Expense Management: How 2018 Trends Affect Your Company

Expense Management: How 2018
Trends Affect Your Company
Ernie Humphrey, CTP
August 29, 2018 Sponsored by:

#InsideTalk
Copyright © 2018 IMA® (Institute of Management Accountants). All rights reserved.
2
Webinar Features and CPE Credit
Asking Questions
Help
CPE Credit Requirements

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Join the Conversation
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@IMA_News

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Moderator
Daniel Butcher
Finance Editor, Publications
Strategic Finance Magazine and
Management Accounting Quarterly
IMA

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Featured Presenter
Ernie Humphrey, CTP
Chief Executive Officer
360 Thought Leadership

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Upon completing this webinar, you will be able to:
1. Recognize exclusive new benchmarks on T&E
spending.
2. Identify examples of the hidden costs of manual and
inefficient T&E reporting processes.
3. Apply proven strategies to improve policy compliance
by up to 67%, as well as control T&E costs.
Learning Objectives

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• Integrated, automated solutions for travel,
expense, and accounts payable invoice
• 64 languages, 140+ currencies, clients in 80
countries
• #1 highest rated expense management software
for user satisfaction on G2 Crowd
• PC Magazine Editors’ Choice for best expense
management software of 2017
• Processing expenses and receipts valued at
$10 billion annually
About Certify

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Certify Annual Trends Study 2018
39%
44%
17%
Director-level or above with
expense reporting responsibility
(CEO, CFO, etc.)
Manager, controller
or accountant
Other (accounting staff,
consultant, administrative, etc.)
500+ accounting professionals from
outside the Certify customer base:
2018 Expense Management Trends Report, Certify, Inc.

2018 T&E Spending and
Expense Category Benchmarks

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T&E Spending by U.S. Companies
Total U.S.-based spending for all domestic and international
business travel related costs:
$537MM
U.S. business trips in 2017
$262b
2016
$296b
2017
13%
annual
growth
GBTA BTI™ Outlook – Annual Global Report & Forecast, 2017

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Business Investment in T&E
6-12%
Total annual budget
for T&E expenses
(Aberdeen Group 2014)
Company Revenue Annual Spend
Under $100MM $700,000
$100MM to $500MM $1,500,000
$501MM to $2B $7,400,000
$2B and above $58,000,000
PayStream Advisors 2016

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How Companies Set T&E Spending
We do not have expense
category spending limits
Budget based on
company historical
spending
Follow U.S. GSA per diem
rate guidelines
Determined by annual
budgeting process
Other
30%
7% 13%
21%
29%

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How the Expense Budget is Spent
1. Meals 19%
2. Airfare 15%
3. Lodging 14%
4. Misc. 13%
5. Gas 11%
6. Taxi 9%
7. Cell phone 5%
8. Car Rental 5%
9. Supplies 5%
10. Shipping 2%
11. Tolls 1%
12. Parking 1%
Meals
Airfare
Lodging
Misc.
Gas
Supplies
Shipping Tolls Parking
Meals
Airfare
Lodging
Misc.
Certify SpendSmart™ Report, 2017
Car
Rental
Cell
Phone
Taxi

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Benchmark Spending by Category
Category 2016 2017 Difference
Gas $30.32 $29.77 –1.81%
Airfare $274.00 $316.17 +15.39%
Lodging $223.45 $210.19 –5.93%
Car Rental $186.45 $190.74 +2.30%
Cell Phone $92.24 $89.00 –3.51%
Meals $26.06 $27.02 +3.68%
Misc. $55.71 $68.20 +22.41%
Taxi $31.82 $27.90 –12.31%
Certify SpendSmart™ Report, 2016-2017

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Most Expensed Brands of 2018
11%
4%
4%
4%
Certify SpendSmart™ Report, Q2 2018

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Most Expensed Brands of 2018
11%
4%
4%
4%
Certify SpendSmart™ Report, Q2 2018
Technology disruption
has changed the
industry and traveler
expectations

T&E spending ranks as the
second most difficult operating
expense category to control
Forrester Research 2014

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a) Meals
b) Mileage
c) Airfare
d) Lodging
e) Other
Polling Question 1
As a percent of total spending, what was your
company’s largest expense category in 2017?

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Polling Question 1 Results (Placeholder)

Inefficiencies in T&E
Expense Reporting

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Unclear policies coupled with:
• Paper receipts
• Paper expense reports
• Manual routing for approvals, audits,
and payments
Cause:
• High cost, inefficient process
• Inflated travel charges
• Noncompliance to laws and regulations
• Sets the opportunity for fraud
T&E Process is Antiquated

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Expense Reporting Inefficiencies
minutes to complete
one expense report
up to 23 minutes to correct
expense reports
errors
15-22 average number
of reports with
errors
22%
Expense Reporting Around the World:
Practices, Pain Points, and Productivity, GBTA, 2015

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Methods for Managing T&E Reporting
10%
33%
6%
35%
17%
0 5 10 15 20 25 30 35
Pen and paper
Microsoft
Excel/spreadsheets
Homegrown solution
Web-based solution
ERP/accounting
package (Oracle, SAP, etc)

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T&E Systems by Company Size
SMALL
BUSINESS
MID-SIZE
BUSINESS ENTERPRISE
39%
34%
12%
5%
10%
39%
18%
3%
9%
32%
28%
42%
13%
5%
12%
Web-based solution (Concur, IBM, etc.)
Microsoft Excel/spreadsheets
Pen and paper
Homegrown solution
ERP/accounting package (Oracle, SAP, etc.)

