Is the Market Ready for Unified Travel and Expense Management?
The worlds of travel and entertainment (T&E) and expense have always been parallel, but today they are converging with new urgency brought on by an environment of cost control and universal regulatory compliance. Naturally, corporate expenses are most commonly derived through travel, yet the complexity of managing disparate databases has proven difficult to navigate. While efforts were made to marry the two in the past, those initiatives were often born out of necessity, not out of innovation, and the cracks in those models showed through clearly.
For the most part, then, the functions have therefore been kept separate – following the false belief that it is easier to juggle two distinct yet intertwined entities than it is to streamline them into one efficient model. But with the advent of technology that enhances workflow and back end operations, companies are finding that the modern enterprise can get more out of their operations by truly uniting T&E and expense.
Any significant change in operations is bound to meet with resistance, and of course most companies have followed the same antiquated expense regimen for decades. It can be daunting to leap to a new, technology-based system when managers are accustomed to the employee’s faxed expenses form.
But even the most conservative managers may find their paper-based system extremely cumbersome if viewed with a modern perspective. Companies often still rely on a dozen different expense forms that make their way through a wide range of departments depending on which submission and approval processes the form may be required to follow. There is little consistency and even less overarching governance allowing managers to effectively enforce corporate policy.
The idea that such practices have survived this long is shocking in itself, and the drivers for change go beyond a simple matter of convenience and streamlining. Companies must realise by now that they are at risk of losing significant value as employees take advantage of separate systems for T&E and expense that can be rife with loopholes. In fact, a survey conducted by American Express and cited in a recent New York Times article noted that of 500 polled business travellers in both Europe and the US, 40% thought expense report abuse was common. The number is even higher when looked at as a corporate issue: according to KDS research, nearly 50% of companies experience internal cases of fraud – and almost 25% of these are expense-related.
Global compliance issues demand a more stringent view of expenses and a tighter rein on reporting. The rigours of Sarbanes-Oxley demand full transparency of accounting, including expense submission and disbursement.
European T&E can also be extremely complicated when cross-border situations arise. In a manual system, negotiating the maze of currencies and regional requirements means that individual offices need to review and convert each and every expense report by hand. The capability exists today, however, to employ daily and historical currency exchange rates for regional pricing comparisons, multi-currency reporting so that home offices can receive expense reports from abroad without the hassle of manual currency conversion.
Unifying T&E and expense management on a single platform that shares information, delivers reports, and channels approvals without sacrificing components unique to individual companies – such as cross-border operations or affiliations with specific hotels and airlines – has finally become a viable solution. Instead of files full of Excel reports, faxes, receipts and credit card statements, managers can apply technology to gain streamlined, uniform processes across different company departments, work sites and borders.
All of these advances mean less time spent on filing, approving, and fixing expense reports. The same American Express report showed that it takes employees and average of 57 minutes to complete an expense report – an automated system can cut that time by nearly 75%.
In addition, centralised control has to be maintained; companies cannot risk opening more loopholes just as old ones are closed. Solutions exist that can give customised views of T&E and expense, allowing for fewer errors and better enforcement of spending policies. Indeed, it is much easier to become acquainted with one application and enjoy better cost of ownership: companies interface with only one partner, conduct one rollout, design one customisation, and host one training regimen. When T&E and expense are separate modules, each of these elements must be performed for both functions.
Once up and running, a fully integrated tool can yield efficiency and synergies that early incarnations were unable to provide. Companies can enjoy better tracking of trip spending both for business travellers and managers, a streamlined workflow process, improved data collection, and audit trails that go from booking all the way to reimbursement. Features that capitalise on the shared database bring even more ease-of-use factors into play for both traveller and manager. For example, when approved credit cards are used in the field, expense reports can now be automatically populated with charges.
This directly impacts business operations, where benefits can be realised that ease the pain of compliance efforts. Reporting capabilities are a key component of modern solutions, which provide intuitive and flexible reporting and in many cases can be integrated with proven business intelligence tools. That means the improved workflow tracking and approvals decrease the likelihood of bottlenecks. And Sarbanes-Oxley transparency requirements are addressed with self-monitoring features that automatically flag potentially fraudulent claims (i.e., detecting duplicate claims).
Adoption rates go up, as well – simply by virtue of the shared system. Because employees must log into the expense tool to get reimbursed, they are by default drawn into using the same tool for bookings.
To date, there has been comfort in the notion that a majority of companies have been reluctant to employ new systems. But with the myriad benefits available to managers, bringing T&E up to speed with the technological revolution can mean a completely new outlook on how expenses are processed. To remain buried under a pile of paperwork for expenses is difficult enough – and soon, those who fall behind will be buried there alone.