%) say they miss out on savings, discounts and rebates offered to larger organisations

UK small and mid-sized businesses admit they need to do more to control costs, but say they are struggling to balance business expenditure with sustaining growth, according to new research from American Express Corporate Membership Rewards®.

The research reveals that more than two thirds of the financial decision makers at the companies surveyed (68%) plan to review their expense management policies in the next year, with a view to reducing costs – but almost three quarters (74%) also say that despite current economic conditions, they feel that travelling to meet clients face to face is critical to the long term success of the business. This is leaving companies with a dilemma as to where they can achieve cost savings while maintaining their competitive edge.

According to the research, the VAT increase has been the catalyst for over half (56%) of financial decision makers in small and mid-sized firms to put company expenses under greater scrutiny as they look to get more value from their outlay. While 63% of companies admit they could do more to achieve further savings and extra value from their providers, almost two thirds (62%) say this is a struggle as, due to the size of their firm, they often miss out on the savings, discounts and rebates enjoyed by larger organisations.

Katrina Cliffe, Vice President and General Manager of Commercial Cards at American Express UK said:

“Against the backdrop of the VAT increase and speculation about interest rate rises later this year, mid-sized companies are focusing more than ever on maximising business expenditure. Travel and Entertainment costs typically account for an organisations third largest controllable cost after salaries and IT and our survey shows that small and mid-sized companies in the UK are keenly aware of the need to put an even greater focus on how to achieve the best value from suppliers and from their overall company spend.”

The research also provides insight into financial decision maker’s expense management strategies, and finds the indirect expenses that the firms surveyed have historically prioritised most are salaries (33%) supplier costs (29%); and travel (15%), with technology and telecoms spend accounting for a further 7% and 5% respectively.

To help businesses capitalise on company expense spend, American Express is today launching an innovative new rewards programme, Corporate Membership Rewards. The new programme  has been specifically designed to suit mid-sized businesses and will provide them with tangible savings through consolidating points, from spend on multiple Corporate Cards, into a central company account.  Companies can redeem these points for savings across three business categories – business products & services, travel & meetings rewards and flexible savings (credit on their Corporate Card statements).

The need to take greater control of employee spend to achieve savings is also highlighted further in the American Express survey. It finds that employees of small and mid-sized companies in the UK, spend on average £3480 per annum on company expenses, while one in ten (10%) spend more than £6000.Three-fifths (60%) of company expense users admit to being less likely to shop around for the best deals when spending company money, compared to when making a personal purchase, further highlighting the need for a strong expense management policy.

Corporate Membership Rewards:

Open to all American Express Corporate Card customers using Platinum, Gold and Green Cards, Corporate Membership Rewards provides businesses with an opportunity to achieve business-wide savings by accruing reward points on every full 1 pound spent on items or services purchased on employee Corporate Cards.   Every enrolled Card earns points for the business, there are no limits to the number of Cards that can be enrolled in the programme – the more Cards enrolled the higher the potential earning power.