Our Whitepapers on Expense Management
The 6-step Plan To Travel & Expense Management Automation
With the business travel industry on the rise, efficient travel and expense management is becoming increasingly important for companies.
6 Effective Strategies To Increase Your Travel Policy Compliance
A good travel policy is only effective when employees actually comply with the rules. How do you increase your company’s compliance rates without causing more stress and hassle for your employees?
The Return on Investment Of Automating Your Travel & Expense Management
The return on investment (ROI) of automating your expense management should be one of the main internal selling points of the project. Fully automating your expense management will greatly decrease costs by reducing the time your employees spend dealing with expenses, by increasing compliance with your organization’s travel policy, by reducing expense fraud and errors in expense reports, by simplifying reporting and by increasing visibility into spending patterns. Few projects are so easy to implement and have such a high return on investment . This report outlines how investing in a dedicated expense management tool will pay for itself and can yield an ROI of up to 500%. Key Findings We identify six main drivers of the return on investment of automating your expense management: 1.Lost employee productivity for traveling employees, approvers and the finance/accounting department. 2. Reduced prevalence of duplicate entries and errors in expense reports. 3. Happier and hence more productive employees because of faster reimbursement and friction-less travel. 4. Increased compliance with corporate T&E policy. 5. Insights from data that will allow you to make further cost savings. 6. Decreased expense fraud. Key Findings/recomendations Managing expenses properly and keeping them under control is an important part of any business. Aberdeen (2016) estimates that travel and expenses (T&E) is the largest expense item for companies after employees’ salaries and wages. Yet, many companies do not optimize the way they deal with processing and controlling expenses, leaving a lot of money on the table. Are you looking to reduce the costs of your business and increase profits? Then reviewing how your company manages expenses and optimizing this process could have a significant impact on your organization’s bottom line. Fully automating your expense management will save your employees a great amount of time filling out expense reports, will increase compliance with travel policy, reduce expense fraud and errors in expense reports, simplify reporting and increase visibility into spending patterns, all resulting in a huge decrease in costs. Few projects have such a high return on investment (ROI). This report outlines how investing in a dedicated T&E management tool such as Rydoo will pay for itself and could yield a return on investment of up to 500 percent. Many organizations see travel expenses as an investment in their business, with its success often measured in terms of new business, stronger client and supplier relationships, and professional development of their staff. It’s an investment that pays off: Oxford Economics (2013) estimates that for every dollar invested in business travel, firms generate $9.50 in revenue and $2.90 in profit. With businesses spending between 6 and 12 percent of their annual budget on T&E, this is an important operational cost. Yet, while most businesses spend ample resources on optimizing and streamlining most of their operations and processes to minimize costs and maximize revenue, travel expenses are often forgotten. According to PayStream Advisors (2017), 37 percent of companies still manage expenses manually, with employees (e-)mailing receipts to the finance or accounting department and typing over the relevant information into spreadsheets. Of the 63 percent of the companies who do use a dedicated expense software tool, Forrester Research (2014) estimates that more than half still make their employees enter some expenses manually, as the expense software only partially automates the reporting of expenses. Only 18 percent of companies use a TEM (travel expense management) tool such as Rydoo that completely automates the entire expense process. It is therefore not surprising that T&E costs are considered the second most difficult operational expense item to control (Forrester Research, 2014). Not only is manual expense management a waste of resources, a source of errors, employee dissatisfaction and even fraud, companies that are not effective at controlling costs are also less profitable and experience less revenue growth (Oxford Economics, 2017). Finance leaders at well-performing companies understand the link between superior financial performance and cost control, and acknowledge that T&E software tools that automate expense reporting are a crucial tool for modern and efficient expense management. This implies that there is great room for improvement in many companies when it comes to expense management. Companies implementing an expense management tool that completely automates the entire expense management process typically report very high returns on investment. This because the potential cost-savings are huge, while the price for dedicated T&E software tools is very reasonable. Some companies report ROIs of up to 500 percent, while the average payback