More Cos. Outsource T&E Reporting To Cut Costs

The corporate mantra to focus on core competencies is proving a boon to an emerging segment of travel and entertainment expense solution providers: the outsourced service bureau.

Providing everything from software and payment options to receipt scanning to clerks who audit expense reports manually, this new breed of service bureau is finding a receptive audience among corporations interesting in slashing costs without investing capital. Using conservative estimates that it costs corporations $10 to $20 to process each expense report, most T&E outsourcing firms contend they can do it for less than $5.

Corporate culture, security concerns and costs are among the reasons preventing some firms from even considering using a service bureau. But for companies like Johnson & Johnson, Bayer, Merck and Cadence Design Systems, the service bureau option provides a quick way to implement a streamlined expense processing solution that will yield savings.

Consultant Shimon Avish of the Travel Management Group, Alexandria, Va., said some of his clients have looked at outsourcing as an interim solution "during corporate consolidation, or while waiting for T&E reimbursement technology to mature."

Although the concept of outsourcing expense reports has been one of Gelco Information Network's core businesses since the early 1900s, several new entrants, including Automatic Data Processing, RPL Expense Management Services and VIN.net, are finding ways to add new value for the corporation. The ultimate example is Carlson Wagonlit Travel, which earlier this year extended its relationship with General Electric to take over expense report processing previously handled by more than 100 GE employees. Even American Express last year launched a draft system that allows employees with no access to automation to reimburse themselves and the company to audit the reports later.

"The first reason why anyone would want to outsource this is cost savings," said Chuck Buckner, senior vice president of sales for Gelco. "They're able to leverage technology that's already in place."

But service bureaus offer several advantages beyond saving money. In most instances, employees can be reimbursed within 48 hours, instead of several weeks. Corporations can get access to state-of-the-art expense reporting software without having to burden information systems with the responsibility of supporting and updating the package. And companies can free up accounting clerks who manually verify policy compliance and check that receipts are attached to expense reports. Some bureaus identify big-picture issues that the accounting clerks never had time to report. For example, companies can identify the need to change policy or receipt requirements.

At Cadence Design in San Jose, Calif., executives continually debate the merits of using a software solution but can't find an easy, cost-effective method to do so across platforms and widely disbursed employees, said Bill Porter, vice president and corporate controller. Two years ago, Cadence's accounts payable supervisor, Debra Batary, began looking at service bureaus as a way to reimburse employees more quickly. A software maker with 3,500 employees, Cadence outsources talent trained on using its products to corporations. Consequently, employees working off site must mail expense reports to their supervisors, who must then submit them to headquarters for payment. The process frequently took six weeks, and required 3.5 processors to resolve problems, Porter said.

After the company adopted Gelco's Traveletter Direct option, which allows employees to submit expense reports via touchtone telephone, employees are being reimbursed in two days. "We eliminated one processor, increased volume 40 percent and reduced our costs," Porter said.

The newest service bureau entrant is Roseland, N.J.-based ADP, which earlier this month signed an exclusive arrangement with RPL, Dresher, Pa., to provide outsourcing for those who want to go beyond licensing ADP's e-XPENSE software. Last year, ADP purchased e-XPENSE, an automated expense reporting software that has been licensed to corporations for internal use for several years.

"We knew that going forward, we would need to offer both on-site and off-site processing," said Rob Raczkowski, ADP's sales and marketing vice president. "With RPL's processing expertise, we have the most complete T&E solution in the marketplace. In the future, if our clients decide they want to switch from on-site to off-site or vice versa, e-XPENSE can be easily configured for either solution."

Formed two years ago, RPL has licensed e-XPENSE to handle expense reporting for its clients, which now number 15, and generated more than 750,000 expense reports last year. Because of the ADP deal and other developments, RPL vice president Bob Rayca expects to process more than 2 million expense reports by year-end.

Using e-XPENSE or a voice response system, employees submit their expense reports via e-mail or phone prompts to RPL, which audits them electronically and manually, if desired; scans receipts and stores them on CD-ROM and/or paper; processes reimbursement; forwards data to the company's general ledger system to post expenses; and provides the company with reports. All outsources provide the expense processing, reimbursement and data feeds to a general ledger system and reporting.

One of RPL's distinguishing features is its receipt scanning capability. By storing receipts and reports on CD-ROM instead of paper, corporations can access these files in seconds instead of days. One company routinely audits all expense reports for three weeks; this can now be done by one auditor in three days, said Rayca. Competitors Gelco and VIN.net expect to have scanning capabilities later this year.

Noting an unusual benefit of outsourcers, Rayca said, "we're an apolitical animal within the company. We're given the company policy and we administer it. We don't know who the president is, who the board is, who the other exceptions are, and we question everyone."

Rayca said his firm has actually had one company president thank him for pointing out missing receipts, thus avoiding a potential future problem with the Internal Revenue Service.

Instead of using another firm's software, VIN.net, Barrington, Ill., developed its own expense reporting software, which is distributed to customers who use its outsourcing services. The software also is available for license. More than a dozen corporations use VIN.net, but executives expect the numbers to swell by more than 50 by year-end as a result of the partnership with Sabre Business Travel Solutions and new sales efforts.

VIN.net's proprietary software includes a module used by the traveler and a second for administrators only. The administrator's module is the company's distinguishing factor, noted Art Clausen, vice president of strategic alliances. Corporate executives can slice and dice data any way they want, reviewing real-time expense data. Administrators also can establish policy parameters that will be used to conduct electronic auditing of reports. Corporations have great latitude in establishing policy down to the employee level.

Travelers can submit expenses by dialing into VIN.net's computer, sending it via Internet e-mail or using the company's computer network. Responding to the growth of the Internet, VIN.net is enhancing its site and expects increasing use of this medium.

Like its competitors, VIN.net is accepting data feeds from credit card companies to prepopulate expense reports. However, it is finding that customers are using the data more as a reconciliation tool than a time saver. Most travelers are keying in expenses before the charge card firms pass through charges, Clausen said.

Gelco continues to offer a paper-based draft system to about half of its 1,500 customers, along with the Traveletter Direct phone service. In addition, the company offers ExpenseLink, Windows-based software that dials into a corporation's or Gelco's computers to download expense reports. The latest version of this software, compatible with Windows 95, is slated for release in April.