By popular demand from our global customers, we have released a new feature for capturing VAT. Now, users will be able to list the VAT amount(s) for an expense. Since the transaction includes the receipt, companies will be in compliance with typical VAT reclaim requirements. Depending on the country, different VAT rate categories can be configured in the system.
This is really nifty and helps with more T&E visibility for stakeholders. Also it makes VAT reclaim for companies a piece of cake (or a piece of pie if you are from Europe:) Simply compile the expenses, list all the VAT transactions and you are ready to report it! Hope you enjoy this functionality. As always, we love to hear from you – info@gorillaexpense.com
(Finance Speak is a series where we discuss typical questions & concerns expressed by our customers. We will delve into each of the points and discuss the best way for the company to handle it. If you’d like to contribute or ask a question, send a message to info@gorillaexpense.com with ‘Finance Speak’ in the subject line.)
Executive (E) at a large manufacturing company – We have a sizeable mobile workforce. This mainly includes sales folks and purchasing managers who travel to meet with vendors and OEMs. We currently have no visibility into how we spend on travel. We have a very manual expense reporting process and travel expenses are approved without any due diligence. This leads to almost no visibility in where & how we spend. I would like to establish a process without rocking the boat too much. How do I go about this and what would be your recommendations…..
G – Do you currently have an established and well communicated process to manage T&E spend at all?
E – Not really. Some of the travel we do is last minute and there is minimal planning. After that, there is almost no reconciliation with the spend, not to mention our travelers take forever to send in their reports. The whole process pretty much runs open loop
G – Do you have a policies document for travel expenses? Do you know what your spend limits needs to be in a year?
E – We don’t have a policies document. We are paying more attention on how to budget our spend and making serious attempts to be within that budget. Some of these vary by projects so it does become a little hard to tackle
G – So, it sounds like managing spend by projects would definitely be an area of interest. It would also appear that you would like to automate this process as much as possible so that all stakeholders are involved. Would this be a correct assumption?
E – Absolutely! We would like for your company to guide us on how to setup a process and gradually automate it as we bring in more tools for the traveling folks. Can we connect this afternoon and discuss this in more detail?…….
This was definitely a very engaging discussion with our customer. Every company struggles with visibility into spend. Even the ones with a mature process. As companies grow their needs change and their tracking of parameters evolve – much more so for T&E because of the dynamic nature.
So what did we propose to our customer? We discussed many items but we recommended to take small steps that would converge at measurable goals over time. Due to the company’s culture, it made sense for them to not try too much at once. Here’s what we discussed –
T&E expense reporting process – We talked about the typical expense reporting process (See our website). This was a great way for them to start thinking about it. The key point was the importance of communicating this process and guidelines clearly & frequently to employees. After they looked at it, we helped them fine-tune it much more to meet their needs.
Expense reporting automation – A no-brainer really. This would solve several of the immediate inefficiencies and move them away from the manual process they have today. With this, their employees cannot make excuses for delays in submission. The other advantages are discussed below.
Policies for Expense Reporting – Our application includes setup of policies on various parameters. They were broken down into expense types for this company. This made a huge difference for them in being able to enforce limits. Here is an example screenshot –
Manager Approval – The application also has the ability for managers to view, correct, redirect & approve/reject expenses (See video). This way the right stakeholders were involved in the process and it wasn’t open loop anymore. The company setup a list of approving managers and specific employees to these managers for approval. Over the last few weeks, they have started creating additional layers of managers to review and monitor expense reports. A far cry from what they were doing a few months back!
Allocation of Expenses to Projects – We helped them track project expenses within the application. Project numbers are available to employees who allocate them to the report. We are working through the integration to their ERP system so that all these expenses are pushed to specific project accounts with no manual data entry. Their Accounts Payable manager now does more AP work instead of entering expenses!
T&E Analytics and Reporting – Finally, we walked them through our reporting and analytics engine that helps them slice and dice data to find out biggest areas of spend, expenses that were out of line, budgeted VS spent analysis, expenses by employees, expense types etc. so that they have better visibility on the where and how of travel spend. This has helped them review areas they would have never thought of looking at before.
