AP Journal Online. American Accounts Payable Association.

Business travelers are in the skies or on the roads right now. At one end of the spectrum is the well-traveled employee who keeps impeccable travel expense records; at the other end is the business traveler who returns with crumpled receipts stuffed in pockets, or no receipts at all. However often they travel, or how well they're organized, they're spending company money and it has to be sorted out: how much they spent, where they spent it, and why they spent it. Your company has to manage these expenses against internal company policies and external government compliance and regulations.

Where Can You Find the Controls?

After labor costs, employee business expenses — including travel & entertainment (T&E), payroll cards, and fleet — are the second largest controllable expense. When companies need to tighten their belts, they often look at these discretionary expenses first. By automating the T&E expense submission, approval, audit, and reimbursement processes, an organization can gain valuable insight into its employees’ business expenses, spending patterns, compliance with corporate policies, and preferred suppliers. Administrators in accounts payable, finance, procurement, travel, and other key departments can manage policies, spending, and preferred providers while reducing fraud and gaining key analysis into employee business expenses and spending patterns.

While many organizations have moved to an expense management automation (EMA) solution to gain control over spending, costs, and compliance, a surprising number of organizations of all sizes continue to operate manually by using paper or spreadsheet-based expense reports. In today’s business environment — especially in the case of global organizations — this is not only risky, but expensive. Paper or manual processes contribute to excessive labor costs. They increase the risk of calculation errors and compliance violations, create opportunities for fraud, and create bottlenecks in the approval, reimbursement, and reconciliation processes, which can contribute to budget overruns and negatively affect employee satisfaction. Employee business expenses impact an organization’s bottom line and must be tightly managed, controlled, and re-examined on a regular basis.

Getting the Most Out of Your EMA Solution

Implementing an EMA solution and obtaining traveler acceptance of the system can be facilitated through the use of corporate charge card programs. Most EMA solutions can take feeds directly from corporate charge card providers. These feeds are presented to business travelers who can easily pre-populate their expense reports from the charge card transactions. This relieves business travelers from having to manually key expenses into their report. Furthermore, an increasing number of charge card vendors and merchants will provide detailed expense transaction data that can include airline ticket information, detailed hotel folio, and itemized purchase data. A number of EMA solutions can incorporate this advanced level of data into the creation of an expense report directly from the feed provided from the charge card provider, dramatically reducing the amount of effort required by business travelers to create an expense report and provide 100% accurate expense transaction detail. Integration with charge card feeds can also greatly decrease the burden of creating an expense report for the end user, while reducing the possibility of errors and policy violations. The end result is that this expense data can provide visibility into employee business expenses and that allow the business to take steps to reduce overall spending through improved communication, policies, compliance, and even vendor negotiations.

With the increased adoption and use of online travel-booking tools, companies also have additional data streams that can be analyzed with their expense-reporting data. Integrating travel-booking data with expense-report data delivers answers to questions such as what was booked versus what was actually expensed, are employees following policies, are they using the online booking tool, are they upgrading their airline tickets or hotel rooms after they have been booked, are the booked rates actually what was charged to the traveler, and are preferred vendors delivering on negotiated and booked rates. The challenge that most organizations face is how to bridge the information gap between the corporate travel-booking and expense management solutions while not overburdening or impacting the business travelers.

Receipts Digital Filing — Reduce Waste and Improve Compliance

Receipts Digital Filing (RDF) is another tool that many organizations are embracing to help reduce paper waste and improve compliance for the expense reporting process. Government regulatory agencies, such as the IRS, require receipts for business expenses over a certain threshold. The challenge, even with EMA, is in managing all the paper receipts with electronic expense reports. This challenge can be addressed through Receipts Digital Filing, and most EMA solutions provide this capability. The typical process is for the traveler to print a bar-coded transmittal page of their expense report. The traveler then faxes or scans the transmittal page to email, along with any required receipts, to a centralized imaging server where the digital receipts are matched and indexed to the electronic expense report. Whenever an approver, auditor, or administrator needs to view the receipts, they simply click on a link and the digital receipts are displayed online. Receipts Digital Filing can dramatically reduce the labor associated with managing paper and the cost of travelers sending in paper receipts. Electronic files can be archived for as long as required.

The very nature of business travelers is that they are a mobile workforce. In many cases, business travelers may spend more time on the road than in the office. More and more companies are trying to bring their EMA solutions directly to the traveler & not requiring the traveler to come to the EMA solution. Thus, providing a mobile workforce with an EMA solution on a handheld device, such as a BlackBerry® Smartphone, streamlines and improves the expense reporting process for both the traveler and the company. Travelers have immediate anytime-anywhere access to their enterprise EMA solution and the company benefits from more timely and accurate expense reports. A recent Ipsos-Reid study indicated that 92% of knowledge workers read, send, make, or take work-related communications into nonwork situations. They also found that most BlackBerry Smartphone users can turn 53 minutes of downtime into productive work-time each day and that BlackBerry Smartphones can increase the efficiency of an entire team by nearly 30%.

