The Expense of Expense Management

Even limiting the geography of origin, to say, just the United States, spending on travel and entertainment has proven to be big business. The Global Business Travel Association has estimated that U.S. spending on those categories will reach as much as $310 billion once 2015 results are tallied. That’s as much as 10 percent to 12 percent of total sales for most companies. Given that big a slice of the top line, according to T&E firm Certify, the right reporting system can make all the difference to effective expense management and the financial status of a company.

To identify trends across T&E management, Certify’s latest trends report, its fourth annual iteration since 2012, analyzed thoughts and practices from 500 chief financial officers, accounting executives and other financial professionals.

Expense management can be as varied as the firms who manage expenses and employ paper, pens and Excel spreadsheets. Of respondents, 50 percent said they used manual processes, which is up 7 percent from the report last year. Manual processes, of course, can’t scale that easily and are not that easy to use in the field, especially as a hybrid of paper and spreadsheets. There’s still need to track various forms of paper, such as receipts and redundant data entry. Back office functions can also catch a headache on tedious reconciliation. The headaches might scale considerably as a majority, or 70 percent, of small businesses use manual entry.

And Web processes offer a host of advantages, with the attendant improvement of reporting overall and with streamlined functions, such as booking and simpler administrative tasks. Reimbursement comes more quickly, too, for employees.

Moving toward expense management systems themselves, 54 percent of responding companies said they use direct deposit via ACH. Forty percent use automated expense report build technology; 36 percent also use mobile receipt capture. One way that data capture can become even more robust is through the use of integrated credit card feeds and accounting functions across broader expense reporting platforms, said Certify.

With the technology in place and with the average company spending as much as 12 percent of every dollar on annual T&E, spending control matters, in a big way. The most prevalent ways to do this are to impose spending limits, and that comes across through 75 percent of respondents. The remainder? They have no limits at all, basing budgets simply on past trends.

Monitoring and compiling expense reports costs real money, with PayStream Advisors estimating that it costs as much as $26.63 to use a manual process and considerably less, at $6.85, on a fully automated system.

Spending controls typically come through “manually” checking compliance with policies. Thirty-one percent of respondents stated that “it is the responsibility of the employee” to comply, and these are processes that leave room for error. Only 26 percent have systems that automatically flag policies for review.

But it is not until the weight of employee expense reports (often in tandem with a firm taking on new employees) becomes unwieldy that companies take on upgrades or wholly automated systems — all in what Certify said exists in efforts to eliminate “pain points.” No surprise, the greatest pain point, at 50 percent of those surveyed, was loss of paper receipts, followed by 45 percent citing failure to submit reports on time.

Certify noted that, in 2016, the trends seem to show that the “majority of companies are quickly realizing a return on investment, with ROI within one year extending to 74 percent of companies.