Few finance executives seem satisfied with their ability to control food spending across their organizations. According to a survey by CFO Research Services and American Express (reported in their whitepaper Gaining Control and Unlocking Value in T&E Spending), more than two-thirds (69 percent) of the more than 300 respondents indicated their companies could benefit from stronger control over travel and entertainment (T&E) expenses.
Nearly half (45 percent) said their companies lack the centralized controls that would help them better manage this spending, while 36 percent said ad-hoc T&E spending hurts their firms’ financial performance.
This may ring true to your own organization. To determine and control your budget, it’s important to understand what your food spend is, what the challenges are within your organization to accurately tracking food spending, and the tools you can use to manage expenditure.
Identifying Your Food Spend
The total amount many organizations spend on food often is hard to identify and measure. That makes it difficult to control. For starters, many people across an organization can incur food-related T&E costs. This includes salespeople entertaining customers, human resources staff members offering buffets during lunch-and-learns, and administrative assistants ordering meals for the monthly board meetings, among others.
Because the individual amounts spent on food can be relatively minor, they often fail to capture the attention of both employees and management, who tend to focus on individual expenses that are larger. But, these purchases can add up to a significant expense. The 2015 Meeting Spend Survey by Meetings & Conventions found that respondents allocate more money for food and beverage (31 percent) than for lodging (25 percent).
Mike Underwood, president of Milwaukee-based Underwood Events, notes that many of his clients view food and beverage spending as another item within their budgets. “If the overall budget aligns with their forecast, then it is not an issue,” he says. In other words, they often won’t take the time to analyze food spending for overages or areas to cut as long as their overall budget is in line.
Challenges to Reining in Spending
There are a number of ways to rein in food spending, but each come with their own challenges. For example, some executives want to apply to food spending the policies they implement to control other T&E expenses, like requiring employees to purchase from a list of preferred vendors, but this shouldn’t be a best practice. Many food suppliers operate within limited geographical areas. When you have employees scattered across various regions of the country, or even the globe, it is impractical to identify a small list of providers that can serve different locations. These policies can be difficult to enforce.
And while larger organizations often have purchasing departments that establish overall food and beverage budgets, “individual events are just that: individual,” Underwood says. Departments or teams make their own, sometimes spontaneous food purchases. Employees may balk at applying what they see as overly complicated accounting processes when making these smaller transactions. A platform like ezCater can help you put into place budgeting parameters, without impeding or adding steps to your ordering process. It’s hard to avoid one-off purchases, and this allows them to still be easily tracked.
But it’s not just the one-off transactions that can cause issues since payments for food-related transactions can occur in a variety of ways, often without consistency. The CFO/American Express report found that only one percent of meals were handled via purchase orders. Almost one-third (31 percent) consisted of personal purchases that were reimbursed, 27 percent were handled via corporate cards with reimbursement, and 40 percent were completed via corporate cards paid directly. This lack of standardization across the board can make it difficult to keep track that all food-related expenses are properly captured and recorded. It also can hinder visibility to food spending across the organization, compromising control. To provide transparency into your company’s food spend, the ezCater platform stores data on every food order your employees place through their ezCater accounts. Data can be exported on a per-person and per-order basis, making it easy to compare food spending across an organization even when analyzing events of different sizes.
How to Improve Your Policies
In order to get a handle on all of this, you first need to gain a deep and accurate understanding of food spending across your organization. It’s not always easy to keep your team on the same page here, but by choosing tools that provide enterprise-wide visibility into this expense, your organization’s leaders can find ways to measure and manage it, while also centralizing and automating your food-related transactions. ezCater can help you understand how much your organization is spending on food by unifying your food spend data. What’s more, it can provide breakdowns by departments, locations, and even employees, and show cost per person or event, among other parameters.
To make sure your employees and managers use the tools, they should be user-friendly. More than three quarters of travel managers note that missing or incorrect information listed on expense reports is the greatest challenge to efficiency in reporting. The plain and simple truth is that if tools are not easy to use, your employees will not use them correctly. So long as your team is able to easily and accurately record, approve, and analyze food purchases, you can begin to optimize and control the costs appropriately within your budget.
Learn how ezCater can help you control food spend within your organization,