The process of managing employee expenses crosses several disciplines within a company—from travel to accounts payable and human resources to finance—but travel departments at many companies play a limited role in selecting systems, determining policies and managing expense processes. Of those responding to a survey of expense mangers conducted by Business Travel News who said their companies have a travel team, only about 53 percent reported working with such a team in regards to expense policies and procedures.
Although the numbers point to a lack of overall involvement between expense managers and travel managers, some sources claim there has been a greater realization among companies of the role travel managers could play in the expense reporting process.
"The buying decision is clearly done in the finance department," said Lori Fairbrother, vice president of marketing at expense vendor Necho Systems, "usually by the CFO, treasury, controller or someone at that level. However, the travel manger definitely is playing a greater role in the selection of expense management as well as in policy determination. The programs have to be orchestrated together. A good travel program, a good corporate card program and a good expense management program comprise the three-legged stool."
"We put together a divisional team," said Bill Davidson, manager of corporate travel and meeting services at International Sematech. "There was a project manager that was appointed who has a background in finance. We also had guys from finance, travel and our technology division. We looked at every possible option."
Just as expense management crosses various departments within a company, the average expense report, when processed, can touch a wide range of other applications and many companies are tying the knot to other tools.
"It's our HR, finance, procurement and expense reporting system," said Caro Cook, senior transportation officer for the International Monetary Fund said of the company's enterprise resource planning application. While IMF has not implemented an online tool for travel bookings, as the process would be "too complex," Cook said that links enable integration to such as a system if the organization were to employ one. As such, Cook said, "we're almost an end-to-end."
Accounts payable or payroll systems comprise the most common systems tied to expense management. Seventy-three percent of the companies responding said there is integration between its AP and expense systems. By providing such a link, companies have been able to streamline reimbursement procedures—giving travelers cash back at a quicker rate. Vendors told BTN that as a matter of establishing best practices, they encourage customers installing an automated system to link to the ERP system, although only 14 percent of the respondents have done so.
"The biggest challenge in terms of integration that we typically face is human resources," said Concur Technologies senior director of product management Chris Juneau. "That's where we start with integration because it's the most fragmented system in regard to the customer. Once it's done and we tighten the integration, then it's easy in terms of mapping into ERP or accounts payable—that is probably one of the smallest steps in terms of the overall task."
While the buzz around end-to-end solutions continues to hum—even the federal government is working on rolling out government-wide integrated travel and expense systems
(BTN, Sept. 20)—true integration remains elusive for many. Xerox
(BTN, Jan. 29, 2001) and PNC Financial Services Group
(BTN, Oct. 27, 2003) are among the few companies that boast working end-to-end systems that include expense, online travel booking and other automated processes. Yet, other companies continue to tie the booking process to the expense reporting process. Expense vendors in recent years have fostered relationships with booking tool providers to promote integration. Twenty-six percent of respondents said they integrated their corporate booking tool to the expense tool.
Integration even applies to some companies using internal systems. Of the companies using an in-house system, about 18 percent have gone the automated route, some with tightly integrated systems.
Austin, Texas-based International Sematech this year launched a highly modified, homegrown expense reporting system. Although the system is based on some PeopleSoft technology and integrated to the ERP platform, "it's really a hybrid," Davidson said. Sematech's solution comprises an online-based tool that ties the company's expense reporting module to pre-trip authorization and booking channels.
Companies that employ automated expense systems typically are quicker to reimburse travelers. "With our old process, it took too long to get reimbursements, sometime several weeks before someone was reimbursed," said MarketStar's Jeremy Thurick. MarketStar opted to use Concur Technologies' expense reporting system to replace a manual process.
Another factor that determines how quickly a company processes reimbursements hinges on the way that they reimburse travelers. Some companies reimburse travelers through payroll on a weekly or biweekly basis, others cut checks when expense reports are approved. "I would say when processing through payroll, reimbursement time is no more than 10 days," said Concur's Juneau. "Also, if you're paying through payroll versus cutting a check, you're saving $3.50 per expense report as well as getting the paper out of the process."
Receipts Go Digital, Most Companies Don'tVendors recently pushed to sell clients add-on services and perhaps no such offering has become as pervasive as receipt imaging. Concur Technologies, Geac, Gelco Expense Management and Necho Systems in recent years released receipt-imaging systems. Through such systems, employees fax receipts to a designated number, where the reports are digitally stored for approval and warehousing. In addition to the core expense vendors, other companies, such as IXOS Software and ImageTag, offer the technology as well.
"For receipt compliance, we moved to an imaging platform," said Lucent Technologies manager of global card services Adrienne White in August at a panel on expense management at the National Business Travel Association conference in Orlando. "Before, they just submitted paper receipts with their expense reports." The company selected German imaging service provider IXOS Software for receipt submission. While the imaging program has been a success in the United States, White said the company has been unable to roll the system out globally as it must comply with various tax requirements in other countries. "Outside of the U.S., countries still require paper receipts, but the laws may change," Lucent's White said.
Vendors and proponents of automated receipt management said imaging solutions offer value in several ways, including eliminating overnight shipping costs of paper receipts, cutting down on paper storage fees, as well as reducing the time associated with internal and Internal Revenue Service audits.
"Our corporate policy now requires that all receipts over $25 be imaged into the system," said Bob Mendence, project manager for Norwalk, Conn.-based Applera Corp. "Employees love it, as they don't have to worry about express-mailing their receipts from the road, and our accounts payable department can perform one-click audits without having to go digging through files."
Despite the efforts of vendors, such companies as Lucent and Applera still are in the minority, as only about 15 percent use such automated imaging systems. Of the respondents BTN polled, 66 percent continue to file and store hard copies of receipts manually, which vendors contend is costly. Meanwhile, 15 percent of companies image receipts after business travelers submit hard copies of their expenses.
In response to marketplace confusion as to what was acceptable, the IRS three years ago updated its receipt-management guidelines and clarified that companies can use electronic or imaged receipts in place of paper. According to IRS auditing procedures, records of travel expenses, expense reports and charge card statements must be archived for a minimum of three years after the tax return filing date. Some states mandate that companies keep these records for up to six years following the filing.
Payment Processes VaryGiven the strong efforts of T&E card providers, about 65 percent of business travel expenditures are charged on company-prescribed plastic, including such payment vehicles as traditional corporate cards, meetings cards, ghost accounts and one cards, which have seen increased use in recent years.
However, the lure of personal rewards and the reluctance of some smaller companies to issue corporate cards due to liability perceptions have maintained the viability of such payment methods as personal plastic and cash advances.
Personal credit cards comprise about 16 percent of T&E expenditures at respondents' companies. Meanwhile, cash advances, long considered the method of payment most ripe for abuse, continue to be used at some companies. Of those surveyed, the payment method comprised about 10 percent of T&E payments.
"It's definitely not a best practice, but it's going away," said Necho's Fairbrother. "It's not for frequent travelers. I don't want to pick on any one industry, but let's say, for example, manufacturing. They may have to send a new employee for training and that will be the first and last time that employee travels on the company. Overall, though, it's really less and less."
Whether companies pay by cash or by card, expenses next year will correspond to the anticipated surge in business travel, and expense managers predicted a boost in overall T&E expenses next year. Sixty-one percent of the respondents said that expenses in 2005 will be greater than those this year and only about 7 percent of respondents are expecting a decrease, leaving T&E expenses flat for about 32 percent of the companies polled. Respondents who predicted expenses would rise next year, compared with 2004, said they would do so by an average of 18 percent. This year, 65 percent of expense managers are expecting higher expenses than in 2003. Only 12 percent said expenses would be less than last year.