If your firm is like most, management considers business travel a necessary, albeit expensive, tool to achieving its goals. Now, some firms are taking a more strategic look at T&E, according to a new report from AberdeenGroup. Those that do are rewarded with higher compliance to corporate travel policies, as well as lower costs to process invoices.
As a starting point, more than half (54 percent) of the 175 organizations responding now view expense management as a “mid-level strategic function that can drive moderate value to the overall organization.” That’s a shift from the previously held conventional wisdom, which held that T&E is simply a sunk cost.
At the same time, 52 percent of survey participants stated that they needed to increase visibility into T&E spending, while four in ten also were focused on increasing compliance. Next in importance was reducing the time and cost of processing T&E transactions, which was mentioned by 38 percent of respondents.
At least a few companies appear to have made progress toward these objectives, and enjoy higher rates of compliance with corporate T&E policies, as well as lower costs to process expense reports.
What are the keys to success? For starters, nearly two-thirds of best-in-class organizations have automated T&E expense management, versus 44 percent of other companies. As a result, these firms are 50 percent more likely to have real-time visibility into their T&E spending, and are better able to compare dollars spent against the budget.
The top companies also are more likely to work collaboratively with procurement to develop T&E policies – 73 percent of best-in-class companies take this approach, versus 60 percent of average firms. Working collaboratively typically brings several benefits: greater visibility into T&E spending, higher cost savings and increased compliance.
Another differentiator between the best-in-class and the rest: they are more likely to track performance and compliance against corporate policies. At 62 percent of the top companies, the AP systems automatically notify management when non-compliant reports come through the system. In contrast, just 37 percent of average companies have this sort of system in place.
The efforts shown by best-in-class firms pay off in several ways. The top 20 percent of respondents enjoy a 90 percent rate of compliance with corporate T&E spending policies, versus an average of 77 percent. What’s more, they spend $6.25 to process an expense report, which is less than one-fourth the average cost of $28.91.