Cashing Out: Trans Marine Turns To Prepaid Cards For Savings, Spending Insight - Business Travel News

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Cashing Out: Trans Marine Turns To Prepaid Cards For Savings, Spending Insight

November 27, 2013 - 07:50 AM ET

By JoAnn DeLuna

What if your company cut you a check for several thousand dollars to spend every time you left on a business trip? That's predominately how Trans Marine Propulsion Systems had managed its business travel expenses since the company's inception in 1985, before switching to Pex Card prepaid cards in June 2011.

Based in New York, privately held Pex Card integrates with the QuickBooks accounting system and Orbitz for Business, the corporate travel tool that Trans Marine implemented in January 2013, according to controller Angela Bauer. It has provided Trans Marine with savings, spending insight and controls and, overall, a payment program that is easier to administer.

The diesel engine repair and service company with 26 employees has offices in Seattle, Washington and Tampa, Florida; however, the company sends employees "wherever customers need us," Bauer said. That means 20 employees are traveling—either internationally or domestically—about 90 percent of the year and annually spend over $1 million in T&E.

"The cash just posed a problem all around in terms of managing spending and seeing what employees were spending on," Bauer said. "When on a job [an employee] is sometimes gone for two weeks, so we were cutting checks for $6,000 [per trip]."

The company had situations where employees were spending the money before they left for a job, so once on the job they wouldn't have enough money to get around or to complete the job, Bauer said. "A huge problem started happening."

When Trans Marine realized people were abusing the cash system, it began requiring employees to submit all receipts with their Excel expense reports. By doing so, the company discovered some employees were purchasing such non-travel-related items as DVDs and video games. Additionally, Trans Marine didn't have any insight into its spending. "Before Pex, we'd invoice customers for expenses and the money would go back in the bank," Bauer said, "but no one was keeping track of what we spent on expenses."

In 2006 the company implemented a prepaid card program backed by Springbok, a card provider that was "more like credit cards than prepaid cards," Bauer explained. However, the program only lasted two years. It turned out to be a "complete nightmare," and the company returned to a cash system. "It was before my time, but they had tons of problems," she added, noting Springbok's 2010 bankruptcy. Another problem was supplying employees with funds while they were outside the United States and during emergency situations.

"That's when we realized we needed to figure out a system that's easier to fund employees' cards and mange where the money was going and see what employees were doing," Bauer said.

Trans Marine implemented Pex in June 2011. Bauer said establishing the program was a fairly straightforward process, which required a master account at the company's bank to supply funds to the prepaid cards.

Bauer then used the Pex online portal to add a card for each of the 20 business travelers, which were mailed to Trans Marine. While the cards are backed by Visa, Pex doesn't provide companies with credit.

Two employees use Pex cards to book all employee air travel and hotel stays. To determine how much money a traveler will need for the rest of their trip expenses—including meals, bag fees and taxis—Trans Marine uses the U.S. General Services Administration's per diem rates.

"I figure out the per diem per location, how many days they'll be there, [determine] bag fees, taxis etc., and that's the exact amount I put on the card," Bauer explained. "Then I go in and fund all the cards. It's very simple and the IT department didn't have to work on it at all."

Pex provides some controls, including setting daily limits and defining certain expenses as unallowable. Bauer said she tends to use the feature allowing employees to spend internationally, but doesn't control for daily limits as long as the spend averages out to the GSA rates.

Improvements 

In the first year after implementing Pex, Trans Marine reported a 44 percent savings, or about $35,000, just on "allowable" meals and incidentals. "Some companies use a cash-basis system up to the government allowable rate," Bauer explained. "Using this system, you can just give the employee the full per-diem without any accountability for receipts. We still allow our employees to spend up to the government allowable rate, if they choose. However, if they don't , the funds are left over on the cards for the company to take back and to keep recycling into our expense pool."

"We have a constant revolver of funds in the Pex account," she said.

The company also gained more spending insight by tracking more expense categories and monitoring individual travelers' spending.

Going forward the company hopes to simplify its expense reporting process by enabling employees to take photos of receipts and email them. "We'd like to eliminate the accountability of receipts and just use the statements," Bauer said.

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