A Growing Demand for End-to-End Corporate Travel and Expense Management Solution

Travel & Entertainment Expense Management
Reduce Processing Costs
&
Improve Policy Compliance





August 2006

Travel & Entertainment Expense Management Report
Executive Summary
iven the rise of globalization and the competitive nature of business, enterprises of all sizes are conducting more and more business nationally and globally. Business travel is an expense many companies encounter and is seen as a part of cGonducti ng business. On average, Aberdeen Research found that travel and entertainment (T&E) expenses account for between 8% and 10% of total operating expenses. The actual amount can range from $50,000 to more than $100 million a year for some of the larger corporations. Considering it's an expense that is not core to nearly all companies, ideally this category should be managed "We spend over $100 million a extremely efficiently. A formal and successful program year on T&E and process 15,000 will allow any savings to directly hit the bottom-line expense reports each month." while reducing time spent on making travel Head of Procurement Infrastructure, arrangements and reporting expenses so employees can RBC Financial Group focus on the really important strategic initiatives. This report focuses on the challenges companies face in efficiently managing this expense category. Survey respondents from 296 companies gave us insight into some successful strategies and best-practices that have been implemented. The data collected allowed Aberdeen to benchmark respondents and determine how and where top-performing companies are successful.
Key Business Value Findings The biggest challenge facing finance executives and travel managers is the lack of compliance with T&E policies. On average, approximately 20% of T&E spend is out of policy. In some cases, executives were surprised to find that company T&E policies were regarded more as "guidelines" that employees inconsistently adhered to or outright ignored. Therefore, On average, approximately being preventative rather than detective in enforcing 20% of T&E spend is out of policy is a critical step forward. Another challenge is the policy. level of visibility into T&E spend. Aberdeen found that more than 40% of enterprises use systems and processes that are only moderately automated and that vary throughout the company. In terms of strategic actions companies are taking or planning to take, respondents re-ported prioritizing the adoption of technology to improve visibility into T&E spending (44%) and improve expense tracking and reconciliation (34%). Additionally, there are efforts to improve communication of corporate policies.
Implications and Analysis A key finding in this research study is the increasing interest in an end-to-end T&E solution that incorporates both travel-booking/planning and expense management and tracking. Essentially, this includes everything from pre-trip approvals to reimbursement/card payment services and auditing of expenses. Survey data shows that growth in usage of an integrated T&E solution is significant. Currently, 19% of
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respondents are using an integrated system, with an additional 26% planning to adopt an end-to-end solution by 2008. Another key finding involves expense management solution, which are already widely used (43%); however there is also considerable growth with another 18% planning to adopt. Best in Class companies were found to significantly outperform the rest of the sample, largely due to the process efficiencies gained through automation (Figure i). These companies are able to achieve reimbursement cycle times (creation of expense report to payment) of less than five days, compared to 15 days. BIC companies also have significantly reduced costs in terms of processing expense reports, and transaction costs when booking travel. Figure i: Booking and Expense Reporting Processes
Travel Booking Methodology Expe... [download for more]