However, despite the economic optimism, the new survey indicates that CFOs still place top priority on cutting and containing indirect costs (goods and services other than raw materials, or “direct” expenses). Many are troubled by their companies' efforts to control expenses, such as office supplies, computer equipment, express delivery, and telecommunications.

“Our new survey shows that a growing number of America's mid-size companies see the light at the end of the tunnel for an economic turnaround,” said Anré Williams, senior vice president and general manager, U.S. Middle Market, American Express Corporate Services. “At the same time, financial executives say their firms are challenged by rising expenses, and they're searching for new ways to control them — regardless of the economic climate.”

Leading Practices in Expense Management is the second annual American Express survey focusing on corporate cost-saving strategies at mid-size companies. Conducted by Boston-based CFO Research Services in February 2003, the mailed survey was completed by 459 senior financial executives at companies with annual revenues between $10 million and $1 billion.

Positive Outlook on Economy
According to nearly half (48 percent) of those polled in the survey, the economy will grow within the next 18 months, a significant improvement from the 31 percent who were optimistic last year.

In addition, only 17 percent predicted that the economy would be erratic over the next year-and-a-half, considerably lower than the 30 percent who felt that way in 2002. Meanwhile, 31 percent believe the economy will remain flat and 4 percent said the economy would decline — approximately the same proportions as in the 2002 survey.

Expense Management a Top Priority
Despite the bright economic outlook that more CFOs share today, the survey reveals that financial executives at mid-size firms are solidly committed to trimming indirect expenses.

In the poll, 76 percent, the largest percentage of respondents, noted that cutting indirect costs and generating new revenue sources were equally important strategies in improving the financial health of their organization.

However, in the survey, it's clear that many respondents feel their companies' expense management efforts need a boost. While 50 percent observe that they are satisfied with indirect expense management at their firms, 26 percent report dissatisfaction. Another 24 percent are neutral on the matter.

Improving Control
Also in the survey, while nearly every company surveyed had some type of spending policy, large numbers of CFOs indicated that they weren't satisfied with employee compliance to those policies, revealing a need for greater control.

For example, of the 93 percent of poll respondents who have a policy in place requiring employees to submit timely expense reports, only 58 percent are satisfied with employee adherence.

“Over the past several years, mid-size companies have made strides in taking control of spending for travel, office supplies, computer equipment and other indirect expenses,” said Williams. “But the push for profitability in these tough economic times has prodded many companies to expand their cost-control expertise and implement more effective solutions — such as new technology and innovative payment systems.”

Web-based technology has emerged as a solution for managing indirect expenses, providing improved control and greater efficiency, and is being adopted by an increasing number of mid-size companies. About one-quarter (24 percent) of poll respondents use Web-based tools for employees to file expense reports, up from 15 percent in 2002. Implementation of this technology is expected to jump, as 63 percent said they expect to implement such technology within the next two years.

Similarly, use of Web channels to access data on indirect spending reached 26 percent in 2003, up from 16 percent last year. By 2004, 50 percent of companies plan to go online to access spending information.

Best Practices
The research on mid-size companies found that financial executives are using a variety of methods to improve expense management and streamline processes. Among the most effective strategies are:

• Establishing spending policies that account for the needs of employees, and then enforcing them strictly.
   
• Centralizing the management of expenses to ensure compliance with policies and processes.
   
• Using Web-based technology to improve expense report filing and data access, and taking advantage of the online tools offered by suppliers and corporate card providers.
   
• Using corporate cards for indirect expenses in addition to travel and entertainment spending.
   
• Leveraging the spending data available in corporate systems to manage suppliers.

About the Survey
This survey of 459 senior financial executives at middle market companies and the accompanying research were sponsored by American Express and conducted independently by CFO Research Services. In addition to the mailed survey, CFO Research Services interviewed 12 finance executives. This survey was written, designed and produced by CFO Research Services. Click here to download a complimentary copy of the report.

About American Express Corporate Services
American Express Corporate Services helps mid-size and large companies manage purchases of everyday goods and services, such as office supplies, computer equipment and professional services. The leading commercial card issuer in the U.S., American Express' clients include nearly 70 percent of Fortune 500 companies, along with tens of thousands of mid-size companies, which use the company's Corporate Card and Corporate Purchasing Card programs and Corporate Travel Services. For more information on expense management tools from Corporate Services, click here.

About American Express
American Express Company is a diversified worldwide travel, financial and network services company founded in 1850. It is a world leader in charge and credit cards, Travelers Cheques, travel, financial planning, business services, insurance and international banking.