Over the last few months we have encountered numerous questions and discussions related to automation of the T&E process; specifically the advantages of automation. Here is a quick background of the challenges and synopsis of the advantages.
Surveys based on millions of expense reports submitted by 3,000 companies reveal that U.S. T&E costs are constantly rising. The largest increases were in airfare (up 5.7%), hotels (up 4.5%), and meetings (up 7.7%).
With T&E spend accounting for 7% percent of the total budget for the average mid-market company ($50 million to $800 million in revenue), according to recent Aberdeen Group research, the challenge facing CFOs and Controllers in this area is dramatic.
Scope of challenge
Fundamentally, most companies struggle to tackle these challenges because of not knowing where to start. Aberdeen’s 2011 report (Expense Management for a New Decade and The Mid-Market Expense Management Program) shows that:
* 56% of mid-market companies have limited visibility into T&E spending
* Less than 45% track their expenses via analytics and business intelligence in real time
* Only 33% leverage cloud-based expense management solutions and 28% integrate corporate card and expense management
* Just 15% provide T&E data to C-level executives for financial forecasting purposes
* Finally only a mere 6% utilize mobile expense management apps
Solutions for a new decade
The good news is that cloud-based solutions have significantly brought down the cost of automating T&E expense management. Solutions such as ours have been shown to deliver huge reductions in expense processing costs.
What steps to take?
1. Benchmark T&E costs against industry averages
2. Audit expenses against corporate travel policies with an automated expense auditing system
3. Leverage expense data to improve budgeting and forecasting. This data should allow companies to adjust travel policies to match realities and trends
4. Sign up for a cloud-based and mobile expense-management application. For example the up-front costs to get going with our solution is very minimal while being very economical to own
5. Integrate corporate card solutions (if a company has a corporate card program)
More than just cost control
Automating T&E does even more than just reduce costs.
* It makes it harder for employees to inflate expenses — and far easier for companies to detect fraud. According to the Association of Certified Fraud Examiners, up to 13% of company fraud arises in this area, so that’s a huge advantage.
* Expense reporting time is reduced and employees are reimbursed faster which is a major boost to morale. Automation results in an average 28% reduction in expense approval times and 27% reduction in employee expense report creation times according to the latest Aberdeen reports.