Finance Speak – ‘We lack visibility with our travel expenses. Please advise on how to tackle this’
(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 firstname.lastname@example.org 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.
– 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!
Send us any questions or comments below or email us – info AT gorillaexpense