Tight policy controls and interdepartmental cooperation have enabled Norwalk, Conn.-based life sciences company Applera Corp. to fund its expense reporting system through corporate card rebates.
Spurred in part by heightened financial consciousness dictated by Sarbanes-Oxley, the company in the past two years consolidated travel and expense practices, replaced its Excel-based expense system with an automated tool and mandated use of its corporate card, which now captures more than 90 percent of the company's travel spend. Consequently, the company has been able to secure substantial commercial card rebates, in effect turning a cost center into a profit center.
Bob Mendence, finance manager at Applera, said the return on investment is most evident in strengthened compliance and heightened spend visibility for negotiations, but the cash-back card rebates have been an added bonus. "We take a look at our average monthly spend and what we've been achieving in rebates is more than our monthly cost for our expense system," Mendence said of Visa card rebates and the company's Concur expense reporting system. "It's money coming back to the company that never came back before and we would have the monthly bill for Concur to pay anyway."
Just as the company had disparate travel management processes
(BTN, April 18), with "different preferred vendors, different rates, different rules," Applera in the past also relied on various accounts payable and expense management tools across its units, Mendence said. "There were several different business units and those units had their own accounts payable processing," he said. "What was processed one way in one business unit was processed differently in another unit."
Mendence said this caused headaches when trying to get accurate spending data. "If you wanted information out of the system we would take it from five different systems and lump it together," he said of prior practices. "Now, I can give you total aggregate air spend or hotel spend from the entire company within two clicks."
Even if there was consistency among business units, Mendence said the process was still inefficient, as it relied too heavily on paper. "We used Excel spreadsheets, which then you had to print out and mail with all of your receipts. You have people FedExing expense reports and receipts to their manager and the manager putting three or four of them in an envelope and sending that somewhere. You definitely get some lost productivity."
In 2003, the company set out on a mission to streamline and consolidate disparate expense management, travel and commercial card programs. After selecting Concur as its expense system and Visa to cover its various categories of indirect spend, the company in November of that year rolled out a vastly different set of practices and tools.
"We did everything around that same time," Mendence said. "We first had our card up and rolling, then the expense system and travel booking system rolled out at the same time."
Now, in addition to using consistent travel policies and one booking tool, all domestic employees follow the same expense guidelines and use a single expense system and one card provider.
As with many successful corporate programs, the company stressed employee education—both hands-on and via its corporate intranet—in efforts to supplant a lightly managed program with firmer policies, which in some cases replaced "should" with "must."
Upon its rollout, the new expense system and Applera's harder line on employee expenses at first met some skepticism. However, as company travelers became more comfortable with the system, they noted the benefits that the system gave them—quicker filing time, less manual entry and faster reimbursements, among others.
From mandating the card and curbing delinquent payments to bundling various categories of indirect spend and processing them all through the Concur system, Applera adopted a number of best practices, which increased spend visibility and boosted rebates.
"Before we launched Concur, 46 percent of our T&E spend was going back to the employee in the way of out-of-pocket reimbursements," Mendence said. "There was a lot of personal plastic and, for different reasons, they were using their own credit cards. That was taking away from the company's rebate potential. Within the first nine months, we were able to get the out-of-pocket spending from 46 percent to 9 percent. Three or four months ago, our out-of-pocket spend was down to 8 percent."
While mandating the card yielded higher volumes and feeds into card rebates, Mendence, senior manager of travel Suzen Moye and senior manager of support services Jim Maher, who manages Applera's corporate card program, also have been sticklers for timely payments—further impacting the rebate level. Although many companies send reminders to employees only when a corporate card balance is outstanding, Applera has been more proactive.
"By linking in with the expense system, we can see charges that have not been submitted. Our policy is you must submit your expenses within three weeks of being incurred," Mendence said. "Every other week, we'll do a dump of the credit card charges that are greater than 14 days old and have not been submitted. We send a mass e-mail out to employees, reminding them the policy is to submit within three weeks. It gives them the reminder that they have one week, otherwise they'd be out of policy."
Mendence and the company's finance department also have embraced the recent trend of managing all employee expenses in the same fashion, enabling it to bundle various categories of spend for corporate card rebates
(BTN, Aug. 16, 2004).In addition to the company's T&E card, Applera also contracts with Visa for various other card products—including procurement cards, meeting cards and a ghost account—all of which now feed into the Concur system, as well as foster higher corporate rebates. "They do contribute to rebates," Mendence said. "Although our T&E cards were paid in a timely way, some of our other cards were not. They are all factored into the rebate since it's all from a single provider. As of two months ago, everything is through Concur. We added a database for procurement cards through Concur, another for meeting cards and ghost cards, and then another, more recently, for Canada."