End Result?
– The company now saves thousands of dollars per month by taking these steps
– The finance team has more details on travel spend
– Employees now submit expenses faster and they love the tools that have enabled improvements
– We helped them expand on their travel policies document when they had none
– The executive we interfaced with is loving his new approach and system having implemented all these steps without breaking the bank
While the company still needs to address other challenges, they are definitely on the right path towards tackling these tricky T&E problems one at a time. At the end of the day a big win-win for all!
This paper (Air Spend Management 101 by NBTA) published by the NBTA discusses various areas to look at and specific steps to take for better management of air travel expenses. The results of this research include lowering costs, improving compliance, setting and managing air travel policies and long-term initiatives for better management of air travel for the company.
– The average tab for a meal worldwide is $39 while dining alone
– New York generates the most T&E expense reports than any other state, most of it coming from the NYC area
– Dining accounts for 10-17% of the $$ value on an average expense report
– Entertainment (group meals/customer meals etc.) account for a typical 6% of an expense report
– US Travelers spend surprisingly 4% more on cabs than on rental cars in a year
– Ground transportation accounts for 5% of the average expense account
– For US companies, business travel to Europe is on the average 7% more expensive than to any other part of the world
– The most expensive cab fare is in Vancouver, an average of $73. In the US, San Jose is the highest at $51
– Hotel room rates are on an average 14% more expensive in Europe than the US
– NYC is # 1 among cities visited for business travel
– Laundry and meals are the two main expense types areas that see expense fraud
Some of these we found online, some were submitted by our readers. Do you have other T&E trivia to share? Send us an email (info@gorillaexpense.com) and we will add to the list.
One area that many companies struggle with is organizing of expense related data. This is especially important because stakeholders in these companies frequently utilize the data to observe trends, study patterns and take proactive steps towards improving the T&E process. We have guided our customers in this area to use best practices. Here are some anecdotal observations –
The lack of success with data organization & management can be broadly attributed to the following reasons –
Case 1) There are no defined structures – Many companies ‘toss’ expense data into one area. While this expedites the submission process initially, it becomes onerous at a later point when specific information is required. What’s more, without any organization, all T&E related data look the same. If there is ever a case for lack of T&E visibility, this one takes the cake!
Case 2) There are defined structures but no retrieval mechanisms – Here, companies define areas but offer no means to retrieve and analyze the data. This makes any front-end organization pointless because the end goal of analysis and fine-tuning of data cannot be achieved. While this is still a problem, it is better than Case 1
Case 3) Too many structures – The other end of the spectrum includes companies that have defined to many areas. While this may give an impression of better organization, it is really an illusion because of too much granularity. To arrive at meaningful conclusions, several areas must be analyzed concurrently. This makes it burdensome and error-prone. Then again, this is definitely better than Case 1 and Case 2
From these notes, it is very obvious that organization of data is very ‘company specific’. Different companies have different processes and procedures, sometimes even disparate, and therefore need unique solutions to manage this.
A big factor in this is human nature. If something is arduous and complicated, we usually put it off. This leads to forgetfulness, which leads to a mad rush during tax time or at the end of the year to get organized. The implications are huge and the penalties for not managing the data better are substantial. Companies frequently throw away millions of $$ due to –
– Failure to take proactive steps from T&E data on time
– Not realizing all the tax deductions before tax season
– Forget to bill clients because post-deal activities were not categorized
– Lack of spend visibility on runaway projects due to untimely data management
etc.
At Gorilla Expense, we assist our clients by first helping them define clear, non-redundant areas. Once this is done, specific advice is provided to create future areas carefully. Everything is defined based on how these areas are managed in the back-end ERP/Accounting systems. Since our application is extremely pliable, it can adapt to varying formats. Only after this is technology employed.
Using unique tagging & mapping mechanisms built into the application, come tax time or end of the year, our customers are fully aware areas of spend, steps for improvement, categories to monitor for the next FY etc. which are broken down further by customer accounts, projects, work-orders and more. Now that’s called successful T&E data management!
We are always interested in discussing your pain points and help in any way we can. Contact us at info AT gorillaexpense.com.