Inefficient Travel Management Impacts Corporate Profitability, Says Report

Businesses are trying to decrease the amount of money they spend on travel and entertainment, owing to a recessionary economic climate. However, current, manual T&E processes are fraught with challenges, with manual data entry and inefficient processing emerging as the biggest headaches,  according to a new study by PayStream Advisors, Inc.


"The time is ripe for organisations to look to automation to deliver tangible benefits around cost containment, productivity enhancement and increased employee satisfaction," notes the study.


The biggest challenge for half the organisations (50 percent) was manual data entry and inefficient processes. As organisations continue to rely on paper - or spreadsheets at best - the process of collecting, approving and auditing expense reports translates to long hours and numerous headaches.


More than one third of organisations (37 percent) found the inability to enforce corporate travel policies to be a challenge. Over one quarter of the respondents (28 percent) mentioned that a lack of visibility into spend was a problem. A lack of accurate and timely visibility into travel spending - including information on compliance with corporate travel policies and preferred vendor agreements - prevents organisations from consolidating spend, which in turn reduces their ability to leverage volumes and achieve stronger negotiating positions with suppliers.


Just under one quarter of the companies (23 percent) were struggling with an increase in overall T&E expenses. The high cost of processing expense reports was a challenge for 19 percent of the organisations surveyed. The research indicates that the average cost to manually process an expense report is many times more than the processing cost of an electronic report. Multiplied by the total number of trips, this amounts to thousands of dollars spent on travel management, which can have a material impact on profitability.


According to the survey, under half the volume of expense reports (46 percent) is currently submitted in paper format via inter-office mail, which has gone down from 53 percent since the 2009 survey. It important to note that more than one in every three reports (39 percent) is submitted using an automated solution (increased from 33 percent in the last survey). Email and fax were not very popular options with only ten and five percent of expense reports, respectively, being sent through these methods. Further, the fact that more than one quarter (28 percent) of companies surveyed submit 100 percent of their expense reports via an automated solution makes us very optimistic about the future of T&E automation.


The survey also reveals that even the back-end of the expense management process – namely around receipt management expense reimbursement, is catching up with automation. While employees at more than 70 percent of the companies mailed the paper receipts to the AP department based on 2009 results, only 58 percent of companies are relying on this method now. Employees scan and attach receipts to expense reports in the automation solution at more than one quarter of companies (28 percent) and fax receipts with a bar-coded cover sheet to a central imaging server at 13 percent of companies. Outsourcing the receipt management process was only used by a small number of companies surveyed (1 percent).


Travel Expense


The survey shows that 39 percent of companies have a completely manual process for T&E expense management. This means that employees are printing out expense reports and submitting paper reports and receipts via inter-office mail. In addition, these reports are reviewed by mangers and then manually keyed into the financial accounting system. However, on the other end of the spectrum, more than a quarter of the respondent organizations (24 percent) is fully automated - whether using an integrated system or disparate systems. (21 percent) of companies stated that they have some automation in place to address the T&E process. Usage of a third-party outsourcing provider was not a popular option with only (3 percent) adoption.


The biggest hindrance for automation at (41 percent) of companies was the fact that senior management believed that current processes did work, even though they were not the most efficient.


Another reason that companies were not interested in automating their manual processes was that they did not think there will be an ROI. Lack of budget and a lack of understanding of current solutions are other reasons that are holding back adoption of automated solutions.


"We found significant differences between processing costs of companies that have manual processes and those that are automated," says the report.




There are a number of different options when it comes to automating the T&E process, but use of a best-of-breed solution appears to be the most popular.


Electronic reimbursement of expenses, followed by automated workflow for expense approval are the most used features of expense management automation solutions.


Lower processing costs, improved visibility over spend and better enforcement of travel policies are the biggest benefits achieved by adopters of automation.




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