Small and Medium Enterprises (SMEs) play a crucial role in the global economy, making up the majority of businesses and significantly contributing to job creation.

According to the World Bank, SMEs account for 90% of all businesses and contribute to over 50% of total global employment. In the UAE, the number of SMEs reached 557,000 by the end of 2022, and the country aims to drive this number to 1 million by 2030, according to WAM. However, as these enterprises continue to contribute to the global economic landscape, they also face a myriad of challenges in their day-to-day operations. Among these challenges, expense management stands out as a prominent obstacle. 

Many small businesses still manually deal with a mountain of receipts, tracking every dirham spent, and ensuring all transactions align with company policy – sounds like a familiar headache, doesn’t it? While this challenge is not unique to SMEs, larger corporations have more resources to tackle it. In fact, the global market size for expense management software is projected to reach $10.56 Billion with a 12.8% CAGR by 2030. However, it’s essential to note that these tools are not exclusively designed for big companies, they are also a transformative solution that SMEs can and indeed should, be leveraging.

Unlocking Strategic Decision-Making

In the MENA (Middle East and North Africa) region, strategic decision-making is vital for businesses to stay competitive and thrive in the market. Expense management software plays a pivotal role in providing valuable decision-making support beyond tracking expenses. Real-time expense data generated by these sophisticated systems can be seamlessly integrated into crucial processes like budgeting, forecasting, and resource allocation, empowering SMEs to make informed decisions aligned with their growth and innovation goals.

The emerging generation of expense management solutions, often referred to as spend management solutions, such as Qashio in the UAE or Brex in the US, offers an excellent opportunity for strategic decision-making within businesses. These solutions not only allow real-time recording and reporting of expenses but also provide the convenience of instantly issuing corporate cards linked to the platform. With all spending consolidated through this centralised system, small business owners can make more informed strategic decisions regarding cash flow forecasting and gain better control over company expenditures.

Combating Fraud and Ensuring Compliance

Expense fraud is a significant concern to SMEs in the region. These incidents not only result in substantial financial losses but also have the potential to cause damage to the reputation of affected companies. According to Deloitte‘s 2021 Middle East Fraud Survey, nearly half of the respondents (approximately 49.8%) lose trust in a company whose name appears in a fraudulent communication. This erosion of trust can have far-reaching consequences that affect brand perception, market share, and overall customer loyalty. Moreover, the MENA PwC‘s Global Economic Crime and Fraud Survey 2022 revealed staggering total losses of $42 billion, underscoring the financial toll that expense fraud can take on a business. For small and medium-sized enterprises, already operating with limited resources, the financial losses resulting from expense fraud can have a profound effect on their bottom line and overall financial stability. 

Cost-Effectiveness of Adopting Spend Management Software

When adopting new technologies, cost-effectiveness becomes crucial. Utilising spend management software offers businesses the potential to curtail avoidable expenditures and enhance supplier negotiations, leading to sustained cost savings. By closely examining expenses and identifying opportunities for expense reduction, companies can achieve long-term financial benefits. Furthermore, expense management software optimises financial operations and streamlines processes, leading to improved financial management. For small companies burdened by managing petty cash with manual expense recording and receipt reconciliation, spend management software provides a viable alternative. It allows companies to set proactive controls on their cards, such as spending limits, frequency restrictions, and vendor or category usage limitations, empowering SMEs to achieve significant efficiencies.

Empowering SMEs for Sustainable Growth

The basis of any good business practice lies in sound financial decision-making. Evaluating the potential return on investment (ROI) before investing in a solution, such as calculating the ROI for new software purchases, is fundamental for efficient resource allocation and strategic planning. Small businesses must prioritise operational efficiency and invest in cost-effective technologies like expense management software, especially in competitive markets like the MENA region. Furthermore, businesses that have embraced expense management software have reported substantial cost savings. This is achieved by reducing reliance on manual and paper-based methods, which in turn eliminates inefficiencies and reduces human errors. The time and money saved from manual data entry and processing is highly valuable, allowing SMEs to focus on core activities and strategic decision-making. 

Elevating Financial Management Practices

The bottom line is that SMEs in the MENA region stand to gain significant advantages by adopting spend management software. As these businesses increasingly recognize the importance of combating expense fraud, the prevalence of these software solutions is on the rise. Not only do these tools act as a bulwark against fraudulent practices, but they also elevate overall financial management practices. By mitigating the risk of expense fraud, SMEs can redirect their focus on core operations, foster stronger business relationships, and establish a solid foundation for sustained growth and success in the competitive MENA business landscape.

Furthermore, the challenges posed by traditional expense tracking methods, such as the lengthy and cumbersome process of processing expense claims and reconciling employee credit/debit cards, are being alleviated by advances in technology and regulatory changes in the region. Spendesk data reveals that the average expense claim takes 20 minutes to process, and with numerous claims being submitted monthly, SMEs incur both time and financial costs managing this process. However, the adoption of expense management software provides a transformative solution.