The term T&E stands for travel and entertainment - any expenses incurred by travelling for business purposes or entertaining a business client. Examples of travelling expenses include money spent on accommodation, transportation, and meals. T&E expense management is important because your company's T&E budget is one of the critical places where you could look to reduce costs. Unfortunately, expense management and reimbursements for travelling employees are among the most time-consuming and repetitive manual business processes that companies face.
Finding a way to effectively manage T&E can be an arduous process for many companies but here are some tips to give you an ease of mind.
Tips for effective management of T&E expenses
1. Enforce a good T&E expense policy
A good start is to implement a policy that ensures your business travellers are clear on what is expected of them. There needs to be clear guidance on issues such as approval procedures, preferred booking channels and a list of expenses that will and that will not be approved under any circumstance.
Your T&E policy should clearly define the expense parameters that are aligned with your organisation’s budgetary goals and business objectives. Also, a recommendation is to provide a detailed explanation of payback periods so that employees know when they will be reimbursed for expenses incurred.
It is essential to reinforce your T&E policy. “I didn’t know”, no longer qualifies as a valid excuse, and there should be consequences for employees who keep breaching your T&E policy.
2. Be user-friendly
Effective expense management automation all begins with an expense being recorded correctly. You will also know how effective the expense management is from the employees' responses. There is no point in implementing a solution that doesn’t integrate well with employees.
Everyone, from the person making the purchase to the person approving it, should feel the benefits. Anyone who has filled in a travel or expense form will testify that finding, printing out and filling in forms, before obtaining sign off, are often a long-drawn-out process. As a result, automation is key, but it should remain seamless and understandable.
If your employees cannot understand the solution, it won’t be used effectively. Applying the solution to take a photo of their receipt and upload it into the expense management system, is both user-friendly and convenient for employees.
Providing employees with a list of categories around expenses can also make it easier for managers to process and approve expenses; employees will better understand what expenses can be reimbursed, thereby increasing travel policy compliance.
Also, in this modern age, mobile-friendly should be a given. Lacking a mobile-friendly solution could lead to lapses and errors in reimbursements so a mobile-friendly solution that’s always on ensures that records and approvals stay on target.
3. Adopt automated processing
The best thing you can do to clean up your transaction management system is to go digital. Automation can eliminate all paper. Expense data is entered directly into an automated system and imaged receipts are matched to those transactions. As a result, you’ll also save a lot of processing time, if you have user-friendly software to view, log and approve the money your employees are spending. An automated expense management tool is tailored to your company’s travel policy and can automatically flag non-compliant expenses.
According to a study by Aberdeen Group (2016), using an automated travel expense management tool effectively increases the average rate of T&E compliance by 26%. Automating your expense management will increase employee productivity as your employees no longer have to waste time on tasks such as collecting receipts and submitting expense reports.
Automating these tasks can make it easier and more rewarding to track expenses and provide reimbursement promptly. Implementing an automated expense management solution is low hanging fruit when it comes to cost reduction. The tools are generally inexpensive and easy to implement.
Employees misusing the T&E process for personal gain is an unfortunate reality. A survey conducted by the Association of Certified Fraud Examiners (ACFE) revealed employees, across all company teams, account for a total of 13.8% of expense reimbursement fraud cases. By automating, there’s access to data to fully understand the spending decisions employees are making on behalf of the company.
These are major tips, any and all companies should take on board when attempting to manage travel and entertainment expenses effectively. An easily accessible and widely used tip is automating your expense management.
In this day and age many companies have adopted this solution and rid the days of manual processing, an investment with the cloud has shared substantial benefits to T&E policy application. There is no need to worry about the safety of print receipts or retrieval of such in the future when everything is backed up by the clouds. We will go more in-depth on the case for cloud expense management solution in upcoming blog.
Nevertheless, you know your business needs better than anyone. If travel and entertainment is a significant portion of your outgoings, consider incorporating an effective T&E expense management solution.