January 2009 - Travel payment and expense in many organizations are aligned as functions of accounting, finance or treasury rather than the final stages of a travel management cycle. Increasingly, corporate executives are viewing the two functions as critical enablers to travel and entertainment spend visibility and efficiency. When automated, integrated and executed well, payment and expense management systems deliver not only process savings, but the leverage necessary for policy compliance or changes, negotiated preferred supplier deals and vendor compliance.
In fact, American Express and A.T. Kearney last year found that "expense claim processing is the most costly part of the T&E management process and accounts for over half (52 percent) of total indirect costs." Indirect costs associated with managing T&E were calculated at 4.6 percent of total direct T&E, but could be reduced to just 2.1 percent--a 47 percent reduction--if automated according to best practice guidelines, the study concluded. (
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A MasterCard study of 152 organizations found that "automating the expense reporting process with exception--based approvals and corporate card data population" yielded average savings of 68 percent in processing costs, 55 percent in traveler time savings and 57 percent in approver time savings. (
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Source: Procurement.travel August-September 2008 online survey of 473 qualified travel decision-makers
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Time savings, management efficiencies and more accurate data capture were likewise among the numerous benefits of integrated T&E management systems documented in Aberdeen Group studies. (
3) Companies that integrated their payment and expense systems reported faster expense report preparation, faster payments to employees and vendors and better supplier leverage with more accurate data, according to Aberdeen.
Consistent with other industry studies, 65 percent of all "State Of The Practice" respondents said they had policies regarding use of a preferred corporate card or travel and entertainment payment card. The bigger the spend, the greater the propensity for a preferred corporate card policy. Among those with $1 million or less in annual T&E spending, just 38 percent of respondents said they had a preferred payment system policy. Among the largest two spender groups, such policies were cited by 77 percent of those with T&E of between $15 million and $59.9 million and 93 percent of those with spend of more than $60 million.
But also consistent with other studies, 28 percent of respondents are "not involved" in negotiating corporate payment system deals for their organizations. Forty-four percent of respondents described their role in corporate card negotiations as "direct/close involvement," 21 percent said they were the sole decision-makers and 7 percent "approve of the final decision."
Source:
Procurement.travel August-September 2008 online survey of 473 qualified travel decision-makers
The fragmented responsibility for payment perhaps explains why just 44 percent of respondents said their companies directly negotiated preferred rate agreements with corporate payment providers. In contrast, 82 percent said they directly negotiate with hotels, 75 percent with car rental firms and 69 percent with airlines.
Asked what percentage of their companies' T&E volume was charged to the card, the mean across all respondents was 64 percent, as shown in the top chart, which also indicates the mean for the largest spenders at 81 percent. For the smallest spenders, the mean was just 57 percent. For those with annual T&E spend of between $15 million and $59.9 million, the mean was 69 percent.
Reliance on both card and expense reporting data was reflected in the fact that 69 percent of respondents examine card data and 64 percent examine expense reporting system data as key travel data sources. Just over half (52 percent) of respondents said their companies had policies on use of a preferred expense reporting system.
Payment systems offer plenty of advantages to corporations and their travelers, not the least of which is rebate opportunities for the enterprise. For travelers, a corporate card offers the convenience of not having to use their own line of credit to fund company business, insurance, emergency assistance and other perks, depending on the brand and type of card. For corporations that have integrated their preferred payment platform into automated expense reporting solutions, such developments ease the preparation of expense reports, automate audits and policy compliance checks and significantly reduce data entry errors as travelers no longer have to key amounts captured on the card.
