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.