Taking away with one hand, then giving back with the other is something I wrote about a few weeks back. Nowhere is this philosophy more prevalent that in travel expenses and according to the findings of a newly published research paper by CFO Research called Improving the Management of Travel Spend, it’s an area where most companies have a middling performance. Now that finding shouldn’t really surprise anyone because if you turn on the pressure on travel expenses too much, employees start to grumble and that can compromise their performance. Do you really want your ace sales team overnighting in a budget motel before pitching a multimillion dollar deal to a potential customer? No, of course you don’t.
Perhaps it’s not surprising that the 173 senior finance executives from North America and Europe interview for the survey had a similar view with 42% of respondents reporting that they are seeking greater visibility into and control over travel spending by gathering more information on employee spending behavior and fine-tuning policies for travel spending –rather than squeezing it dry.
Improving control over the ravel spend is likely to have a greater impact on a company’s financial performance and as only 12% of respondents reported that their employees’ compliance with travel-related spending policies was excellent, it’s clear there is a massive gap to close here that will not only reduce the incidence of exceptions but would also drive down transactions costs by minimizing the administrative burden of travel-expense management.
Trying to improve employees’ compliance with travel policies without using an automated solution is likely to be unsuccessful and will only result in increased administration costs. But survey findings show that simply automating processes is not enough; automation has to be done right. Most companies surveyed relied on some degree of automation in their travel processes, with only 16% saying that processes are primarily manual. However, over half of the respondents (56%) reported that their companies’ employees had to navigate through a variety of dedicated point solutions for booking, reimbursement, and reporting and only 22% of respondents said that the travel systems are tightly integrated with their ERP and general ledger systems.
The survey results lead the authors of the report to suggest three ways for successfully automating travel-expense submissions and reimbursements;
- Tightly integrate travel systems with other enterprise systems. At companies that tightly integrate their travel systems with their ERP and general-ledger systems, 49% of respondents say that their travel systems contribute substantially to their ability to meet their travel-expense management goals, compared with only 11% of respondents at companies with only somewhat integrated travel systems.
- Consolidate all travel-expense data into a single source. At companies that rely on a unified source of travel-expense data, 84% of respondents say that their management decision makers have access to robust, timely, and comprehensive information on travel expenses, whereas this figure is only 57% at companies that rely on many sources of travel-expense data in many formats.
- Make better use of preferred-vendor relationships for travel. While this is an obvious strategy, without an automated solution in place, it is often difficult to achieve and 30% of respondents reported difficulty in consolidating enough purchasing volume with a given vendor to gain negotiating leverage and another 30% reported difficulty in enforcing employee compliance with travel-spending policies.
Success in improving employee compliance only comes when they are provided with a solution that is designed for how they work and travel today. That means automating the entire process from travel planning and approval, travel booking, expense and receipt capture, and expense reimbursement and giving them the mobile access for booking and receipt capture so they can make the maximum use of their time away from the office. That’s exactly what you get with solutions like SAP Travel OnDemand. Only by deploying such solutions can the majority of companies rise above the “merely mediocre” performance in travel-expense management that this report uncovered. And being available on a subscription basis of “pay as you go,” you can gain all the benefits of a solution without a large upfront investment.