Disciplined spending a must. (News and Views).

Business expenses take a fair chunk out of corporate profits, and it appears Canadian companies aren't managing them well at all. After months of cost cutting and reengineering to protect corporate profits, American Express says that Canadian companies still aren't managing the estimated $95 billion a year they spend very well.

The company says that as much as $15 billion in savings is being left on the table because corporate Canada is not paying strict enough attention to how their employees purchase everyday goods and services like couriers, temp workers and office supplies and equipment.

"Canadian companies are fully aware of the direct costs of running their business and put lots of rigor behind managing their big ticket expenditures effectively," said Herve Sedky, vice-president of American Express Corporate Services. "But large amounts of money are falling under the radar screen of corporate purchasing scrutiny. By not applying the same kind of discipline to how everyday expenses are managed, corporate Canada is missing out on billions in savings that could be going straight to the bottom line."

A recent Amex survey of 229 Canadian finance and purchasing execs found that most organizations have basic cost containment strategies in place but there's lots of room to improve overall purchasing practices.

For example, managing expenses has a high profile with 92% of companies polled. Three quarters have a department in charge of purchasing and 87% have purchasing policies in place that spell out how and where to buy goods and services.

But the survey found an inconsistent approach to how spending on everyday items is managed, including office supplies and equipment, couriers, telecom, travel, maintenance and repair supplies, computer hardware and software, and temps.

While nearly nine in ten companies have a policy in place, 43% don't enforce it and most (69%) don't formally communicate the policy's guidelines to employees. As many as 86% of respondents admitted that their employees spend outside the set policy on a regular basis.

"Developing better policies and stronger controls can dramatically rein in employee spending," said Sedky. "This helps create a culture where employees are looking for ways to save money, instead of ways to beat the system or, worse still, unintentionally ignoring the rules because the policy is not well communicated."

For more information, visit home3.americanexpress.com/canada/