Many organizations continue to struggle to calculate the return on travel and entertainment spending, according to a new survey, even as they identify it as among their biggest variable corporate costs.
Commissioned by SalesTrip and conducted by 3Gen Research in October 2019, the survey canvassed more than 500 senior finance leaders for companies ranging from 50 to 50,000 employees. Half of the companies were based in the U.S. and half in the U.K.
T&E spending was the expense category most often cited as a company's biggest variable cost—identified as such by nearly 27 percent of respondents, outpacing salaries by 1 percentage point. However, about 48 percent of respondents reported a lack of understanding of the return on investment for their organization's T&E spend.
That disconnect can be attributed to a lack of real-time visibility into T&E spending and siloed data sets creating a barrier between spending and revenue, according to SalesTrip. A whopping 87 percent of survey respondents at midmarket companies between 101 and 5,000 employees said their finance teams take more than a day to report on travel spending. Meanwhile, 60 percent of companies included in the survey don't have a single system of records that links travel and expense data to customer and revenue data.
Those conditions can leave companies to attempt to calculate ROI via an after-the-fact reconciliation process focusing solely on travel cost, often leaving the resultant revenue to fall by the wayside. Retroactive calculation also hinders managers' ability to predict ahead of time whether a potential trip will be worth the cost in terms of revenue generated, the report said. Further, a lack of understanding as to particular employees' productivity means leadership has no basis to reward top revenue creators, increasing the risk of losing valuable employees.
"If organizations were able to better manage, track and forecast spend according to business activity or purpose, business leaders will be able to evidence travel as revenue-generating … [and] corporate travel would be widely considered as an enabler of business growth rather than a necessary evil," said Manoj Ganapathy, founder and CEO of SalesTrip.
An effective method of bridging the gap between T&E spending and resultant revenue long has been something of a holy grail for the managed travel industry. But new technology integration models have achieved promising progress toward that goal in recent years.
SalesTrip, a U.K.-based T&E management service delivered through customer relationship management giant Salesforce, has set its sights on the CRM as the key node of intersection between spending and revenue. Certify/Chrome River's Prosper tool takes a similar tack. But there are other approaches, including linking expense management platforms with booking systems and corporate credit cards.