Zombie spending is an imaginative way of describing non-thought expenditures. Why zombies? Like the creatures from horror movies, those expenses are there, but their existence is numb.
Like many of us do, Alice signed up for a gym plan last May, went a few times, got sore and started losing her motivation. The devil lies in the fact that she signed up for €19/month (set on autopay with her credit card). It's not that much, right? So she continues to pay for the membership, but not benefiting from it. That's a zombie expenditure.
Is there such a thing for businesses? Of course. Employees will sometimes subscribe to two or three softwares that do the exact same thing, with perhaps one or two different features. Office supplies placed on auto-delivery are another example. The issue here is that those costs are so camouflaged, and often so irrelevant to your overall cash flux, that financial teams regularly overlook them.
So how is it that we can avoid this situation and smarten our finances as a consequence?
The dangers of employee spending
If your employees keep asking for reimbursement of purchases done in the name of the company, you will eventually get lost in an ocean of receipts. It's hard to keep track of all of those, and this will only get worse once you grow in the number of employees and the degree of liberty they have to spend.
Auto-pay is a tricky road to follow
Automatic payments are a slippery trap as well. Of course, they come in handy when trying to keep in track with every single upcoming payment deadline. But remember the many times you saw yourself with a newly arrived shipment of supplies that you thought were unneeded, although it was too late to do something about it? Those are usually consequences of automatic payments.
How to solve your zombie problem
Just as what we commonly see in movies, there is not much of a secret in dealing with real-life zombie expenses. The kill shot for such annoying monsters is done with budgeting and controlling.
Budget, budget, & budget
Understanding your company's cash position is pivotal. Being stacked with dozens of sheets, each one referring to a particular bank account, is counter-productive. You will likely continue skipping those small amounts forever.
That is when budgeting becomes fundamental. And not only budgeting, but smart budgeting. A real-time understanding of your cash position, as well as an integration to all your bank accounts and wallets, is a safe way of getting yourself in command of your company. Visualizing past transactions, current money flows and forecasting future debts are what allow you to strategize your business and start evaluating what is indeed necessary from now on.
Take full control of your business
The relevance of controlling when administering a business is unmeasurable. It is a hard, if not impossible, mission for managers to keep track of hundreds of receipts. Either coming via email or paper, when you let yourself drag with pre-accounting you may waste many hours, if not days, of precious time in manual arrangements. Manual arrangements that often end up missing one or other details. It’s imperative that financial teams find a way to avoid getting stuck in billing treatment.
Moreover, if employees have some liberty in spending the company money, the risks of losing control of their expenses escalate. It makes no sense to simply keep them from spending, though. What is better, instead, is to have a notion of how those decisions are taken. Issuing company cards that have previously set limits, traceable expenditure reports, and even restrictions on what they can be used for is an elegant way out of this matter.
How we can help
It’s 2022, and luckily budgeting and controlling can now be automatized. We combine state-of-the-art Artificial Intelligence, capable of recognizing bills (and even pictures or pdfs of receipts) and categorizing transactions, with the cleanest and most elegant layout out there.
Our newly redesigned cash flow tab provides you with visuals of your financial history, so you can always have an instant notion of where your company stands at that point, and your expected forecast, based on your inputs of recurring expenses.
If you want to know more about Friday Finance, check our website and take a self-guided tour. We are here to revolutionize the way SMBs manage their finances, and it would be a pleasure to have you with us.