Travel and expense management is a massive undertaking, whether you have 50 employees who travel for business or 5,000. Accurately collecting and reporting on all travel-related expenses is a challenge. Fortunately, in recent years, things have changed. Today, modern software eliminates the need for paper expense reports, manual reimbursement processes, and back-and-forth approvals.
In this guide, we dive into travel and expense management. We showcase the signs that your processes may not be up to date, and list what to look for in new solutions.
All about travel expense management
Travel and expense management (T&E) is the process of collecting all travel-related expenses in order to write them off (and not pay taxes on that amount). In most countries, business-related travel, including flights, hotels, and ground transportation is fully expendable.
Whether or not food purchases are fully expensable depends on the country. In the US, food and beverages are 50% deductible, whether the expense is incurred during an event, a business trip, or a client dinner in your home city. Meanwhile, in the UK, food and beverages are fully deductible.
While the rules may differ by country, one thing holds true: tracking all deductible expenses is essential for lowering a company’s tax liability. T&E is designed to accurately track these expenses for tax write-offs as well as financial analysis. With the right data in place, smarter budgetary decisions can be made.
Pain points of ineffective T&E processes
If your travel and expense management processes are inefficient, your company will experience a lot of frustration.
Are you dealing with some or all of these? Take it as a clear sign that it’s time to change the way that you manage your expenses.
- Lack of visibility into real-time travel spend: When your expense processes are slow, that means your data collection is slow too. Finance managers and budget owners who can’t get instant insights into spending can’t make informed decisions for that time period. Instead, all of their budget optimizations will be reactionary.
- Lack of control and autonomy for travelers: The old-school way of managing T&E is all about control. An office manager or travel manager will book all trips to ensure that they’re within budget. But this frustrates travelers, who would rather book their own trips than send back-and-forth emails.
- Requirement for travelers to pay upfront: Without a travel management platform and corporate credit cards in place, travelers will have to pay for things upfront and file a reimbursement request later.
- Requirement for travelers to fill out expense reports: Without modern tech, travelers will either have to fill out a paper expense report or manually enter the data into an outdated system.
- Office managers struggling to wrangle all invoices: If your company isn’t booking travel in one place, you’ll have dozens or even hundreds of vendors each month to collect invoices from for your tax preparation.
- Finance managers struggling to reconcile purchases: Without automated reconciliation in place, finance managers will have to reconcile expense reports with corporate credit card purchases.
- Tedious reimbursement tasks: If you’re using paperwork or outdated tech, reimbursements are processed manually with payment vouchers.
- Lengthy reimbursement fund processing for travelers: Slow processes mean that travelers don’t get reimbursed right away. Especially if they had to make a large purchase, this could be challenging for managing their own personal finances.
If you allow these issues to continue, your business travelers will feel like you don’t trust them, and your administrative and finance teams will be too bogged down with manual work to tackle strategic business initiatives.
What effective T&E processes look like
When you have easy-to-use and powerful software to help you manage your corporate travel expenses, you can switch all of those negatives into positives.
- Full visibility into real-time travel spend: With automated expense reports via a mobile app, as well as consolidated travel booking, your finance team will have real-time expense tracking to help them better understand your travel program.
- Options and autonomy for travelers: Whether at a small business or a large corporation, business travelers want to choose their own trip options. This is a more enjoyable experience and helps them feel trusted.
- No need for travelers to pay upfront: Business travel purchases shouldn’t require that travelers request a reimbursement. Flights and hotels especially can be expensive. When booking on a business travel platform, the company can pay the monthly invoice and the travelers don’t have to pay upfront for each trip.
- No need for travelers to fill out expense reports: The right expense management solution will streamline all expense workflows with automation. A mobile app can scan receipts so travelers don’t have to manually enter data into the expense management tool.
- Fast for office managers to collect invoices: When you consolidate your travel costs into one corporate travel management system, you reduce the number of invoices. Your business travel platform should give you just one invoice at the end of each month.
- Automated purchase reconciliation: Expense data from receipt scans and corporate credit card purchases should be automatically reconciled.
- Automated reimbursement approvals: You should be able to automate your expense policy with rules so that food or taxi purchases under a certain pricing can be automatically reimbursed with no need for approvers to manually review.
- Quicker reimbursement funds for travelers: With automated reimbursements, travelers can get their funds quicker. And with consolidated business travel booking that the company pays for, travelers won’t even need reimbursement most of the time.
The best systems for travel and expense management
To manage your travel expenses accurately, you need the right software. An ERP solution that isn’t built for travel won’t cut it. In fact, you need two different programs that are fully integrated, a travel management platform and an expense management software.
