When it comes to corporate finance parlance and CFO-talk, T&E is an acronym that is commonly thrown around. And most people assume it is something that is commonly understood; which might not be the case. Well, what does it stand for anyway?
The term T&E can mean either ‘Travel & Expense’ or ‘Travel & Entertainment’ Expenses. These definitions which are both valid and frequently interchanged are used to address the second largest operational cost for a business, after payroll. Except this cost is controllable through automation and careful analysis of a business’s expense reporting process.
So the next time you hear a CFO say ‘Our T&E is out of control’ or ‘When was the last review of our T&E plan’ you know exactly what is being discussed. And voila!
(Friendly tip – Just don’t expense that speeding ticket)
We recently updated our mobile app to offer a very cool new feature from within the mobile app for receipt management. Users can now attach receipts from their Dropbox account to transactions on the mobile app! (If you don’t have a Dropbox account yet, don’t worry – we won’t judge you. We will however make fun of you :). Sign up is very easy.)
The attached receipts can be standard .jpg or .png receipts taken with a camera. But the great thing about it is that now you can also attach multi-page PDF receipts! Super convenient is what we are shooting for with this feature and it delivers. Here is what it looks like:
During the 1st-time login, the app will ask the user for permission to link to their Dropbox account. Once the user approves, the user can attach anything from their Dropbox account.
We recommend users to create a ‘Receipts’ folder within their Dropbox and access that from our mobile app. That way everything is organized better and data management becomes easier.
From a process standpoint it is easy as Apple Pie (or cake; we forget). Simply click on ‘Add Photo’, select ‘Dropbox’ and pick the respective receipt from there. Finito!
Hope you find this feature to be useful while crossing the Seven Seas. As always, contact us at firstname.lastname@example.org if you have any questions or would like to discuss in more detail!
When you think of expense reports, you also think about its vulnerability to fraud. While there are tools and systems to better tackle fraud, consistent auditing still plays a vital role.
Last year, the Association of Certified Fraud Examiners (ACFE) reported that nearly 15% of all fraud in the workplace was related to T&E expense reporting. According to the same report, the median financial loss to an organization for a single instance of expense fraud is $26,000, and the median duration of the fraudulent activity is two years. That is a lot of money and a long duration.
Earlier this year, AirPlus International fielded a survey to corporate travel managers to explore how they manage expense fraud in the travel category. 35% of the respondents reported that they manage both travel and T&E within their organizations. Another 15% of the respondents identified their official role as a travel manager but were closely involved in creating T&E expense policy as it relates to travel. On the other side, only 30% of travel managers said their company’s travel policy had any guidelines for T&E expenses. 7% of the respondents said they were not involved at all with T&E expenses.
Of the 119 surveyed, 8% of the respondents reported that their companies had uncovered significant fraud in T&E expense reporting over the last two years while 19% said that they didn’t know of any significant fraud. For the 8% of respondents, the most common behavior was falsifying or altering receipts to inflate reimbursements. Additional common fraudulent behaviors include submitting too many “below-the-line” expenses (expenses below a certain $ value that do not require receipts per a corporation’s T&E policy), exchanging premium-class tickets and reclaiming receipts.
The survey respondents utilized safeguards in place at their organizations for preventing and detecting fraud. The most common prevention tactic, cited by 81% of the respondents, was to include direct manager approval for all T&E expenses. 67% of respondents said their companies required receipts for all expenses incurred during travel, while 59% required the use of a corporate card for T&E expenses.
To read the full report by AirPlus International click here
Maintaining compliance and increasing visibility are the key factors in prevention of T&E fraud. Surprisingly, the ACFE reports that most workplace fraud is initially discovered from a tip provided by a co-worker. However, to take action, the tip must be backed up by facts and data.
Here is a video on T&E expense fraud which you may find useful –
Our expense reporting customers love our credit card integration module and find it to be a huge time-saver and hassle-minimizer for their users. The main purpose of this post is to quickly explain how the credit card integration works with our system. So here goes….
Two Words – Very Easy!
In our application, users can automatically download transactions from their corporate and personal credit cards with the click of a button. This uses the standard OFX format, supported by most banks and credit card companies. As a 1st step, the user must setup the credit card profile in the system. Each user can setup multiple profiles and they can be a mix of corporate and personal cards. Each credit card profile can be allocated to different pay methods, as defined by the Accounting person in the company. Once this is done, the user can toggle between the various cards from a list and select one, as shown here
After a card is selected, the user would enter the login credentials as they would if they were logging into their online account, pick a start and end date and Voila! – all the transactions within that date range are imported into the transactions bucket of the application and ready to be pulled into a report, as shown below. This process can be automated a 100%
Once this is done, the user can then assign these transactions to different expense types or GL codes. All information supplied by the credit card merchant is available within the transaction, including the meta-data. So each transaction will include the date, amount, vendor, city and additional fields depending on what is supplied by the bank/CC company. The user can also choose to break down transactions in more detail if needed. For example, a hotel transaction imported from a credit card will typically show the total amount. But the user can break it down into Room rate, Tax, Room Service and Laundry by using the sub-amount fields within the application. Remember, ‘More visibility = More Compliance’
Reconciliation of Credit Card Data
Once all the credit card data is available in the system, reconciliation, which normally takes hours or even days becomes very quick & simple too. Within the Gorilla Expense system, the accounting / AP person can quickly run a report by a pay method and filter by specific employees as well. This report can be exported in multiple formats (PDF, Word, Excel) and compared to the credit card data supplied by the bank for a quick analysis. This will quickly tell if the transactions are valid or if any transactions have been missed by the employee. Since reports can be created for specific date ranges, there is no need to wait till month end (when there are typically 15 other bigger issues to take care of!) to do this. The Accounting person can reconcile every day, week or 2 weeks to make it easier to manage.
