AEP Automates Expense Mgmt.

Since implementing a one-card program in 2000 and linking it to an automated expense reporting system, Steve Quincel, manager of employee expenses, has helped American Electric Power Co. achieve T&E savings and revenues of more than $2 million by providing better data for vendor negotiations, maximizing card rebates and reducing expense processing time.

Columbus, Ohio-based AEP, which in 2002 spent $6 million in U.S. air, has had a contract with American Express for its travel and entertainment card program since the 1980s. In the late '90s, the company implemented Visa's purchasing card program, but a merger in 2000 was the catalyst for putting all corporate card spend—both T&E and purchasing—into one program.

Upon merging with Central and South West Corp., "which had its own card programs, there was a merger team formed to look at all the redundancies that could be corrected," Quincel said. "Since we had all these different pieces of plastic floating around, we realized we could consolidate them into one program. Our ultimate goal was to achieve one single piece of plastic for everything."

After an arduous request for proposals process with several vendors, American Electric Power and its newly acquired subsidiaries ultimately went with Bank One's MasterCard one-card program. After consolidating several card programs with several vendors into a centrally managed account, Quincel was able to leverage the company's purchasing and T&E card spend into a single entity, resulting in an annual rebate of $500,000.

"Putting those programs together increased our overall dollar spend on the card," he said. "Prior to that, things were pretty well fragmented. Some of the card programs had rebates, and some of them did not. This way, we were able to capture everything and maximize the rebate potential."

AEP also drove efficiencies by making Quincel the manager for the single card program. Just as it merged several pieces of plastic into a single entity, the company merged separate card program administrators into one point of contact.

"Through card consolidation, we were able to reduce our corporate supply chain," Quincel said. He now manages the approximately 10,000 cards issued at AEP. "When we had fragmented card programs we weren't getting any centralized reporting, so we didn't know exactly how much we had spent with one vendor," he added.

American Electric Power also took the consolidated approach with its expense reporting platform. Quincel said that 10 years ago the company's management of expenses matched the fragmentation of its management of cards: Some travelers were filing with pen and paper, while others were using an internally developed program. In 1999, AEP moved into automation when it implemented Necho Systems software.

"The electronic expense system—since it has workflow built into it—is just so much faster than trying to move a hard copy around," Quincel said. "We're able to turn things around relatively quickly. The ultimate thing is that it is possible to complete an expense report and be reimbursed within two business days." Through implementing automated e-mail notifications to managers for expense report approvals and eliminating the re-entering of data, what once took as much as six weeks to complete has been chopped to as little as 48 hours.

"When an expense report has been submitted for an approval it launches an e-mail that goes out to whomever the designated approver is and lets them know that there's an expense report awaiting approval so they can log in and take care of that," Quincel said. "If the approver decides that there's something wrong with that expense report or something's not clear enough, the notice goes back to the person whose report has been rejected. The idea being that if people are doing reimbursement, we like to get that processed quickly. People should not have to use their personal funds to take care of company business."

Since expense management is "business critical but not mission critical," Quincel asserted that the process improvements have given internal resources and employees the time to focus on more higher-priority responsibilities.

In addition to saving time, AEP also has saved money. Compared with prior practices in expense management, Quincel said that automation has saved an average of $3.50 on processing costs per expense report. At a rate of 8,500 expense reports processed per month, the company saves about $357,000 annually when compared with earlier practices.

In 2000, when both tools were in place, Quincel moved to streamline further the expense management process by linking its newly implemented one-card with the company's expense reporting system.

"The IT department helped link it up as far as the hardware goes, but Necho did the mapping work to take the MasterCard file feed and pull it into the expense system," Quincel said. "MasterCard was easy to work with in obtaining the data. They supply us a feed every working day, and we were uploading these things five days a week."

With travel data always in flux, AEP drastically has improved its view of the who-what-when-where-and-why of spending patterns within the company. Quincel said the integration of payment and expense has resulted in significant benefits to the company, as the more consolidated view of travel spend has driven vendor negotiations.

The impact was realized last year when American Electric Power witnessed a $1.6 million spend reduction, which Quincel and AEP attributed directly to the power of data.