Companies without proper processes in place to manage and control event expenditure may be in jeopardy.
Most companies these days control the purchase of employee laptops and phones, and restrict spend within travel policies. There are, however, a surprising number of organisations allowing employees to spend significant amounts on M&E, often without establishing guidelines to manage risk and resources.
Our recent commissioned two-dimensional study looked into meetings and events (M&E) risk exposure and mitigation, comprising approximately half of respondents being meeting planners and the other half leaders (of meetings, procurement, finance, marketing, sales or meeting budget holders).
It revealed that 51 per cent of planners and 43 per cent of leaders do not believe risk is properly mitigated in their organisations. 68 per cent of leaders said that transparency of all data is a top priority; however 85 per cent of planners still simply use Excel for their budget tracking. Respondents also cited “legal/regulatory” and “financial” categories as the most important risk mitigation areas for meetings management.
37 per cent of planners currently do not forward ancillary (e.g. ground, AV, entertainment, etc.) contracts for further review. Furthermore, 23 per cent of meeting planners sign their own contracts but only 6 per cent of leaders state that planners are allowed to sign contracts.
The danger of an organisation not managing legal and regulatory risk can result in heavy fines, loss of reputation or even legal action. However, an organisation can realise significant benefits by taking reasonably simple steps such as formalising financial controls and document management. For example, developing standard addendums and review processes for ancillary contracts, and developing a contract signing authorisation matrix outlining the appropriate levels of staff who are allowed to sign contracts, can help ensure an organisation is protected in a regulatory sense.
52 per cent of planners said they do not receive a budget when meeting planning begins, but 82 per cent of leaders said providing a budget is either an organisational guideline or requirement. Organisations are unnecessarily wasting financial resources by not using available credits, where 36 per cent of planners said they are unlikely or neutral on using available credits and half of the leaders said that their policies do not require the use of available credits. Visibility is also an issue highlighted: 27 per cent of leaders are unable to track meeting expenses and 32 per cent of leaders are unable to report all meeting expenses.
Organisations not efficiently managing financial processes and reporting can face unnecessary spending or miss the opportunity for savings. By implementing policies and processes such as the following, an organisation can minimise financial risk around M&E:
- Provide technology to enable meeting requesters to create estimated budgets.
- Develop a process to identify available credits at the onset of sourcing each meeting and share these throughout the organisation. Track available credits, and update policies to include processes to use credits.
- Input all forecasted budgets and actual expenses in an M&E technology tool, then mandate the use of a corporate purchasing card for all meeting expenses. Develop standard General Ledger codes to track these meeting expenses.
In order to avoid the pitfalls of risk exposure, it is important that M&E activity takes place within a formal, enterprise-wide meetings management programme, which enables proper visibility and control of spending and activities.