June 2008 - Automating and integrating travel expense and reimbursement cuts process costs by more than 50 percent, according to two recent studies.
"Automating the expense reporting process with exception-based approvals and corporate card data population has yielded an average of 68 percent savings in processing costs among the respondent sample" of 152 organizations based in Asia-Pacific, Europe and the United States, according to a study released in March by MasterCard Worldwide. Among survey respondents in the "T&E Expense Management Best Practices Study," the average 2006 revenue was $39 billion and average annual T&E spending was $174 million.
"Best-in-class expense management practices also yielded average savings of 55 percent in traveler time and 57 percent in approver timing," the study found. In addition, best practices in corporate card data usage and global expense reporting system integration yielded nearly 10 percent in "vendor-related savings," as respondents said they were able to take advantage of better negotiating and discounts related to early vendor payments.
Separate research by American Express and A.T. Kearney determined that "expense claim processing is the most costly part of the T&E management process, accounting for over half (52 percent) of total indirect costs." The "European Expense Management Study 2008" examined the indirect costs of six key areas of travel management for 66 multinational and large national Europe-based companies that collectively spent more than €2.6 billion, booked more than 3 million trips and processed more than 3.2 million expense claims. Indirect T&E management costs totaled 4.6 percent of the direct costs, with the following breakdown: trip planning (23 percent), trip booking (17 percent), cash advances (2 percent) central billing (1 percent), expense claims (52 percent) and IT costs (5 percent).
"Companies that implement best practices can achieve reductions from 4.6 percent to 2.1 percent, equivalent to a 54 percent reduction of total indirect T&E spend," the report stated. "Expense claim process and trip planning, the largest costs segments, are both labor intensive and time consuming, which are key drivers of the costs."
Assessing a study subset of 54 companies, A.T. Kearney found costs in a nonautomated environment per expense claim of €27.81 ($42.98 as of June 2), 50 percent more than the €13.82 ($21.86) cost for a fully automated expense claim. The authors further found that corporations could drop the cost even further. "Companies with average performance in expense claims processing could achieve a savings of 47 percent per claim" to reduce the per claim costs to just €9.28 ($14.34) from the €17.64 ($27.27) average.
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Nonautomated |
€27.81 |
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Fully automated |
€13.82 |
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Automated best performers |
€9.28 |
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Source: American Express/A.T. Kearney 2008 "European Expense Management Study" of 66 multinational and large national Europe-based companies
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"When you have a streamlined and transparent process, there is no need to have costly and archaic approval methods," said Andreas Giapka, procurement director for the rolling and recycling unit of aluminum maker Novelis.
Despite such dramatic savings potential, relatively few companies have deployed and integrated expense management systems. Market leader Concur in May said it counted more than 7,000 customers following its acquisition of Gelco last year. Combined, all the expense system vendors report no more than 10,000 customers. Concur CEO Steve Singh said "less than 2 percent" of more than 1 million companies with more than 75 employees in the United States and European Union have automated expense reporting.
Such upside potential is what drove BCD Travel to sign an exclusive reseller agreement with Concur to not only sell its Cliqbook booking tool, but also the expense system and a data analytics module expected this fall. Beyond selling the tools, BCD and its Advito consulting arm said their Concur-powered solution would help customers implement, manage and analyze data generated by the end-to-end suite.
"Nearly half of our recently surveyed clients are looking for us to help them integrate travel planning with expense management," said Louise Miller, BCD Travel executive vice president for global business solutions sales and marketing. "There is not a lot of penetration in this space, so my guess is that at least 25 percent of our customers are going to want to talk about it."
According to BCD senior vice president of technology solutions Ellen Trotochaud, "It's surprising in our studies that a lot of our customers aren't on systems today. Or, we're finding that a lot are on old, legacy, internal systems that they built. With privacy laws, Sarbanes-Oxley and tax laws changing, they're saying, 'I'm not able to keep up with all this on an internal tool. So I'm now going to look for experts and outsource that.' "
