As the pandemic grounded enterprise sales teams and business travelers around the country in March, the impact on T&E -- especially on items like hotel rooms and air travel -- was swift and linear.
The door for unprecedented risk opened as organizations underwent rapid shifts in employee spend. Having the ability to find and understand all risks in the organization quickly became imperative as companies fought to put themselves in the best position when adapting policy and best practices to meet the changing employee spend behaviors.
For instance, when the pandemic began, purchase activity in new spend categories increased dramatically, emphasizing the changing dynamics of organizational spend and introducing risk that could impact cash flow. The purchase volume in high-risk categories, such as mail, phone orders and miscellaneous spend, exploded almost overnight. Employees were making purchases from retail vendors like Amazon, Best Buy and Apple in the rush to set up remote working capabilities.
Organizational spend on meal delivery services and gift cards also grew, in support of client-facing teams unable to conduct face-to-face meetings. Finance teams struggled with the influx of new kinds of spend, and the unique challenge they represented: ensuring that expenditures complied with policies, all while having limited visibility into whether the expense was for legitimate business purposes or personal use.
The initial burst of purchasing activity gave way over the summer months to even more purchases, as organizations began to prepare for long-term remote arrangements. Companies around the country recognized a second wave of enterprise purchase activity for office supplies and equipment as employees settled in for the long haul.
With those extended working from home arrangements came more online shopping, and with online shopping came third-party payment processing. As employees stayed home, organizations during the pandemic reported third party purchases up 43% year over year for April, and 28% for the first quarter. When purchasing online through PayPal, Venmo and other third-party payment processing platforms, organizations lack visibility into the transaction data. In “normal” times, many organizations restrict third-party transactions altogether.
Companies may not be able to tell what the future holds confidently; the pandemic is mostly beyond the control of business leaders in America. With its persistence comes ongoing risks, new risks and a deluge of unexpected and shifting spend. However, challenging the environment may be, organizations must understand how the business arena is changing around them, and remain attuned to the shifts that reshape risk.
Want to learn more about how your organization can increase its awareness of risky spend behavior? Check out a recent article from Oversight’s CEO, Terrence McCrossan, in Dataconomy. For more information about how Oversight helps identify spend risk, request a Spend Risk Analysis.