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How to Manage Business Subscriptions and Avoid Cash Leaks
Small businesses today rely on numerous online subscriptions to manage their operations efficiently. From software-as-a-service (SaaS) tools, Card-as-a-service (CaaS), to cloud-based storage platforms and more, these subscriptions can quickly add up and become a financial burden if not managed properly.
In this article, we will discuss some tips and strategies to help startups & small companies manage their online subscriptions effectively and avoid any cash leaks that may arise due to outdated or unnecessary subscriptions.
How to perfectly manage your business subscriptions?
- Take inventory of your subscriptions
The first step to managing your online subscriptions is to take stock of what you’re currently paying for. If you’re not using expense management or subscription management tools already, you can create a spreadsheet or document that lists all of your subscriptions, including the name of the service, the monthly or annual cost, and the renewal date. This will give you a clear picture of how much you’re spending and when your subscriptions need to be renewed.
- Prioritize your subscriptions
Once you have a list of your subscriptions, prioritize them based on their importance and usefulness to your business. Identify which subscriptions are essential and which ones you can do without. For instance, you may need a project management tool to manage your team’s tasks, but you may not need a premium social media management tool if you have a small social media presence.
- Negotiate better rates
If you’re paying for multiple subscriptions, consider negotiating with the service providers for better rates. Many SaaS companies offer discounts for annual subscriptions or for customers with multiple subscriptions. Contact your service providers and ask if they can offer you a better rate or a bundled package.
- Update your subscriptions
Make sure to keep your subscriptions up to date by regularly reviewing them and renewing them on time. An outdated subscription can lead to lost productivity and unnecessary expenses, as you may be paying for a service that you no longer use or need.
- Consider using an expense management tool
Expense Management solutions can help you manage your subscriptions more efficiently. These tools can streamline all your subscription-based payments, track your subscriptions, and provide you with insights into your subscription spending.
- Use corporate cards for payment (and pay in the same currency)
It can add a lot to your costs if you use a local currency credit card to make cross-border payments, especially when these are recurring payments. Look for a corporate card provider that offers multi-currency cards, most importantly USD, with an integrated expense management platform. This way, you’re able to manage your subscriptions from payment to reports.
Learn more about CaaS solutions here.
In conclusion, managing online subscriptions is an important aspect of financial management for small businesses. By using a corporate card with an expense management solution, you can consolidate all management tasks into one platform. Taking inventory of your subscriptions, prioritizing them, and updating them regularly will no longer be a taxing manual job. Using an expense management tool helps you manage your subscriptions more effectively and avoid any unnecessary expenses.
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Are Trends in Payments Ready for SMEs?
In 2022, the demand for contactless, online, digital, and speedier payments have only increased, especially since the pandemic pushed for more innovation in the industry. For fintech solutions, such as digital payments and buy now-pay later (BNPL), this pushed for offering new ways to make payments as they continue to attract billions in investments globally, aimed at creating faster, easier, and cheaper worldwide payment tools.
“faster, easier, and cheaper” is the motto for payment technology
While the market seems to respond well to consumers’ shift in their buying behavior and cater to the demand for better solutions, not the same can be said about small and medium businesses -or SMEs-. Once new fintech companies capture the potential the SMB market has and the various needs that are not yet optimally met, we will see new competitive solutions to make the financial operations in SMEs much more seamless.
In Saudi Arabia, the number of small and medium enterprises (SMEs) increased by about 68%, reaching 752,500 during Q1 of 2022, in light of the incentives provided by Vision 2030. This in itself should be seen as a driving factor for fintech companies who aim at diversifying their kit of solutions and reaching a market that is in dire need of attention.
With that in mind, here we mention three trends in payments that are of concern to SMEs
Embedded Finance can better serve small-business users
To better support their small and medium-sized business users, platforms are turning to embedded payments (as well as other financial services, like enhanced pay-out options/flexibility, card issuing, capital/lending, and foreign exchange). By doing this, they can increase revenues, improve cash flows, and develop more appealing products.
As a result, platforms and financial institutions are under pressure to do more to combat financial crime and uphold oversight requirements. Although the compliance technology sector is growing, it is a dispersed one. In the years to come, Fintech platforms will require a comprehensive strategy for payments and compliance services.
B2B businesses need a different set of features
The market has become crowded as BNPL, which enables customers to stretch payments over a certain length of time, continues to gain popularity. BNPL players such as Affirm and Klarna are competing with digital payments giant PayPal, card issuers, and large and mid-tier banks.
Once BNPL providers have built a relationship with customers, it is anticipated that they will expand their service offerings to include loans, brokerage accounts, and cryptocurrency. Some significant BNPL businesses, including Klarna, have already debuted new products like debit and rewards schemes.
The financing model might also be used to attract businesses. On the consumer side, it has expanded, but it is still uncommon when it comes to companies. This switch from consumer purchases to business contracts may have major implications for other market participants. Why? Mainly because a larger sum of money will be transferred from the card networks to the loans.
Still, when customers fall behind on payments, BNPL practices can potentially come under more regulatory scrutiny. Mizuho Americas analysts point to delinquencies and charge-offs rising across BNPL operators, and the frequency of consumers missing payments or borrowing through multiple apps.