Travel management platform
You need a travel management platform to help you control company travel, without actually micromanaging anyone. A modern travel management platform allows you to create customizable travel policies that work at the time of booking. This is not just a static travel and expense policy document.
A business travel platform also reduces manual work associated with business travel, because travelers can book for themselves and choose the options they want within policy, so there are no complicated approvals. What’s more, there’s no need for reimbursements, as a business travel platform should consolidate spend into one monthly invoice for the finance team to pay for.
What to look for:
- Great trip inventory (every option you can find in Google)
- Customizable travel policies and approvals
- Monthly invoice to consolidate payments
- High-quality customer support
- Insightful travel spend analytics and reporting
- Easy-to-use mobile app for travelers
- Consumer-grade UX (so travelers want to use the app, which leads to policy compliance)
Expense management platform
On the other hand, an expense management platform doesn’t actually help you purchase travel. Instead, it pulls all transactions from company credit cards into one place. It also securely stores your receipts and invoices for tax preparation. And, expense management systems also provide complex analytics and simplify the reporting process.
Make sure to choose a modern SaaS version that works in the cloud on any device. This way, employees can use their mobile phones to scan and upload receipts.
Some purchases require reimbursement. For example, if a traveler pays a local taxi company. Your expense management platform should help speed up reimbursement processes, and reduce manual work.
What to look for:
- Receipt scanning to reduce manual data entry
- Expense approval and reimbursement workflows
- Rules and automatic approvals for low-cost expenses
- Easy-to-use mobile app for employees
- Corporate card integrations and data importing
- Expense reporting and analytics
Pro tips for managing T&E
Want to manage T&E with less manual work? These are the most important things to put into action.
Let travelers book for themselves in one travel tool
Employee expenses can be spread across thousands of vendors. To consolidate this as much as possible, allow business travelers to book for themselves in your travel management platform. They should be able to book hotels, flights, trains, and car rentals in one place. Not only will this consolidate your vendors and simplify your expense reporting, but it will also increase traveler satisfaction.
Customize policies to match your company
The more that your travel policies align with your company, the better they will work. Create multiple policies for different projects or departments. For example, recruiting and sales might have a higher average spend than the general company policy. You can also create policies for certain people or small groups, like c-suite executives.
Automate approval workflows
Approving travel-related spend is a major time-suck. Make sure that all of your business travelers are booking their accommodations and transportation inside of your travel management platform. Set it up so that only trips that are outside of policy need approval. Add the right approver for each team or department so the travel management platform sends the approval request to the appropriate person.
Get rid of paperwork
Set your company up for faster T&E management by reducing paperwork. For example, instead of an expense form or a reimbursement request, business travelers can use your travel and expense management system to enter expenses, scan receipts, and quickly request reimbursement for purchases they made upfront with their personal credit card.
Integrate your T&E services
The most common way to handle T&E management is to pull in data from your travel management system into your expense management software. This way, you have travel expenses and non-travel expenses inside of one expense platform to consolidate your spending analysis by department, team, or project.
Reduce the need for reimbursements
We’ve talked about this above, but it’s worth calling out again (in case you’re skim-reading). Reimbursements are a scourge for everyone, travelers and administrators. To reduce them, make sure travelers are booking their trips inside of your travel management system, which should consolidate monthly spend into a single invoice. For food and beverage purchases, you could offer corporate cards to your frequent travelers so they don’t need to request reimbursement—and your finance team doesn’t have to process those requests.
The success of your T&E management depends on the tech you use and how well that tech meets your business’s needs. Make sure to consider everyone involved: your travelers, office managers, travel managers, and finance managers.
We caught up with Katharina Wodischeck from adsquare to hear her thoughts on Travel & Expense management.
How important do you think it is to have visibility on a company’s travel expenses and why?
“With having a clear visibility on travel expenses, a company is able to accurately track travel spends, and therefore budgeting and forecasting can be made more precisely. Beside that, the visibility gives the opportunity to analyse expenses by travel category, departments, and therefore helps streamlining the reporting process. And finally, having insights on the travel spend helps the company to create effective expense policies.“
In your opinion, what are the biggest challenges in managing T&E?
“In my opinion, one of the biggest challenges is that too many businesses are still managing T&E using excel sheets and therefore wasting a lot of time for manual processes and reconciling receipts. That lack of visibility makes it difficult for finance teams to identify which employees incur what expenses. Another challenge I see are unclear T&E policies. This can lead to unexpected and unauthorised purchases and moreover to consequences in terms of cost control and overseeing travel budgets.“
What advice would you give to someone who’s struggling with managing their company’s travel expenses?
“My advice would be to find a technical solution and therefore to automate the process as much as possible. It would make sense to capture all travel bookings and expenses in one system and enable all employees to manage travel bookings and expenses on their own according to the corporate travel policy.“