rate for the most popular expense management tools is 6 to 17 months. On top of that, expense automation also increases compliance with company travel policies and employee happiness. Benefits and costs of automating your TEM So, what are the ROI drivers of automating your expense management? To analyze the return on investment of automating your expense management, we have to look at the benefits and costs of automation. Figure 2 provides a schematic overview of all costs and benefits. The cost-side is actually very straight-forward and only consists of two factors: the price of buying an expense management tool and the cost of deploying it. The benefit side of the equation is slightly more complicated, with six potential sources of benefits: lost employee productivity, reduced prevalence of duplicate entries and errors in expense reports, decreased expense fraud, increased compliance with company travel policy, insights from data that will allow you to make further cost savings and happier employees. Let’s zoom in on each of these factors. 1. Lost employee productivity Processing expenses manually is a time-consuming endeavor. In a company where expenses are still managed manually, traveling employees must collect receipts when incurring expenses, write down any non-receipt items, enter the date, vendor, item category, price and currency of each expense item into a spreadsheet or “the system”, compile an expense report and print it, tape or staple the receipts to the report, sign and date the report and mail it to the right person for approval. Once approvers receive a paper expense report, they must check each expense item has a receipt with info that corresponds to the expense report. Approvers must also check compliance with company travel policy and double check duplicate entries, errors or other abnormalities. Once the report has been approved, it moves onto the accounting or finance department, where often the expense report and receipts will be checked again, after which each expense has to be inputted into the company’s accounting software or the company’s payroll system for reimbursement. It is not uncommon for accounting staff to spend hours inputting expenses, correcting errors and chasing lost receipts. Counting together all man-hours lost by traveling employees filling out expense reports and approvers and accounting or finance staff processing expense reports results in a massive loss of productivity. This loss of productivity can easily be alleviated by using a tool that fully automates the entire expense management process: employees then snap a picture of the receipt on the go, the software automatically fills in the expense report based on the data “read” from the picture and checks compliance with company travel policy, managers only need to approve the expense if the system finds any abnormalities, and all the data gets automatically inputted into the accounting and reimbursement software. According to PayStream Advisors (2017), the total average cost of submitting an expense report manually is $26.63, while a fully automated T&E management tool such as Rydoo cuts this cost down to a mere $6.85. That is a saving of almost $20 per expense report per employee. These savings add up over time. Let’s consider a small company Global Matics Inc. with 300 employees. Of these 300 employees, 100 travel once per month for business. A simple calculation reveals that Global Matics Inc. could, therefore, save a staggering $23,736 per year by automating their expense management (see equation for details on the calculation). Given that Rydoo charges as little as $84 per active user per year, switching from manual expense management to Rydoo could yield Global Matics Inc. a return on investment of 183 percent. The return on investment of companies that already have some degree of automation of their expense management is slightly lower, yet there are still considerable cost-savings to be made. According to PayStream (2017), the average total cost of processing expense reports with some automation is $17.31. This means that switching to a fully automatic TEM solution will save you a little bit over $10 per expense report, a considerable saving. Now, let’s imagine that our example company Global Matics Inc. was already using a very simple expense management tool, then switching from this tool to complete automation with Rydoo would yield Global Matics Inc. a return on investment of 49 percent. These averages, however, conceal a great amount of 3 variation. Companies that have more senior staff traveling than average, for example, will be able to obtain a higher ROI as the hourly wages of senior staff are higher and hence the potential cost-savings are higher. This is also the case for companies that employ more highly educated people than average or companies in industries or regions where wages are higher. 2. Duplicate entries & errors Employees are only human, and so it shouldn’t come as a surprise that expense reports are full of mistakes. Duplica
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13 Key Features Every T&E Tool Should Have
Travel expense management (TEM) has changed a lot in recent years. Especially Software as a Service (SaaS) tools have disrupted the way expenses are managed. What once were very innovative tools for risk-loving companies, have now become the gold standard in many companies. However, with more than 1