Top 6 Travel and Expense Best Practices
In recent years, we’ve seen an increased emphasis on integrating travel and expense. This makes sense: There is value to having that frictionless connection between the two applications, where an expense report is auto-populated when a corporate traveler books a trip.
For travel and expense (T&E) professionals, having an integrated T&E management solution solves some of the biggest pain points. Corporate travelers are focused on their job and being productive, so it isn’t a surprise that they often lose receipts or fail to send in their expense reports on time. Once T&E professionals receive the reports, they still need to reconcile the data, correct errors that often occur from manual inputs, and get reports approved and processed.
For business travelers, having an integrated travel and expense management software means they save time by finishing a portion of their expense report before they even leave for their trip. And the seamless connection means no need for yet another username and password. These things empower the traveler to focus more on their job and getting results.
Because helping business travelers stay productive is part of what we focus on at Deem, we’ve compiled a list of the top corporate travel and expense management best practices for any corporate travel program.
1. Have a formal travel and expense policy
A corporate travel and expense policy helps companies control costs, set expectations for traveling employees and inform them about reporting. It’s a guide for what is usually the second largest expense in a company.
A strong policy creates a clear standard for defining essential travel, determining who can travel, what types of travel are allowed or can be considered, and a clear plan for approvals. Teams may need to collaborate to decide which, if any, travel plans meet the criteria and their relative importance to the company.
Having a formal travel and expense policy seems obvious, but nearly a quarter of companies polled by Emburse for its 2021 Trends Report indicated they didn’t have one. This is a missed opportunity for those companies that don’t have a clear — or any — policy in place. By stating the maximum allowance for each expenditure of a business trip, companies can more accurately forecast and control costs.
2. Get a company-sponsored dedicated expense solution
According to a Confirma Pay Insight Report, two in three U.S. employees use their own money to pay for work-related expenses. But the lag in reimbursement leads to personal cash flow issues for those employees.
And delays in reimbursements to employees can translate into a detrimental impact to businesses. Fifty-eight percent of employees say that if they were in a situation where they were expected to pay their expenses from their own account but did not have the personal funds to cover it, they wouldn’t incur the expense even if that was bad for the company.
According to the Emburse report, about half of all large and mid-sized companies use a dedicated expense software, and 17% use an expense software that’s embedded in their ERP system. Surprisingly, nearly a third are still using manual processes. These companies are at risk of inaccuracies in reporting and delays in reimbursements to employees. Even more concerning, they may be at risk of losing both business and employees to more efficient competitors.
3. Combine use of physical and virtual cards with pre-approved limits and controls.
Virtual cards make company payments more accessible to everyone, and they can be used in physical transactions or in an app. At the same time, virtual cards for travel and expense management are a more secure and controllable way to manage budgets.
Corporate expense managers can pre-set limits on virtual cards to match what is expected for business trips, so spending doesn’t end up being out of policy. These cards also provide more security as lost or stolen physical cards are easily abused by unauthorized people.
And virtual cards are less susceptible to hacks — because the primary card number is not exposed during transactions, a system breach only exposes useless data and strings of numbers.
4. Shift to mobile options for travel and expense payments.
Business travelers have been conditioned as consumers and now expect the same convenience and technology options for business that they’re used to in their personal lives. And in the wake of the Covid-19 pandemic, contactless payment cards and mobile options are becoming more popular across the U.S. as people have greater health and safety concerns.
According to a Strategy Analytics survey, “29% of US consumers preferred contactless payments to other options.” And in a 2021 Amadeus survey, respondents said the ability to have contactless payments is very important in feeling reassured during business travel.
This is another area where virtual cards benefit businesses and their travelers. Just like physical cards, virtual cards can be added to mobile phone wallets. Travelers who are already acclimated to paying for services through their phones are likely to continue the practice during business travel.
In fact, if companies offered a mobile app for expenses that would be paid directly by the company, 60% of surveyed employees said that they would be very likely to use such an app.
5. Switch to a cloud-based travel & expense platform
Once you’ve set up a platform travelers can access from their mobile devices, they can and will use it everywhere. And it’s easier for employees to capture travel expenses from the road. They’re more efficient with their time because they don’t need lengthy sessions when they’re home to find and record receipts.
A cloud-based expense system enables travelers to upload receipts from their trips into an online database, usually through snapping photos of receipts from a smartphone. The digital versions of receipts are then saved to the company’s systems, so everything from expense reports to reconciliations are securely stored and accessible. Cloud-based expense systems help eliminate the risk of errors and provide better analytics and transparency for business leaders.
Think a cloud-based T&E management software solution is too expensive? In 2021, 46% of companies achieved a positive return on their investment in less than one year after switching to a cloud-based system. The savings came primarily from lowered expense processing costs, improved employee productivity, and improved policy compliance.
6. Automate processes
In 2017, nearly half of all surveyed companies used manual processes rather than a dedicated expense management solution. As shown below, that number is down in 2021, to 29%, but this means nearly a third were still using manual processes. On top of that, 68% of companies use a manual method to enforce T&E policies. That’s a lot of time doing work that’s more efficiently done by dedicated travel and expense software.
Automating travel and expense processes increases control and cost savings through policy management. It can be used to capture rich data for insights and analysis, can help save money by alerting and automatically applying unused tickets to new trips, and can make global travel easier by converting dollars to local currency.
According to Association of Certified Fraud Examiners, expense reimbursements are the third most common occupational fraud scheme in the US and Canada. Companies can lose an estimated 5% of revenue to fraud each year. But automated reconciliations can reduce fraud by using electronic payments, controlling who spends and how much, and regularly auditing company accounts for unusual or unauthorized transactions.
Using a dedicated travel and expense management system has many advantages, including improving travel and expense compliance, providing access to the system from anywhere at any time when the system is cloud-based and mobile-enabled, and improving reporting and analytics capabilities. Simplifying the travel and expense process for both employees and travel managers not only improves all of those activities, but also helps create a better corporate culture and happier employees.
Learn how to upgrade your T&E management program in our free eBook.