Expense Reporting Savings Go Directly to the Bottom Line

Expense automation dramatically cuts the cost of processing expense reports and increases employee satisfaction by shortening reimbursement cycles with an easy-to-use solution. There are numerous reasons why an organization should consider automating their employee business-expense management process:

• Spend control. An organization can get information to managers so they can administer company policies in real time.
• Ensure compliance. An EMA solution provides a mechanism for the approval and audit of T&E expenses and other business expenses relative to corporate governance and financial reporting requirements including Sarbanes-Oxley. In some cases, the cost of noncompliance with reporting requirements such as Sarbanes-Oxley can be much greater than the savings realized through automating expense reporting.
• Fraud detection. An EMA solution can help approvers and auditors detect “padded” expense reports and cases of abuse much easier than in a paper-based environment. Furthermore, an EMA system can easily plug the gaps in controls once identified.
• Cost reduction. Companies can achieve greater control over costs which translates to a reduction in spending and a savings for the labor and process costs associated with manual- or paper-based expense reporting.
• Vendor analysis and negotiation. EMA dramatically improves data analytics and provides drill-down reporting to measure spending and find new opportunities for negotiated corporate rates and preferred vendors.
• Operational savings. Organizations can realize increased efficiencies and savings through Value-Added Tax (VAT) recovery, exchange-rate leakage, timely rebilling of expenses, IRS deductions, unused airline ticket tracking, and increased corporate card rebates.
• Traveler satisfaction. EMA provides submitter and approver convenience which results in increased productivity and satisfaction. An EMA solution will save the business traveler time in creating and submitting their expense reports and will also reduce and ease the reimbursement process.

Gaining control over business expenditures is an obvious benefit to any organization. Once expense reporting is automated, companies can then begin to shift away from processing related tasks and move to more value-added activities such as analyzing expense data to identify additional areas for controls and management resulting in more cost savings.

A Value Proposition That Travels With You

By simply automating the expense reporting process with a vendor or in-house-developed solution, an organization can expect a cost savings from the reduced labor costs of processing an expense report.

There are four additional measurable areas of savings with an EMA solution that CyberShift has identified. They include spend control, data analytics, operational savings, and processing savings.

• Spend control-policy-compliance management can result in savings of up to 10% on total spend via real-time policy validation, “a desire to fly under the radar,” “red flag” exceptions, real-time communication and education, exception reporting, and dissemination and fraud detection.
• Data analytics and drill-down reporting offer achievable savings of again up to 10% via enhanced reporting for all spend detail to analyze and identify trends, spend characteristics, variance analysis, etc., within the user population, allowing for timely corrective action and managing preferred vendor programs.
• Operational savings through a corporate-card spend rebate management, VAT reclaim, business entertainment tax deductions, foreign exchange rate leakage, rebilling management, and cash-flow management. These areas can account for significant cost savings in most organizations.
• Processing savings through non-labor charges including courier/postage, photocopy, paper storage, and redeployment from clerical cost areas.

It is also important to note that many organizations also use their EMA solution to automate other areas of employee discretionary spending such as purchasing-card transactions, fleet expenses, cell phones, maintenance repair operations (MRO), relocation, and much more. For every dollar of T&E expenses there is usually another $2 to $5 of other employee business expenses incurred in most organizations. The same controls and tools that are implemented for T&E expense reporting can easily be adapted to these expenses thus greatly increasing the opportunity for cost savings.

The Destination

Implementing an EMA solution can help an organization achieve greater control over costs and make a direct impact on your bottom line.

Overall, an organization can improve control and management of business expenses and reduce processing costs within finance. Better-educated travelers and approvers will bring greater compliance and timeliness to the process. The EMA solution will help create a consistent reimbursement cycle and deliver detailed data reports for strategic decision-making. Other positives are an increase in productivity and results based on expense management best practices to help people spend more time on their actual job rather than spending time on complicated expense reports. Taking advantage of additional tools such as Receipts Digital Filing and mobile access can further streamline the expense reporting and reimbursement process.

Travel is an essential cost of business for most companies. Automating the expense reporting process is a critical component in controlling these costs, improving the bottom line, and increasing employee satisfaction and morale.

About the Author

Craig Fearon

Senior Product Director of Expense Applications for CyberShift, a leading provider of workforce and expense management software and services.

Craig Fearon is responsible for the product roadmap and vision for CyberShift’s Necho Expense and Necho Boomerang suite of Expense Management Automation solutions. Craig has extensive domain knowledge and experience in the Expense Automation market, and over 14 years of experience in the ERP and financial software market.

Increasing business travel, fraud, poor spend visibility, and control have led many organizations to seek automated solutions.

Sush Koka, Senior Research Analyst, PayStream Advisors.

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IN THE NEWS

Sign Up for a FREE Automated T&E Webinar on Sept. 4

The AAPA and CyberShift are teaming up to present “Ensuring Your Automated Travel & Expense Reimbursements Meet the IRS’ Requirements,” a free webinar. The webinar will also focus on finding ways to combat quickly rising business travel costs. The webinar is scheduled for Thursday, September 4 at 2 p.m. ET. Click here to register and reserve your seat for this informative event.

The one-hour webinar, taking place during National Payroll Week, will be presented by Jim Medlock, CPP, Director of Education and Training for the APA and Craig Fearon, Senior Product Director, Expense, for CyberShift. Medlock and Fearon will interweave their respective presentations, and will also set aside time for a question and answer session.

“The topic of travel and entertainment expenses is definitely of interest,” said Laura Hills, Vice President of Marketing for CyberShift. “Managing travel and entertainment expense from a legislative or compliance perspective as well as improving cost control is top of mind for many organizations today.”

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IRS Increases Business Mileage Rate to 58.5 Cents on July 1

Citing "recent gasoline price increases," the IRS has increased the standard business mileage rate from 50.5 cents to 58.5 cents a mile for all business miles driven between July 1 and December 31, 2008. The rate for deductible medical or moving expenses is increased from 19 cents to 27 cents a mile. Note: The rate for providing services for charitable organizations is set by law, not by the IRS, and remains at 14 cents a mile. Read the news release from IRS.