Cloud Tech Can Help Business Adapt To Euro Crisis

By Author: Web Expenses
Total Articles: 8
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p>As the eurozone stands on the brink of break-up, Sanjay Parek, MD at WebExpenses, says cloud technology could help multinationals adapt to an unpredictable economic climate.
The implications of the euro-zone crisis are clear: business must now start preparing for a fragmentation of Europe, with worrying implications for control of international company finances.
Nicholas Sarkozy’s stark warning that “never has the risk of disintegration been greater”, David Cameron’s dramatic veto and the possibility of referendums across Europe, now make a break-up of the Euro a real prospect. Even if the euro survives, several of its current members may well be forced out.
The implications of this in terms of the broader knock-on effect on the UK economy have been widely-discussed.

But few have considered the implications of this scenario for UK multinationals with employees scattered throughout the Continent: once, these businesses had the advantage of harmonising the management of payroll, tax and expenses systems across one currency bloc, ...
... with one set of Treaty obligations. Now they may have to contend with the admin nightmare of centrally managing and monitoring payroll, tax and expenses-systems across an array of newly-fragmented currency zones.
With heavily-regulated UK businesses losing an estimated £6.8 billion a year due to outdated paper-based payroll admin systems, a euro break-up will dramatically increase the red-tape overload. One can imagine chaotic scenarios where group-reporting is carried out in francs, the Finance Department monitors spending in deutschmarks, and a line-manager must approve claims made by someone subject to different expenses rules using a different currency.

Compliance with expenses rules governing everything from acceptable VAT claims to bribery, already adds a massive admin burden to UK businesses. Multinationals may now have to alter their policies to incorporate multiple local jurisdictions with new and varying tax rates, policies and currencies.

Expenses fraud is estimated to cost UK businesses an estimated £1.3 billion a year and Deloitte found that this is because fewer than 2% of claims are investigated by overburdened admin staff. The lack of proper monitoring and potential for widespread fraud will only be further exacerbated if businesses are forced to monitor and control expenses across a range of newly-reborn currency zones.

And monitoring the activities of international employees has recently become a legal imperative: the UK Bribery Act applies to foreign companies with any business connection to Britain, and holds companies directly responsible for the actions of all employees and even “associates” scattered around the world.

Cloud Technology Gives Business Flexibility

Everybody talks about the advantages of cloud technology when it comes to cost savings and scalable data storage: but its advantages when it comes to the ability to quickly respond to, and incorporate changes in the global economic and legal environment, are rarely discussed.
With a break-up of the euro looming, cloud-based software can be centrally altered to include “out of the box” updates so multinationals can rapidly adapt to regulatory, tax or currency changes affecting local divisions.

Companies using software-as-a-service can customise their expenses and payroll-management for international divisions and tiers of employees across a vast range of currencies, policies and rules.

Remarkable IT innovations now enable one Finance Department to centrally monitor and control finances and automatically reimburse multiple tiers of employees and multiple international divisions, in their own currency, and in compliance with separate policies.
The flexible systems can be configured to incorporate an endlessly-changing stream of laws and rules governing each company division and each tier of employee in its calculations. This gives Finance Departments an instant and accurate overview of spending patterns across a fragmented global operation.

Crucially, the software automates the process of staying within the law, by instantly red-flagging any claims that do not comply with the widely-varying regulations governing each international company division.

Even if group reporting is in euros, a Swiss employee could have their expenses instantly reimbursed in francs: a line manager in a British division can approve claims made by an employee in a Norwegian division: one accounts team can process expenses across a far-flung cluster of international divisions and many entities can be configured with their own base currencies, terminology, expense categories, credit card programmes, and mileage rates. Multinational and multi-division policies can now be implemented in days.

In today’s world of mobile workers and consumer devices, the modern workforce is already becoming increasingly fragmented, and a euro-zone break-up will only add to corporate woes.
The modern worker expects to be able to book their company flight, hotel, travel and entertainment on smart-phones in different countries, while on the move. WebExpenses technology, used by multinationals like BT and EMI Music, enables employees to enter claims and evidence “on the road” using smart-phone apps and phone cameras to capture receipts.
The modern fashion for worker empowerment, consumer IT and cloud-computing may yet help corporate Finance Departments restore control over an increasingly mobile, globalised workforce operating in an unpredictable economic climate.