4 minute read
Travel turbulence: The struggle with T&E expenses
Imagine you’re at the end of a business dinner and have just paid the bill. You pull out your phone and take a picture of the receipt, and just like that, you’ve started the expense reporting process.
Technology today is improving efficiency and having a huge effect on the reporting and approval of business expenses.
Virtual cards and other new payment innovations have made it easier for employees to do their jobs, whether it's buying office supplies or paying for meals on a business trip. This is especially true as more and more remote and hybrid employees are issued corporate cards for business travel and entertainment (T&E) expenses.
There is also the benefit of added flexibility and transparency for an organization’s working capital needs. Commercial cards have become more attractive now, as suppliers want to accept them to help decrease the average number of days it takes to receive payment for a sale, also known as days sales outstanding.
On the other hand, the technology is also uncovering many pain points, including: reconciliation limitations, reimbursement inefficiencies and lack of spend visibility, among others. For example, how do we help cardholders and finance teams efficiently complete the reconciliation process on the backend if they don’t have the right technology?
When you add in that cardholders expect better digital experiences—such as capturing payment receipts with their phones—the results show that businesses face an immediate need to adopt solutions that improve their expense management system.
The elephant in the airport lounge
Worldwide business travel spend is expected to soar above $1.78 trillion by 2027. With business travel on the rise, it means expenses are also growing—putting a strain on employees and employers with their expense management process.
Unfortunately, many expense management systems have remained largely unchanged for years. They struggle with reporting, tracking and processing so much information, especially when employees are not in the office.
One study found 47% of business travelers said their company relies on spreadsheets to handle recording and reporting expense reports. This process often involves manually tracking receipts, which leads to mounting paperwork plus lost time and money.
Nearly 6 out of 10 business travelers spend 20 minutes or more organizing materials to file an expense report. That’s a concern when 55% of business travelers say time is the biggest burden in their expense management process.
Factor in that manual reporting and tracking often leads to errors—a whopping 90% of business travelers admit to making mistakes when navigating the process—and there’s more cause for concern.
Correcting those mistakes takes an average of 18 minutes and an extra $52 for your business to fix. If you process 100 reports a week, you may spend $5,200 a week fixing those errors.
Devoting more time to those mistakes means other reimbursement claims could pile up in the approval process workflow. It also hampers administrators and finance teams from performing other job responsibilities.
A better user experience begins with better collaboration
It’s evident that slow or outdated systems need to be upgraded, especially as they bear a greater burden to capture, record and process more data.
Creating efficiency with cross-functional collaboration in commercial card programs is essential. You must understand the needs of all parties—business travelers, purchasing agents, back-office administrators, finance and technology teams, even human resources. Key functional areas to support them include:
- Better user experience. Solutions that provide convenience to allow users to transact from anywhere, anytime.
- User-friendly features and functionalities. For example, apps designed to streamline the transaction process, which is important for employees needing to learn a new expense system.
- Ability to input, submit and reconcile expenses in real-time from anywhere. For example, users can start processes on a laptop and continue their work at a later time in the same place on a mobile phone.
- Better account management controls. This will create a simpler, less time-consuming process, which affects everything from account creation to expense approvals.
Automation: Create business intelligence with data and technology
The ability to track spend in real time will be a differentiator in the next five years, according to 40% of decision makers.
That’s because when you have insights into expense management data, you can create a more efficient process that improves operational efficiency—saving time and money. Gaining that visibility requires technology that focuses on automated solutions.
When you introduce automation, for example, employees go from submitting paper-based receipts manually in the office to a digital system where they submit expenses via an app from anywhere. Going mobile fast-tracks the submission and review of expenses. The reimbursement process also starts earlier, reducing wait times and the chance for errors.
Other key benefits include requesting a card credit limit increase, instant online support and digital capture of receipts with your phone by taking a picture.
On the administrative side, automation plays just as big of a role. When you automate the reconciliation process, you may be able to capture all payment details using receipts and categorize them—saving time because you basically removed the tasks from your work to-do list.
Exactly how much time and money can you save?
- Save nearly 10 hours a week, or more than 500 hours per year.
- Reduce the cost of processing an expense report from $58 to less than $7.
That’s also important for organizations as they deal with rising interest rates, higher cost of capital and the impact of corporate working capital. Commercial cards can, for example, not only expedite payments from one business to another, they allow them to tap into a line of credit as an alternative to other financing options.
Ensure policy compliance
According to a Mastercard survey, 89% of travel decision makers said dynamic T&E policies are needed to navigate the future of business travel.
By automating policy controls, businesses and employees may be enabled to better adhere to what is set in budgets. This also mitigates the need to enforce policies. For example, if the company card is swiped for an out-of-policy dinner, the charge could automatically be declined.
“By having compliance in place with the right automation tools, you equip your business and workforce with the right combination to handle the ever-changing world of expense management process,” said King.
If you are interested in learning more about how to have an efficient and cost-effective expense management strategy with TSYS commercial solutions, click here.