In 2015, the average cost of manually-processing an expense report is $20.65 compared to $12.51 with an automated expense management solution
Professionals are traveling more widely than in prior years as many companies are seeking to expand their operations globally. Simultaneously, many companies are stepping up efforts be more cost-effective in managing and processing travel expenses.
Fortune magazine notes that spending on corporate travel is expected to increase by 6.2 percent this year. The number of trips worldwide should increase to 490.4 million, or a 1.7 percent increase. Last year there were 482.4 million trips. U.S. business travel spending is estimated to top $310 billion in 2015.
In 2014, there was a 6 percent increase in business travel spending after declines in 2012. Also helping to drive an expected increase in travel is an improving U.S. economy and higher business profits in 2015. Travel increases go along with stronger growth and profits, as we are seeing. Using online expense reports saves across the organization using them. Automation ranges from expense report creation and approvals all the way through to reimbursements, empowering users before during and after the expense reporting process.
There are several steps involved in corporate travel and expense management (TEM):
1) Pre-trip planning and purchases;
2) Mid-trip receipts and submission; and
3) Expense report creation and reimbursement.
Automation simplifies all three steps by improving the process for both the travelers and those who must approve the expenditures. Travel spend analytics in TEM software helps senior management make significant budgeting decisions that impact the bottom line.
PayStream Advisors conducted a survey of a variety of industry professionals – more than 200 in all. The survey found the majority of organizations were still handling their T&E processes manually. Most of these companies, 37 percent, reported annual T&E spending of under $100,000, while 25 percent spend between $100,000 and $500,000 per year, and just 18 percent spend more than $5 million.
Challenges are unique to companies, but the overriding problem seems to involve inefficient processes because they are manual, and difficulties enforcing corporate travel policies. With an increase in overall T&E expenses, companies are seeking answers. In fact, the increases are substantial. For large enterprises, the number is at 43 percent while the small to medium-sized enterprises increase in overall T&E expenses is around 23 percent.
Moreover, 41 percent of large businesses are unable to enforce corporate travel policies, whereas 22 percent of small and medium-sized companies cannot do the same. Last, when it comes to the high cost of processing an expense report, the numbers are 25 percent for corporate to 26 percent for the SMEs.
The survey also found the most the common method for expense receipt submissions has been and remains intra-office mail. In this era of automation, it may be hard to believe, but 69 percent of employees are still mailing the paper receipts to the Accounts Payable (AP) department.
Sadly, when documents are lost, expense report reimbursements are denied. At least, however, 62 percent of companies use automated direct deposit for the expense reimbursement portion of the expense reporting process.
Overall industry trends indicate that due to corporate goals to reduce costs, many accounts payable (AP) departments are now more serious than ever about purchasing T&E solutions like that offered by ExpenseWatch.
The Real Benefit of Automated T&E Reports
Automation enables transparency. Company management becomes aware of the cost per expense report – which is a good way to identify areas for improvement. In fact, The Aberdeen Group found that the average cost to process a single expense report is $20.65. However, for organizations with visibility, the average cost is $12.51, or 39 percent lower. Just imagine the savings if you are a small to mid-sized organization handling upwards of 100 to 500 expense reports per month.
This might include reducing the time it takes your AP staff to chase around trying to get manager approvals, lost receipts or misfiled documents and miscellaneous activities like copying, faxing, and mailing paper documents. Besides saving time, expense automation also improves the quality of the AP department’s work, enabling them to better monitor reports and payments with detailed audit trails. Last, it even helps prevent employee expense fraud.
We hope it is now obvious that if you are not yet using an automated T&E solution, now is the time to start saving money. Fill out the form to the right and we will contact you shortly.
Source: The 2015 Global Business Travel Association Annual Report; PayStream Advisors’ 2015 Travel and Expense Management Report and The Aberdeen Group.
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