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The Obstacles of Travel and Expense Management

26th May 2015
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Business travel is on the rise, and with it, travel spending and related expenses. The Global Business Travel Association (GBTA) projects an increase of up to 8.6% in global business travel spending this year. Macro trends, such as (slowly) improving business confidence and ongoing economic globalisation, are contributing to the rise.

A recent PayStream Advisors report on the state of travel and expense management, found that 38% of organisations spend $500,000 or more on travel and expenses, and 18% spend more than $5million. Managing an increase in spending in this area is a top management challenge for 43% of the large corporations involved in the study.

It is therefore, more important than ever for businesses to find an accurate and effective way to monitor and control travel and expenses. The study also found that 68% of SMEs are still using entirely manual and therefore outdated methods for travel and expense tracking, which can hamper operations and profitability in the long run.

Below are what I believe to be the key five issues businesses are facing with travel and expense management:  

1.       Poor data visibility and accuracy

Over one-third (35%) of SME organisations interviewed admit to having little to no clear view of their employees’ expense spend due to the use of manual or disparate IT systems. This lack of visibility can lead to mismanagement of budgets and costs can spiral out of control.

2.       Inefficient processes

It’s vital that expenses are reported correctly and within a certain deadline so that employees can be reimbursed promptly and with the accurate amount. Yet, employees of over two-thirds (69%) of companies in the report still send paper receipts to their finance departments.

These processes make it difficult for people to file their expenses, which delays reporting and frustrates employees. Accuracy and productivity can be eroded by using manual processes as receipts or cheques can be lost on the way, and claims can be attributed to the wrong people.

3.       High costs of processing

Many businesses are unaware of the cost of processing expenses, with four out of five (80%) of those involved in the PayStream study not actively tracking this. However, according to the report, the cost of manually processing an expense report was $23 on average on 2014, increasing to over $26 in 2015. In sharp contrast, this falls to only $7 per expense report amongst businesses using a fully automated travel and expense system.

4.       Increasing travel and expenses spend

Companies need to spend to operate and those costs are growing as confidence increases. Managing this increase in overall travel and expense spending is a top challenge for large organisations in particular. This stands to reason for those with outdated expense management practices: an increase in the volume of expenses means more work for finance teams and even higher processing costs.

5.       Enforcing travel policies

Finally, a lack of visibility of travel and expenses makes it difficult for finance teams to see when purchases outside of the corporate travel policy are made. Expenses may be approved whether or not they comply. This has obvious consequences in terms of cost control and compliance with relevant regulations.

The bottom line is that travel and expense spending is a major cost for companies and, for many, is likely to increase in line with a rise in business travel. The good news is that newer, automated systems can make things much easier for organisations, and help improve accuracy and visibility, reduce costs and improve policy compliance.

In light of increasing business travel, such improvements are important to the future profitability and competiveness of many businesses. It’s vital that businesses take action rather than delaying improvements that could have a big impact on their business. 

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