BEIRUT: Cost reduction has become a top priority for businesses in Lebanon as companies adopt a more conservative financial strategy, a survey of Corporate Spending by American Express Middle East showed.
Seventy-one percent of finance managers said cost reduction has become a higher priority, with 32 percent switching to lower cost suppliers, 23 percent reducing corporate hospitality, 19 percent stopping business class travel and 16 percent reducing per diem allowances in the last six months.
“A clear consequence of the global economic slowdown is that companies in Lebanon have become much shrewder when it comes to controllable expenses,” said Mazin Khoury, Chief Executive Officer of American Express Middle East.
The survey showed 55 percent of participants said their companies were now more financially conservative.
Planning, budgeting and forecasting have taken on greater importance for 68 percent of respondents, while 65 percent said cash management had become more significant followed by risk management with 64 percent.
However, rather than simply looking to spend less, the participants said they were revamping their approach to corporate expenditures by introducing new, smarter management practices.
“Cost reduction is certainly an important part of the mix, but the overriding objective for Lebanese businesses seems to be a desire to have full visibility of, and control over, every pound they spend,” Khoury said.
Nearly 45 percent of participants said they introduced new corporate expense policies, while 29 percent said they renegotiated contracts with suppliers, 32 percent changed the expense activities which could be billed back to the company and 32 percent utilized technology such as video conferencing.
According to the survey, companies in Lebanon are increasingly implementing more transparent and efficient expense management processes, with 35 percent saying they now had a clear, company-wide corporate expense management policy in place and another 23 percent expressing an intention to develop one.
Asked about their outlook for corporate expenditure for the coming year, the majority of respondents forecast the same level of expenditures or a decrease.
Those expecting to maintain or decrease current spending levels were split equally at 42 percent, while only 16 percent projected a modest increase in expenditure.
Of those expecting an increase, 26 percent said it would touch on the areas of PR and marketing, 23 percent said it would be spent on employee training, while 16 and 13 percent of participants said respectively they would target equipment and logistics.
“Companies in Lebanon are still spending, but they are investing for the long term in areas they believe will deliver real long-term value, such as marketing their products and training their employees,” Khoury said.