The GBTA did a survey of more than 200 travel managers in the US on which expense types they mandate the usage of corporate card
No surprises that Airfare was the top at 67%. This is mainly to better manage the spend related to airfare and utilize programs and partnership with air travel vendors. Plus, in some cases, if tickets are canceled or modified, corporate cards have discounted change-fees for being part of the air travel vendor program. Closely following the Airfare expense type are Lodging and Rentals both of which maintain a similar philosophy.
Charging meals to the corporate card provides greater visibility from a compliance perspective. This is especially true if meals are related to Entertainment type expenses. Companies are also increasingly asking employees to charge misc. business expenses like internet, phone calls, faxes etc. to the corporate card to prevent potential frauds. For sales people on the road all the time, the corporate card is a big convenience for mileage and gas related expenses as well.
So, how do your company stack up compared to this? Which expense types do you mandate your users to use the corporate card for? Let us know in the comments below.
Reference: GBTA April 2014 survey. Chart provided by Travel Procurement, part of BTN Newsletter
When it comes to T&E expense management, the cloud has inspired a new and quick way of thinking about mobile and online expense tracking with integration to various accounting and ERP systems. Of course the ‘old’ model of companies having to purchase licenses to own the software and have the ability to deploy it on their servers still exists but faces solid competition from cloud solutions.
The Gorilla Expense software can be delivered as a SaaS or on-premise when it comes to our online T&E solution. Of course, when the SaaS solution is purchased, it comes as a complete turnkey package that includes software and the entire delivery mechanism.
The inter-webs is ripe with discussions on the pros and cons of on-premise vs SaaS when it comes to expense reporting and several topics on how best to assess the costs. With SaaS, the business pays less upfront while on-premise requires higher initial costs because you buy the software in terms of licenses and maintenance. However, the details lurk below this cursory assessment – the often heard concept of ‘Total Cost of Ownership’ a.k.a TCO. Let us explore this in more detail by segmenting the comparisons by company size relative to our customer base.
Expense Reporting for Small Business
With small businesses, the initial cost of licensing the expense reporting software on-premise is usually several orders higher than a SaaS expense solution. Plus the on-premise solution will require additional internal infrastructure and may incur personnel costs to maintain the solution. So, for small businesses SaaS cloud based expense reporting may offer better ROI and quicker value than on-premise.
Mid-Market Expense Management
For mid-sized businesses, the comparison between the two approaches can be closer to break-even. The costs usually level out because the cost of the fixed license and recurring SaaS payments typically increase proportionately while the infrastructure cost remains fixed. However, the big difference is labor costs – the standard assumption is that mid-sized business would have the cost of paying for 1/2rd to 1/4th of an IT team’s (consisting of anywhere from one to ten people) salary to maintain the server, OS and ancillary software applications; so these costs may mean that the on-premise deployment could potentially be more expensive.
When is SaaS Better?
The biggest benefit of going the SaaS route is when companies cannot dedicate IT resources and personnel to install and manage the applications. The general rule of thumb for on-premise is that upgrades are needed at least four times in a year and require several hours to install and manage up-time.
In addition, with SaaS, the expenses are deferred (the classic CAPEX vs OPEX debate), so, from a cash flow standpoint, the model becomes attractive for cash strapped small businesses.
Conclusion
While we have reviewed the key piece of the equation which is related to cost, note that this is just one part of the puzzle. The other factors to consider when you compare Saas vs on-premise expense reporting solutions are:
– Level of internal IT expertise and talent to manage on-premise solutions
– Comfort level with outsourcing the work, if not possible in house
– Tolerance for downtime and risk mitigation
– Capability to support requirements from an evolving and growing business operations
– Level of engagement with the solution (SaaS gives you a ‘rent and forget’ approach whereas on-premise requires constant monitoring)
– Cash flow management
At Gorilla Expense, we provide both options and work with the customer to closely understand which format will benefit their business and employees the most. We advise and support our customer’s rapidly changing requirements when it comes to deployment options, since we have seen all the combinations and the respective challenges. If you would like to learn more or would like for us to review your requirements, please send an email to info@gorillaexpense.com
According to the Aberdeen Group research, 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 ranging from 7% to 15% percent of the total budget for the average mid-market company ($50 million to $800 million in revenue), the challenge facing CFOs and Controllers in this area is dramatic with millions of dollars at stake! For most companies, travel related expenses remain a significant area of spend – second only to payroll.
Scope of challenge
Fundamentally, most companies struggle to tackle these challenges because of not knowing where to start, when it comes to managing their T&E Expense reporting process, resulting in thousands of dollars of reckless spending and waste. Aberdeen’s report (Expense Management for a New Decade and The Mid-Market Expense Management Program) says 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 reporting solutions and 28% integrate corporate cards
* Just 15% provide T&E data to C-level executives for financial forecasting purposes
Solutions for a new decade
The good news is that cloud-based solutions have significantly brought down the cost of automating T&E expense reporting. These solutions have been shown to deliver huge reductions in expense processing costs. But the big questions is – where do you start?
The Best-In-Class corporations (a term used by the Aberdeen Group to classify the top 20% of companies that manage their expense related processes by creatively blending technology & strategy) combine strategy, core capabilities, technology, a culture that embraces change and a desire to optimize. The objectives of most Best-In-Class programs include cost savings, enhanced productivity, improved efficiencies and better compliance. This is usually achieved by unifying the different processes in the lifecycle.
By advocating a culture that fosters Best-In-Class programs and by investing in a system that ensures achievement of this status, Best-In-Class companies constantly reap gains and realize immediate ROIs.