Retailers and payment networks are navigating the recent e-commerce boom
Amid the rise in e-commerce, payment networks and retailers need to find common ground when it comes to fees. We saw disputes erupting around this area, as both sides look to adapt to the new digital marketplace. Leading firms are going to set the trend as they address the boom in e-commerce transactions in the future.
Visa and its rivals Mastercard, American Express, and Discover Financial, are dependent on swipe fees. The Nilson Report estimates that overall U.S. swipe fees increased by 70% over the previous ten years, from $64.6 billion in 2010 to $110.3 billion in 2020.
How new trends in Fintech are going to drive these numbers in the future? Only time will tell
While we tend to view the recent developments in the e-commerce and payments sector from the customer’s angle, we might be missing the full picture. SMEs can grow faster when they are given the right tools, especially for managing their finances, since many of them do not hire permanently and operate with small teams. If you own a small business or growing your startup, keep updates on the market in mind and discover what is there on offer, you might be surprised by the fintech solution already available.
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How to Manage Business Subscriptions and Avoid Cash Leaks
In most companies, employees need to pay some expenses as part of completing their tasks, which requires handling expense claims and paying reimbursement on a continuous basis. Many consider this process complicated and slow, especially given that each expense claim takes about 20 minutes to process, and eventually several claims may accumulate before the employee receives any reimbursement. Therefore, some companies are moving towards allocating fixed allowances as an alternative solution.
A fixed allowance policy may solve the issue of time and reimbursement, but other elements are considered when comparing both methods and selecting the best for your company.
To help you find the best way to manage your company’s expenses, we review the pros and cons of the fixed allowance and expense claims method in terms of its suitability for different types of costs and its impact on employees.
Cost Item Properties
The settlement method you decide to follow has different implications. For example, some companies tend to adopt an expense claim policy when their employees purchase work-related devices, such as a computer and mobile phone, and set in their policy a maximum reimbursement limit, for example, 3000 riyals. If the employee gets a device at a higher value, he will not be compensated for the full amount, and the device will be fully owned by the company.
But if the company follows a fixed allowance policy for the purchase of devices, the employee can buy a device with better specifications at a higher value, and the ownership of the device will be his/ hers. The employee may not have to eventually buy any device and the value of the allowance will be accounted for using his personal device for work.
With regard to devices in particular, there are other important aspects that must be considered, such as control systems and protection of data, which we will address in another article.
In terms of cost item properties, let us consider 2 of them:
What is the value of the expense?
It is difficult to estimate the actual expenses of a company when using the fixed allowances. How exactly were the allowances disbursed? Is the actual cost greater than the sum of allowances for a particular item or less? Companies often set the fixed allowance amount on the basis of the lowest estimated cost, which often results in employees paying the difference and asking for a reimbursement later. Here, the company has to work on both solutions together, ensuring that employees follow the expense claims policies.
What is the estimated amount of expenses?
Many business expenses are recurring periodically, whether daily or infrequently. Transportation expense is a daily low cost item that companies compensate by setting a fixed allowance. Should the allowance include all forms of transportation? Some jobs call for constant travel, but due to the many variables that affect the cost of travel, it is difficult to compensate for it with a fixed amount.
The rule is that the more frequent and low in value an expense is, the more a fixed allowance is suited for it.
Impact on employees
In addition to looking at the cost characteristics, it is important to consider the impact of a stressful process on your employees.
Timing of compensation payment
When the employee receives a fixed allowance, he receives the amount before the expense occurs, which is an important point for employees who are unable to cover costs from their own money. On the other hand, if the policy is to claim expenses, the employee will not receive payment until the expense is realized and the claim form is submitted. The timing of compensation payment depends on the size of the company, its policy, and how free the employee is to deliver and follow up on the claim, so the period may exceed one month or more. Therefore, it is natural for employees to prefer receiving an advance allowance, especially if the expense cost is high.
In a nutshell!
The nature of your company expenses is the main factor in determining the type of payment and reimbursement, and you will often find it unavoidable to adopt an employee expense policy. Therefore, developing this process to be on the level of efficiency of allowances in terms of processing time and speed of payment is the best option for any company.
The best of both world? A fully automated expense management system.
Here is a summary of the comparison:
| Fixed Allowance | Expense Claim | ||
|---|---|---|---|
| Responsibility and Accountability | Unclear view of the actual exchange | A high degree of responsibility and transparency about the cost of actual expenses | |
| Transaction Process | Simplified or nonexistent | Takes a lot of time and effort | |
| Ease of processing claims | Advance Payment, no need to wait for reimbursement | reimbursement takes place after the expense has occurred and is subject to postponement |
Can you fully automate your expense management?
For more information about automating your expense management and avoiding all the challenges of expense claims, book your demo with NQOODLET here.
About NQOODLET
NQOODLET is a world class unified expenses management platform for SMEs who need to manage and streamline their expenses, through a full automated process that provides instant issuance to multiple payment corporate cards for team members and smart spending solution for expenses reports and reconciliations.