Managing expenses can be a challenge for any field-service company, and construction companies can be particularly susceptible to inefficiencies and waste. Variable costs for materials, management of labor and subcontractors, managing cash flow and adhering to budgets over long project timelines are all factors that can lead to a lack of oversight and expense control.
To understand more about the challenges financial managers face when implementing field-management practices, Coast, a financial technology company serving field service companies, recently conducted a survey of more than 200 construction company employees who have the responsibility of managing or reviewing field spending.
The survey found that many companies are wasting both money and time despite meaningful attempts to control expenses. The results also indicated there were significant gaps when attempting to efficiently manage and control spend in the field.
Some standout statistics are:
- 48% feel they’re spending too much time on reconciliation.
- 56% have caught wasteful spending/card abuse in the last year.
- 31% estimated savings between 10-20% due to better compliance with company policies.
- 61% of respondents are using manual processes to review spending in real time.
HOW ARE CONSTRUCTION EMPLOYEES MAKING PURCHASES?
Across the board, construction employees are making work-related purchases: Respondents said that either “all” (42%) or “some” (58%) of the employees in their company make job-related purchases.
The purchases themselves cover a range of items, including transportation (44%), vehicle maintenance (52%) and accommodation (32%). The two most common purchases are supplies and materials (86%) and fleet expenses such as fuel, parking, tolls and car washes (62%).
The survey also shows that work-related purchases are a common occurrence within construction companies: 69% said their employees make purchases on a weekly basis and another 20% said they make purchases monthly.
Many use more than one purchasing method to meet their needs in the field: 55% use corporate cards, 46% use fuel cards, 33% rely on house accounts and 22% on vendor-specific cards. But the survey showed that a company card isn’t always available, therefore they must rely on their employees’ means. Forty-three percent of respondents say they were reimbursed after using their personal cash or card.
HOW EASY IS IT FOR CONSTRUCTION COMPANIES TO APPROVE, TRACK AND RECONCILE PURCHASES?
Interestingly, 61% of respondents are using manual processes, such as phone calls, to review spending in real time. Only 25% use a software-enabled process and a full 13% don’t have a process at all.
Companies use multiple methods for tracking the expenses themselves. These include expense-management software (33%), accounting software (48%), spreadsheets (36%), custom expense reports (29%) and email (33%).
Tracking this many expenses across different purchase methods can be time-consuming and confusing for employees and field-expense managers. It is probably not surprising, then, that 48% feel they’re spending too much time reconciling expenses with company budgets.
Overall, the survey indicates that construction industry financial teams are spending far too much time each month manually reviewing what their field personnel spend in real time.
HOW WELL DO EMPLOYEES FOLLOW THE RULES?
Construction companies are clearly making an effort to inform employees of their purchasing policies: 57% regularly share their policies in written form with their staff, communicate policies verbally (59%) and/or inform employees of them during onboarding (49%). Only a very small percentage (1.44%) fail to communicate policies at all.
Companies also use a number of measures to prevent or reduce unauthorized spending. Almost 70% collect receipts, 39% rely on an expense approval workflow, 46% have pre-approval requirements, 39% have card spending limits and 36% have expense policies in place.
However, whether through deliberate disregard or simple misunderstanding, it’s clear that not everyone follows the rules. Well over half (57%) of respondents encounter instances of unauthorized or wasteful spending among field employees at least once per quarter. More specifically, 40% have suspected, witnessed or experienced instances of misuse or abuse specifically related to company spending cards.
HOW DOES WASTEFUL SPENDING AFFECT CONSTRUCTION COMPANIES?
The impact of wasteful spending adds up. According to the survey, more than 36% estimate that wasteful spending costs their company between $100 and $1,000 a quarter, while almost 6% believe it costs more than $5,000 a quarter.
While almost all companies have spending policies in place and are clearly making an effort to keep employees informed about their policies and any compliance regulations, it seems that many employees simply aren’t following them. Seventeen percent of respondents said current processes were not effective or only slightly effective while 31% estimate that better compliance with policies would save between 10% to 20% quarterly.
METHODOLOGY
Coast surveyed 200 construction industry employees who have responsibility for managing and/or reviewing field spending in some capacity. The survey was conducted over a two-week period in March 2024 and was limited to U.S.-based respondents.
Enabling employees to make work-related purchases is essential to efficient operations. This is especially true for construction businesses, where purchases often need to be made quickly in response to immediate needs. And it’s essential to control spending and ensure that expenses are easy to track.
The survey suggests that construction company leaders want unparalleled visibility into their expenses, and that an all-in-one fuel-card solution would simplify their employees’ expense management. With a full-service fleet and expense-card platform, accounting managers and dispatchers can create robust, customizable spending policies that are automatically enforced, provide real-time alerts and are built to meet compliance issues.