Here are the 10 Commandments of Expense Reporting that Best-In-Class companies consistently execute on:
1. Centralize the control and operation of T&E expense management programs
2. Automate the process to greatly reduce unproductive manual work and eliminate errors
3. Integrate the front-end expense reporting system to the ERP system to minimize manual data entries and errors (here is a video of automated integration with Dynamics GP)
4. Establish generally accepted corporate-wide policies and processes
5. Educate employees regularly on expense report related policies and processes and appoint a designee for any questions from employees
6. Encourage usage of corporate cards for better accuracy and mobile device applications for convenience to users (read our blog on Credit Card Integration)
7. Leverage and close the loop on expense management data to fine-tune the system and also provide better deals with travel vendors for the company
8. Develop audit mechanisms that capture errant data and provide real-time visibility into spend
9. Invest in the latest technology to maximize efficiency, provide long term ROI and reduce paper usage
10. Provide flexibility and convenience to the end users to improve productivity, reduce inherent delays and to capture expense data immediately after incurred
For some companies, executing on all 10 steps immediately might prove to be a challenge. In those cases, it would be beneficial to select a few and to focus on those, till the desired results are obtained.
Automating T&E processes does 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.
To read the complete white paper on ’10 steps towards best-in-class status for expense management’, click HERE
If you have any specific questions that we can help with or need more information, contact us at questions@gorillaexpense.com
Additional resource:
To calculate savings from automating the T&E Expense Reporting Process, click HERE
We get asked about ‘our story’ at different times by different folks – customers, prospects, partners, new employees and even competitors! What is our story? Why are we doing this? Why now? Well, it is very simple:
Our team has been in the Travel + Expense Reporting space for many years with a combined experience of several decades. The backgrounds of our management team comes from working with / implementing / developing other T&E expense reporting systems like Concur, SAP, Oracle’s iExpense and other Goliaths in the past.
These are large companies with big legacy systems. And we fully understand what works and what doesn’t work with the solutions provided by these companies, which not only includes products but also support.
Learning from the mistakes of our competitors, we wanted to offer a solution that was nimble yet powerful in being able to handle all requirements ranging from a 20 user application to one used by our large multi-national customers. (And this caught the attention of Microsoft for their Dynamics ERP product line, when they sponsored us to attend DEMO – read more here)
But our focus is more than just the product – we also pride ourselves in providing exceptional support, where our competitors don’t do the best job. Every customer that signs up with us becomes THE customer for us while they may be A customer for our competitors, which is a big difference.
Our customers don’t just subscribe to our solution or buy our products – they approach us for advice and guidance to solve their challenges with expense reporting and support our mission. And we love solving their problems while putting a smile on the faces of their Travelers and Finance teams.
So, that’s our raison d’etre. As far as we know the T&E pain point hasn’t been solved yet. And that’s why we are here today – to finally fix it for customers like you and have fun while doing it! Hope you enjoyed this post and thanks for your support….
As part of a recent research, most managers and travel budget owners for small and medium businesses cited managing costs as the primary goal for 2014. The methods companies use to achieve this goal, vary widely within the SMB segment. The travel spend for companies in this group range from less than $2MM in annual US booked travel to $12MM on the high end.
Most SMBs struggle with the same challenges – lack of internal resources to manage T&E, no dedicated travel manager, missed supplier relationships and a general cookie-cutter travel management program setup by the travel agency, if one exists at all. The best of breed companies may have better control on travel spend with elaborate procurement strategies and internal resources that manage the company’s travel program and spend carefully. These resources typically report to the CFO, thus offering the finance office full visibility into spend.
Visibility-of-travel-expenses
The reason that travel management as a concept is a challenge for SMBs is because there are many factors that drive a company’s travel strategy: travel patterns, international vs domestic, company culture, senior management’s support, business focus and others. Regardless of the status quo, it is never too late for a company to manage its travel and T&E processes more efficiently.
“I don’t believe there’s a company out there that can’t benefit from some level of a managed program,” said Directravel president Sam DeFranco. “When a company feels like there’s a lack of control of their spending and they only have basic expense processes in place, their antenna should be up.”
Several SMBs were focused on getting the right tools and processes in place in 2014. One was in the midst of “designing and implementing a full-scale travel management program,” while others were planning to implement a robust automated expense-reporting system as soon as possible in 2014.
In the various SMBs, even with senior management support, a planned travel policy, TMC relationship and T&E expense reporting solutions in place, companies reported ongoing challenges with compliance. Several of the companies reported their greatest travel management challenge today was to get travelers to comply.
“At larger companies, you’re dealing with a multitude of people that touch T&E,” said DeFranco. “At one company alone, you could have a travel manager, a director of procurement, a director of purchasing, expense management, HR and a risk manager. Inherently, the SMBs simply do not have the same infrastructure, so to compensate for that, the travel management company account manager essentially becomes an extension of the customer.” One company highlighted the biggest travel management challenge as “achieving objectives with limited resources.” It’s a position in which many managers in the small and midsize segments find themselves.
What are your challenges when it comes to managing travel and travel related expenses? What are your goals for 2014? Let us know in the comments below.
Reference: BTN, "BTN's 2014 Small & Medium Enterprise Report, Apr 15, 2014"
Carlson Wagonlit did a survey in November 2013 of 970 travel managers worldwide including 270 in North America. From the respondents, they found the top secondary spend categories that were critical to additional cost savings. Here are the results, with the top being ‘Roaming fees’ and the lowest cost savings coming from ‘Public transportation’ & ‘Parking’.