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T&E Systems by Company Size
SMALL
BUSINESS
MID-SIZE
BUSINESS ENTERPRISE
39%
34%
12%
5%
11%
39%
18%
3%
9%
32%
28%
42%
13%
5%
12%
Web-based solution (Concur, IBM, etc.)
Microsoft Excel/spreadsheets
Pen and paper
Homegrown solution
ERP/accounting package (Oracle, SAP, etc.)
MANUAL SYSTEMS:
29% enterprise | 60% small businesses

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Manual Expense Reporting Process
Print
spreadsheets,
tape or staple
receipts and
make copiesEnter expenses in Excel
with category, vendor,
dates, etc.
And then …
wait
Gather receipts,
itineraries and
write down non-
receipt items
Sign report/date
report and
present or mail to
manager
Employees AccountantsManagers

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Check expenses for
receipts, review for
out-of-policy items,
etc.
Receive reports for all
employees at different
times during the
month/quarter
If errors, return report
to employee to start
over; wait for
resubmission
Sign/approve
reports and route
to the next
manager or to AP

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Manually enter data
from accounting
software to payroll for
reimbursementManually enter
expense data
into accounting
software
Check for receipts,
manager approvals,
out-of-policy items,
etc.
Receive reports for all
employees at different
times of the
month/quarter
Match receipts
with line-items,
verify all
charges, dates
and vendors

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Top Expense Management Pain Points
Leading frustrations for T&E program administrators:
2016 2017 2018
Employees losing paper receipts/submitting
without receipts
50% 52% 50%
Employees failure to submit reports on time 45% 51% 50%
Time it takes to reconcile, review and
approve reports
38% 36% 31%
Reviewing for policy violations 30% 28% 28%
Errors on expense reports (incorrect codes,
amounts, etc.)
28% 26% 30%
2016-2018 Expense Management Trends Report, Certify, Inc.

Simplifying the expense
reporting process is the #1
reason companies turn to T&E
automation

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a) Manual/Excel
b) ERP
c) Automated system (Certify, Concur)
d) Homegrown solution
Polling Question 2
What is your current process for expense
management?

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Calculating the ROI of
T&E Expense Spending

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• For every dollar invested in business travel, U.S. companies
generated $9.50 in revenue and $2.90 in profit
• Comprehensive 18-year econometric analysis across 14
industries by Oxford Economics and U.S. Travel Association
The ROI of T&E Expense Spending
+ + +

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Top Reasons for Business Travel
Purpose of business travel:
31%
21%
13%
11%
10%
7%
7%
Client or prospect meeting
Team related meeting
Training and development
Events and conferences
Operations / quality control
R&D / innovation
Supplier meeting
The Value of Business Travel: The Travelers’ Perspective,
Carlson Wagonlit Travel, 2014

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The U.S. Business Travel Industry: Business Travel’s Impact on Jobs and the U.S. Economy in 2016, GBTA
Reported Outcomes and Benefits
Business development
Client service delivery
Increased collaboration
Strategic alignment
Innovation
Quality control
People development
Employee engagement
Self-development
Networking
Other
7%
15%
13%
11%
8%
7%
6%
5%
4%
3%
21%
0 252015105

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Executive Perspective on ROI
What does business travel mean for your bottom line?
Trip Type % Of Travel Budget
(Average)
Return on $1 of
Investment
(Median of Responses)
Customer Meetings 34% $15 – 19.99
Conferences 10% $4 – 5.99
Trade Shows 10% $4 – 5.99
Incentives 5% $4+
All Other 42% N/A
The Return on Investment of U.S. Business Travel,
Oxford Economics/U.S. Travel Association, 2009

Lower processing costs is the
top driver of T&E investments
for 49% of all companiesForrester Research 2016

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Expense Report Processing Costs
$6.85
fully automated
$17.31
semi-automated
$26.63
manual process
PayStream Advisors 2017
Industry average cost to process ONE expense report:

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Self-Reported Processing Costs
31%
16%
9%
Under $7 per report $10−$20 per report
$25 or more per report We do not track these costs
44%
do not track expense
report processing costs

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• Hours to create, review and
approve reports
• Hard costs for paper, printing
and postage
• Time required for reconciliation
and reimbursement
• Storage fees to archive
expense reports
• Lost productivity and lost
opportunity
The Hidden Costs of Expense Reporting
?

