*This is Part Two in my blog series. In case you missed the first article, check out Part One: The Problem with Corporate Credit Card Data.
It wasn’t that long ago when I’d sit in a client’s office and stare at the stack of printed Excel pages with neatly attached expense receipts. The backlog of paperwork all needed attention – a stamp of approval and transfer to accounts payable. Migrating to an automated expense solution was on the horizon but there were several items on the white board to address (including fixing the corporate travel program which is why we were sitting in the office in the first place) prior to tackling automating a rather complex process like expense reimbursement.
Expense automation efforts pay off. The efficiencies gained in productivity provide a compelling return on investment no matter how daunting the task to implement may be or how expensive and labor intensive the project becomes. If using a corporate credit card, expenses flow electronically through the approval process, are placed on an employee’s expense report, submitted, and reimbursed directly into the right account. If an employee is not using a corporate card the process isn’t too dissimilar, just a few extra steps to input an expense item, snap a picture of a receipt, and you’re good to go.
It’s All in the Setup
An automated expense solution addresses many problems faced by finance managers. Depending on your standing in the organization, an employee’s threshold for approval varies. Employees typically need to be associated with department numbers. In a lot of cases, an employee needs to be able to submit expenses based on an assigned job number or project ID. Some companies utilize multiple credit cards or other types of corporate payment solutions that need to be integrated. And finally, the details required in the expense submission itself must be clear enough for the employee’s manager to recognize the expense type and the charge. At the same time, no one wants to include an abundance of useless data inputs which would defeat the purpose of simplifying the expense management and reimbursement process. The idea is to make the process easier, more efficient. As a result, automated expense implementation projects are typically driven by finance specifically to address the needs of Finance, Finance Managers, and Accounts Payable.
The Devil is in the Data – The Problem with Expense Data
Done correctly, automated expense is an elegant solution to an otherwise cumbersome process. Unfortunately, automating expense can be a problem for corporate travel professionals who are typically not part of the solution. Once the Finance Department agrees to the various hierarchies that need to be addressed when implementing expense solutions, how to normalize and assign job numbers across all of the various departments, what the approval flow will look like, and how to integrate all of the inputs, usable data for corporate travel is typically ignored.
Why should Finance care about corporate travel data anyway? What does expense data have to do with corporate travel? If the goal is to reimburse the employee for her business trip do we need any more information than she traveled for Job Number 12, stayed at the Marriott for $137.50, flew on Delta for $450, booked a Hertz rental car for $67, and ate dinner at Chili’s for $27.62? Employee gets reimbursed, client gets charged, and efficiency is realized.
Most studies show that 30-50% of corporate travel bookings occur outside of the approved Travel Management Company (TMC). The single best way to empirically understand if an organization suffers from this type of program “leakage” is to compare expense data to TMC data. Expense data shows that Acme Company spent $1 million in airline travel and our TMC shows we spent $500k. As a result, we know that $500k was spent outside of the TMC. Simple math. Sort of. Since Finance likely didn’t consult with Travel on the setup, is that $500k spent outside of the TMC baggage fees? Airfare? Change fees? Even well-built Expense systems likely don’t have the answer to that. Your data is only as good as how complete and accurate your employees enter their expenses and use appropriate expense types. As we head straight towards NDC, fare bundles and personalization, this data will be critical to negotiating airline deals.
Among those companies that don’t use a TMC, expense data may be the only way to understand corporate travel bookings. And keeping in mind that 90% of all corporate travel occurs without the help of a TMC, this is very significant.
Expense Data Can Be Very Important
So, expense data can be very important to corporate travel. A baseline as described above can frame a problem and help estimate potential efficiencies by leveraging travel volume that occurred outside of the TMC but as discussed in our blog in Part I – The Problem with Corporate Credit Card Data, both corporate travel business owners and preferred suppliers need more information than the basics.
Expense data only becomes helpful to corporate travel optimization when we can marry the key data elements from our TMC, card, or expense such as ticket numbers, advance purchase, routes, supplier name normalization, booked versus actual paid, et cetera. Rarely do we find these critical data elements in our automated expense platforms and as a result are forced to use the data as nothing more than a litmus test in terms of how well the company is managing user behavior and as a somewhat meaningless talking point for senior management. The inability to accurately marry these data elements often cause duplicate or even triplicate data, skewing an organization’s view of their travel spend.
We developed CapTrav because we considered there must be a better way. Take our Demo to see if you agree.
Keep an eye out for the next blog in this series, Part Three: The Problem with TMC Data. And, in case you missed it, check out Part One: The Problem with Corporate Credit Card Data.