Travel and entertainment expenses take a big portion of an organization’s budget. In fact, it has been found to rank second among company expenditures next to payroll.
In 2015, global spending on business travels reached US$1.2 trillion, with the U.S. as one of the leading players. The upsurge is expected to continue every year as more businesses see the necessity to fund business travels and related expenses. According to Global Business Travel Association (GBTA), travel spend is expected to reach US$1.6 trillion by 2020. This trend explains why companies are looking for ways to improve their travel and expense management processes.
Among the biggest challenges that employees face in travel and expense management includes compliance with policies, filing and submitting of expense reports, and keeping track of records.
The issues businesses face in implementing their travel and expense management practices are further discussed below. You’ll also see how an automated expense management system can get you over these roadblocks.
1. Reimbursement delays
Your company encourages employees to take business trips but fail to reimburse them on time. Delayed reimbursements may discourage employees from taking business travels in the future. Worse, they may harbor resentment towards the organization which may eventually lead to reduced performance and quality of work.
Delays may be caused by approval issues, wherein approvers take too long to take action on requests pending on their task list. This may be due to an inefficient system that fails to notify both ends of the approval flow.
There may be times when reimbursement delays are caused by the lack of documentation from employees. Missing information prevents requests from moving forward, and without proper communication, the whole process may come to a standstill. Approvers may be waiting for additional information from the employee, while the employee, thinking they’ve submitted everything needed, is waiting for the report to be approved.
Automated expense management solutions can stop these issues from happening. Notifications can be set to remind approvers of pending tasks on their queue. The system can also alert employees if they missed attaching documents on their expense reports. The software can also be configured to set submission deadlines to avoid delays in forwarding reimbursement requests.
2. Outdated methods
Do you manually enter travel expenses on a spreadsheet? Do you require actual paper receipts to be submitted along with expense reports every cutoff? Outdated travel and expense management processes can be a hassle both for the employees and the organization as a whole.
Manual entry is prone to errors. It’s also hard to stay on top of the company’s travel expenses once employees start sending in their requests if everything is manually maintained. Once submissions start numbering to a hundred, using an automated expense management software will definitely be advantageous over a simple spreadsheet.
Another out-of-date process is collecting receipts as proof of expenses. Paper receipts deteriorate as time passes, making them unreadable and useless in the long run. Moreover, they’re bulky to handle and takes up unnecessary space in the file cabinet.
You can let go of all these with an automated expense system. Solutions like PixExpense allow you take a snapshot of your receipt and have it submitted with your reimbursement request in just a few clicks.
There’s no need to manually input everything that’s on the receipt. With PixExpense’s Live Guidance System you can capture the most vital points on a receipt in a flash for easier reviewing.
3. Process bottlenecks
You have hundreds of reimbursement requests pending approval from the manager. However, the manager is on leave so the responsibility is passed on to the assistant manager who is on a business trip. The approval flow ends there and all requests have to wait until either of these two comes back to the office.
The situation would have been a lot better if these two figures can approve the requests even while they’re away. However, the travel and expense management system the company uses is not connected online, which means there’s no other way for it to be accessed other than the workstation of the managers.
Another issue in travel and expense management is the time wasted in approving recurring requests. This may include the usual travel from your office to a regular client which is scheduled thrice a week. The weekly lunch out your team does with the client may also count under this category.
These are some of the dilemmas businesses face when it comes to approving reimbursement requests. The lack of accessibility and short-sighted approval process can cause unnecessary delays. The same goes for the inability of the system to automatically process recurring requests.
With a mobile automated expense system like PixExpense, approvals can be done on the phone wherever there’s internet connection. Notifications can also be received by approvers if there are pending requests that need their immediate action.
If you have items that appear always on reimbursement requests, you can automate the system to approve them without the need for a manual review. The system can look up the list of expenses that can be automatically approved and processes them by itself. This feature alone of an automated expense management software can save the company time and money.
With this, the workload is transferred to the automated system, freeing up the time of CFOs and Sales Managers. These key people can now shift their attention to more pressing matters.
4. Vague policies
Unclear policies on the filing of T & E can have an impact on business spending in the long run. Without having a clear understanding of travel expense policies, employees may keep wondering if their travel expenses can be reimbursed or not. This can lead to two things, both of which are bad for the organization.
First, employees may get discouraged to take business travels since they don’t know which ones count under reimbursable expenses. They may have filed reimbursement claims for business travels they recently did, only to get rejected every single time without a clue why.
Second, employees may be filing unauthorized claims and yet they get reimbursed most of the time. This happens because there’s no concrete process for approving expense reports. All requests pass through the system for approval. Considering the busy schedules of managers, they’ll likely spend less time in reviewing the requests, resulting in a higher rate of approved expense reports.
Another common issue businesses face is the lack of proper communication in informing employees about discounts they can avail during their travels. Some companies have partnerships with hotels and restaurants that give discounts every time their service is used for business purposes. It’ll be a waste if these discounts are not maximized by your organization.
A mobile expense management system like PixExpense can resolve these challenges. You can have your policies attached to the automated expense management software so that employees can easily pull it up and confirm if their expenses can be claimed for reimbursement.
Having an expense management system that can help implement organization policies properly is also beneficial to employees in another way. No one wants to be accused of padding expense reports when they don’t even know what’s considered reimbursable and what’s not. Most of the time, employees just lack the information they need in selecting the correct expenses to file.
5. Missing out on important metrics
Do you know how much your company is spending on certain business trips? How much do employees spend on food? What kind of expenses do they often file for reimbursement?
One of the challenges organizations face in travel and expense management is the inability to see trends and metrics that can give valuable insights into the company’s spending patterns; figures that can affect business decisions. Crude travel and expense management solutions may not be able to help you get these important statistics.
You need something more than just simple reports and calculations that show how much the company spends on travels. A simple spreadsheet can do these things. What you need is a solution that will let you see not only the whole puzzle but also how each piece integrates to form the bigger picture.
With an automated expense management software like PixExpense, you can gain visibility on how and where spend patterns are going. You can conduct analyses of the company’s travel expenses to show if the rising costs are due to inflation rates or improper spending. You can also see the employee average and investigate if there are individuals who are spending more than they should be.
If you see that employees often books or dines at a certain place, you may try negotiating with the owner of the hotel or restaurant to get better rates for future business endeavors.
These important metrics not only gives you a historical overview of past travel expenses but also provides you with insights that can serve as guidelines for future decisions.
Improving your organization’s efficiency on travel and expense management is possible with the right solution. Pixmettle has a mobile expense management system that has all the features you need and more. Just give us a call if you want to know more about our product.