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The Association of Certified Fraud Examiners reports that:
• Approximately 15 percent of all fraudulent disbursements involve
expense reimbursement fraud
Most common types of expense reimbursement fraud:
• Mischaracterized expenses (disguising personal expenses)
• Overstatement of actual expense (altering receipts)
• Fictitious expenses (usually counterfeit receipts)
• Multiple reimbursements (submitting duplicate reports)
T&E Fraud

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Calculating Costs and Lost Opportunity
Time spent
per reportX
Hourly wage
or salary
Individual Employee:
Sales Representative:
= Overhead cost
per report
Time spent
per report÷
Total available
selling time = Lost selling
opportunity (%)

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a) Decision maker
b) Influencer
c) Researcher/Analyst
d) I have no role
Polling Question 3
What is your role in expense management?

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The ROI of T&E
Expense Reporting

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Top T&E Pressures to Improve in 2018
#1 Need to reduce expense processing costs
#2 Poor visibility into travel/expense data
#3 Lack of control over T&E spending
#4 Frequent non-complaint travel/expenses
#5 Inconsistent and lengthy reimbursement cycles

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Must-Have Expense Reporting Features
Simplicity/Ease of Use: Improve on-time submission,
compliance with policy, and increase employee adoption
Automated Features: Improve expense report process efficiency
and reduce overhead costs
Accessible Anywhere: OCR receipt capture and anywhere
accessibility make T&E easy for employees
Integration Services: Connect systems to reduce errors and
manual data entry; ERP; HR; corporate/credit card feeds
Reporting Analytics: Greater visibility into process and spending
by category, department, employee, etc.

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Top Features/Sources of ROI
How ROI was generated:
Improved efficiency/expense reporting process 58%
Reduction in processing costs (paper, postage, storage etc.) 53%
Travel booking control (pre-trip authorization, etc.) 23%
Mobile accessibility 29%
Elimination of payment for duplicate expenses 22%
Reduction in overhead/staffing requirements 23%
More accurate mileage tracking/mapping 17%
Reduction in fraudulent expenses 22%
Increased employee productivity 27%

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Top Features/Sources of ROI
Improved efficiency/expense reporting process 58%
Reduction in processing costs (paper, postage, storage etc.) 53%
Travel booking control (pre-trip authorization, etc.) 23%
Mobile accessibility 29%
Elimination of payment for duplicate expenses 22%
Reduction in overhead/staffing requirements 23%
More accurate mileage tracking/mapping 17%
Reduction in fraudulent expenses 22%
Increased employee productivity 27%
How ROI was generated:

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Control Spending Before It’s Expensed
Pre-Trip Approval:
Requires manager authorization prior
to booking; configurable by employee,
policy specifics, etc.
Lowest Logical Fare:
Automatically identifies best available
rates for proposed itinerary (and only
best available rates)
$

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• Acceptable/approved classes of service
• Ancillary fees (upgrades, boarding,
airline clubs, etc.)
• Preferred travel vendors for air, hotel
and car rental
• Advance purchase and connecting
flight requirements
• Category spending limits (i.e. amount
not to exceed)
• Changing or cancelling flights
(track/apply unused tickets)
Controllable Costs via Integrated Travel

Companies that track and apply
unused tickets can save 5-8% of
total annual travel budget
2015 GBTA Ancillary Fee Handbook

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Automation Gets Results

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T&E Automation benefits the traveler, AP and
most importantly the bottom line:
• Compliance to company travel policy
• Compliance to laws and regulations
• Enhanced visibility for data analysis to negotiate
preferred pricing
• Data analysis to audit spend for compliance and
reasonability check
T&E Automation

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T&E Automation makes it easier to analyze, set
goals, track and monitor KPI’s proving the ROI:
• Process savings
• Savings negotiated with travel providers
• Percentage compliance/exceptions with travel policies
• Identify high and low spenders
• Track trips that were approved prior to travel
• Capture receipts from non-preferred suppliers
• Identify what was purchased from non-preferred and based
on volume/dollars determine if it should be negotiated
T&E Automation: Key Performance Indicators

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a) Too time consuming
b) Lack of executive level support in moving forward with
the process
c) No available budget
d) We don’t feel we need to make the switch yet
e) We have already made the switch to an automated
expense management software
Polling Question 4
What is the primary reason you haven’t made the
switch to an automated expense management
software?

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Questions & Answers
Use the Q & A Panel to send your questions to our panelists.
Ernie Humphrey, CTP
Daniel Butcher
Finance Editor, Publications
Strategic Finance Magazine and
Management Accounting Quarterly
IMA

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Thank You to Our Featured Presenter!
Ernie Humphrey, CTP

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• Click the “Resources” icon at the bottom of your screen
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• Click the “CPE” icon at the bottom of your console
or
• Click the link in your post-event email
► Please print a copy of the CPE certificate for your records.
► Your CPE credit will be automatically recorded in your
transcript.
Final Reminders

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Thank You to Our Sponsor!
www.certify.com

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