Business travel, customer visits, events, and meetings are on the rise, and with them, travel expenses. The Global Business Travel Association (GBTA) forecasts an increase of up to 8.6% in global business travel spending this year. Macro trends, such as the (slow) improvement in business confidence and the economic globalization environment in which we live, are contributing to the rise. Another key factor is the growth of mobile working. This presents a new challenge for companies: controlling travel expenses.
Manage corporate travel : Current context
This is an important issue for financial teams. A recent report on the state of the Travel Expense Management concluded that 38% of organizations spend 500,000 euros or more on travel expenses, and 18% spend more than five million euros. The management of this increased spending is a challenge for executives of 43% of large companies that participated in the study.
In this context, it is more important than ever for finance professionals to find a simple, accurate and effective way to monitor and control their business trips and expenses while giving the traveller as much freedom as possible to do their job.
However, as we will see below, the study revealed that many organizations continue to use traditional manual methods or outdated computer systems to manage expense reports. This approach may have worked in the past, but in today's tough business environment, it creates problems that can hinder operations and profitability. Automating the process is the preferred solution for all traditional companies seeking internal transformation.
Manage corporate travel: Business challenge in the control of travel expenses
Here are five key issues that are characteristic of the traditional approach:
- Poor visibility of data and poor precision
The use of manual systems or dispersed computer systems to record, monitor and predict the travel expenses can leave unfruitful dedication finance teams to ensure the accuracy of the data and to provide management with accurate and updated reports. The above study shows that more than a third (35%) of SMEs interviewed admitted to having little or no clear vision of the travel expenses of its employees. Obviously, this lack of visibility can lead to mismanagement of budgets and to bear the costs out of control. - Inefficient Processes
It is essential that expenses are reported correctly and within a specified period. Among other things, this means being able to reimburse employees quickly. However, employees of over two thirds (69%) of companies surveyed still send paper tickets to their finance departments.
Outdated processes make it difficult for people who present expense sheets, which slows reporting and frustrates displaced employees, who often see the process as unduly laborious. Accuracy and productivity are clearly eroded by these manual processes, which are unnecessarily long, and claims could be attributed to the wrong people. Importantly, the duplication of work carried out finance teams in order to locate errors in Expense Sheets, obviously, increases the processing times and costs. - High Processing Costs
Many companies are unaware of the cost of the process. In particular, four out of five (80%) companies in the aforementioned study do not perform active monitoring of the cost. However, the report said the cost of manually processing an expense sheet was € 21.08 in 2015, increasing to 24.71 euros in 2016. These figures contrast with those of companies using a fully automated Expense Management system, with the average cost per Expense Sheet of 7.56 euros. - Increase in Travel Costs
Companies need to spend to operate and these costs increase with increasing business confidence. Managing this increase in Travel Expenses is a big challenge for companies, particularly for larger ones. The widespread increase in Travel Expenses makes it essential for those companies with outdated expense corporate management processes and practices to react: an increase in the volume of expenditure means more work for finance teams and even higher processing costs. Besides the cost, the lack of visibility and precision makes it more difficult for companies to control unnecessary spending. - Enforcing the Travel Expenses Policy
Finally, the lack of visibility in travel expenses makes it difficult for finance teams to to identify when employees incur expenses that do not comply with the corporate travel policy. It is highly probable that in such cases, the expenses are approved whether or are not they comply with the policy of travel expenses of the company. This has obvious consequences in terms of cost control and compliance with the relevant policies.
Manage corporate travel : automation as a solution
The conclusion is that travel expenses represent a significant cost for companies. The basic challenge is therefore control of this spending while giving the displaced employee the freedom to complete their tasks, after all, they are helping to expand and improve operations of the company. However, as we have shown in this article, the management of corporate travel expense Sheets is one of the most difficult functions to control for a company using outdated manual processes or technology systems.
The good news is that most modern and automated systems make it easier for organizations, and help improve the accuracy and visibility while reducing costs. These next-generation tools can give employees mobile access that allows them to register receipts and approve the corrections made by finance department evenwhen in the field. Workers can manage receipts in real time, and administrators can reduce the bottleneck of approval thus achieving a more efficient process thanks to technology. Also noteworthy is the contribution of these systems to the compliance with the Travel Expenses policy. For example, when booking the trip, employees can choose only from those options aligned with the policy. For other types of spending, real-time alerts are sent to relevant team when employees try to incur expenses that do not comply with the policy.
Viewing the increase in business trips, improvements are needed to ensure the future profitability and competitiveness of many companies. It is important to take action now rather than delay the improvements, which could have a major impact on the business.