Other Credit Card File Formats
Besides the standard OFX format discussed above, we support numerous other corporate card file formats as well. A few examples of key formats are – GL1025 from American Express, CDF3 from MasterCard, VCF from VISA, among many others.
The operating mechanism for these is slightly different from the one described above. These files supplied by the credit card merchant typically include credit card data for ALL users within the company. So unlike the mechanism above where users can import transactions themselves, here the Accounting person (or Admin) will use our proprietary utility called ‘Gorilla Integration Manager’ (GIM) to import the data into the system. Once the merchant’s daily credit card feed for the company is available and imported into GIM, it will automatically correlate specific transactions to specific users and push them to the respective user accounts. So the Admin can, for example, push 5000 transactions to the various user accounts in the system with the click of a button!! From there on, the user has to simply pull these transactions into a report and submit!
Hope you find this information to be useful. Contact us for more information or any specific questions we can help with at email@example.com.
(In Finance Speak our T&E experts discuss questions & concerns from our customers and solutions to the problems. If you’d like to contribute or ask a question, send a message to firstname.lastname@example.org with ‘Finance Speak’ in the subject line.)
Executive (Anonymous) – We are in a bit of pain with the way our T&E policies are managed. We are dealing with a high level of non-compliance in several areas such as travel booking, alcohol related expenses, delayed reports etc. The breach is not just from employees but also Sr. Management. I have been tasked with cleaning this up but need some guiding points. I am interested in hearing how you have tackled this for other companies.
Gorilla – T&E Policies is one of the touchiest and broadest areas of business travel. Unfortunately there is no magic bullet fix. What works for one company might not work for another. But there are certain fundamental guiding notes. Of course, the first step starts with a clear identification of the problem followed by an actionable plan with defined metrics to compare against.
Here are some of the broad ideas we discussed complied for easy reading:
Make sure the T&E policies are part of a business travel manual or ‘guide’. Make sure they are up to date. If you don’t have a T&E guide, then create one. Without this, you are running open-loop that cannot be controlled. We can help with guidance in this area
In this manual clearly note what is allowed and what is not. No ambiguity here. Don’t leave anything to interpretation
Make sure the manual is easily available to everyone including employees, approvers, travel agents, assistants and executives
Make the manual concise, yet comprehensive. Break it down in several distinct areas so that readers know where to look instead of having to scan a 100 page document
The manual must be signed by the highest authority – CFO or CEO or both
Once generally accepted policies have been agreed upon, there must be zero-tolerance for anyone not adhering to the policies. Make sure this is clearly noted in the manual
Delegate responsibility. The approvers must check the report to ensure that no policies were broken by employees. The travel agent must compare flight requests to policies before booking etc. Also the approvers must also be given the authority to question any area of the expense report
The policies in the manual must apply to everybody – including executives
Look into a corporate card program. It is best to sign up for a program where the employee must apply. This way, the card’s responsibility becomes the employee’s. This ensures lesser delays with card payments leading to lower late payment fines for the company
Mandate the inclusion of receipts for every transaction – electronic or paper. While this won’t prevent fraud, it can act as a deterrent
Make a note in the manual that says the company will not reimburse unauthorized expenses. Create a list of such expenses
If the company is struggling with delays in submission, create a clause for timely submission. If this clause is broken, note the penalties. For example, penalties could be as simple as delaying reimbursement to the more complex withholding a certain percentage of reimbursement after multiple warnings
As you can see, there are many ways to skin this cat. Usually, it is a good idea to kick-start a process and fine-tune it along the way. For most companies, getting up to speed will take some time and there is no way around it.
Executive – How does your automated solution help manage this process?
Gorilla – Using our solution, you can set spending limits for various expense types. Questionable transactions get flagged in the application. You can create multi-level report approval that acts as a deterrent against policy infringement. With e-receipts, all transactions have supporting information. Our mobile app and credit card import module make it easy to submit expenses immediately after incurred thus reducing delays. We have other features that enhance T&E compliance.
After our conversation, our customer left with several ideas to implement and a better understanding of the challenges.