Reviewing your company’s expense report can be a tedious task. There are dozens of employees going on business trips every month and tons of spending categories you should account for, not to mention complex travel policies you must police.
As complicated as these reviews could get, they remain a crucial part of any Finance or HR manager’s role. Companies attribute a big part of their budget to travel and expense (T&E), making it a significant operating cost for large businesses. T&E is also the second most difficult operating cost to control—data for this spending category comes from different sources, and many companies still use manual processes to store it.
Another problem is that T&E budgets are prone to fraudulent activities. According to a 2018 Association of Certified Fraud Examiners (ACFE) global study on occupational fraud and abuse, around 11% of fraud in large companies is due to expense reimbursements, usually in the form of fake reimbursements, duplicate receipts, or altered expense reports. By the time these fraudulent activities are identified, the losses would be practically impossible to recover.
Therefore, getting real-time visibility into your company’s T&E expenditures is critical for business growth. Analyzing travel expenses can help actively reduce costs, mitigate the potential for fraud, improve travel policies, and create a happier and more productive workspace for your business travelers.
Travel & Expense Data Analysis Points
Here are some aspects of a travel expense report to pay close attention to:
Total Travel Volume
How many business trips do your employees take in a year? Where do they travel most often? How long do these trips last on average?
This initial move will help you spot potential long-run improvements. For example, knowing about your employees’ most frequent destinations can help you decide which airlines and hotel chains should be preferred by your company. This makes the booking process much easier and turns business travel into a more cost-efficient part of operations.
Average Transaction Cost
How much does each business trip cost? Is your company spending more on business trips than other companies your size?
Once you get the average cost of one business trip, you can benchmark it against other companies of a similar size. This will show you if you need to be more stringent with your travel budgets or if something’s amiss. You can revisit your expense report to zero in on where the overshooting takes place. From there, you could then take action.
Spend Cycle Time
How long does it take employees to submit their expenses? Do you have to wait for months before you get their paperwork?
Employees must submit their expenses soon after they are incurred. Prompt submissions mean you get real visibility on your company’s spending, which then enables you to identify fraudulent activities and glean accurate insights from your data. The longer you wait, the more difficult these tasks become.
Expense Compliance Rate
Are employees constantly going over their budgeted expenses? Are they reimbursing purchases that aren't on the list?
The goal of a travel policy is to get the compliance rate as close to 100% as possible. If you're not hitting that mark, something's wrong. Your travel policies may be too stringent, and you need to amend them. Or maybe they aren't being enforced, and you need to work on selling your policy to employees.
Expense Approval Time
How long does it take for your company to reimburse company expenses?
If it takes too long—say, more than a month—this would negatively impact employee satisfaction. You would then need to evaluate the reimbursement cycle to find the source of the delay.
For example, delays could be caused by the sheer number of finance staff who need to sign a single expense report. It would then be beneficial to shorten the process and remove redundancies to streamline operations.
Return on Investment (ROI)
Are you seeing any real gains from your business travel?
Not all companies are created equal. Some require fewer business trips, while others benefit from having more. What’s essential is the ROI you get from these trips, like the number of deals closed, the number of ideas shared, and the impact on employee morale.
According to an Oxford Economics Report, corporate executives peg the ROI of business trips at between US$10 and US$14.99 per dollar invested.
Automating Your Travel Spend Management
All of these metrics are crucial in gauging the success of your travel spend management. However, measuring these data points is almost impossible if your company still uses Excel spreadsheets and encodes information individually and manually.
As mentioned earlier, T&E is one of the most challenging operating expenses to account for. Doing all your expense reports manually is extremely time-consuming and error-prone. And because travel expense data can be acquired from various sources, it’s difficult to import relevant data from other systems. Companies will not get the full picture of their travel expenses, and cannot reap the full benefits of travel expense reporting.
This is why more companies are automating travel expense reports and adopting electronic expense reporting. This switch streamlines the process and increases visibility, plus leads to tangible results. According to a report by JP Morgan on spending metrics, companies that have adopted electronic expense reporting experienced a 58% reduction in processing costs compared to paper-based reporting.
Automating your travel expense management will save time and money, and improve compliance with your travel policy. All of these will result in a huge decrease in cost and a greater ROI.
Stay tuned to WegoPro for the latest updates and news on the travel industry!