Beyond the travel and expense management tightrope
Expense workflow automation with pre-paid cards are a smarter alternative to cash and even corporate credit cards.
By Varun Rathi
Travel and expense (T&E) management is not as simple as it used to be a decade ago. Ask a CFO who precariously walks the tightrope between employee contentment and budget control. According to the Global Business Travel Association (GBTA), business travel spends are all set to snowball their way into the coming years. Bolstered by the Modi-led Government, India's total travel spend is expected to grow 9.8% in 2015 and 10.9% in 2016. At a time when organizations push for greater efficiencies, corporate travelers are urged to be more conscientious of costs, without compromising on policy compliance and business outcomes.
When one reads the fine print of this trend, it indicates that an increasing number of corporate travelers will be spending their personal time and money for business purposes. Typically, it won't be before many weeks that they will be fully reimbursed. This brings to mind, a 2015 study conducted by Wakefield Research that states that nearly three-quarters of business travelers felt like the company's bank, floating a loan for business expenses. Nine out of ten travelers were frustrated with waiting for reimbursements. Often, millennials and baby-boomers are worse-affected than their financially stable seniors. Clearly, the current state of T&E management is putting companies of all sizes at the risk of unbridled attrition.
Consider the traditional method of cash disbursement in such companies. It follows a painfully tedious path with bottlenecks at every step:
-- Employees spend money out of their own pockets or the company provides them cash/corporate credit card. A lack of visibility seeps in to the process right from the very start.
-- Employees make purchases on behalf of the company and preserve the receipts.
-- During the dreaded period of manual expense reporting, these quickly fading receipts re-emerge. They are attached in their physical forms and sent to the finance team.
-- The finance team then spends copious amounts of time in physically reconciling expense reports with the submitted receipts. That's not all - they manually enter expense data into the accounting system. Even if an organization boasts of a finance team with the most impeccable accounting skills, data handled by human hands are always prone to errors. At a later stage, if further discrepancies are caught by the keen eyes of the CFO, the finance team will spend more time backtracking in their spreadsheets to find them.
-- After approvals come through, employees are reimbursed. Understandably, the long wait for compensation does not go down well with employees who have bills to pay and families to support. It is this feeling of being wronged that pushes even star employees closer towards writing a resignation letter.
On the flip side, when a company sacrifices control at the altar of employee satisfaction, it is plagued with tangible side effects on the bottom line. Lack of end-to-end visibility keeps managers in the dark about where and how employees are spending the company's money. Before they can approve or disapprove an expense, potential frauds and gross overspends would have already taken place. Though malpractices perpetrated by employees are very common and the revenue lost is often negligible, it is a dent on the culture and ethic upheld by the organization.
So how does an organization find a way out of this dilemma and do a perfect balancing act?
With a significant slice of the budget pie invested on travel operations, there is a dire need for the infusion of efficiency and accuracy in their T&E management. It is high time for CFOs to be empowered to focus on more crucial aspects of the business as opposed to merely crunching numbers. Today their roles have evolved into that of strategic thinkers and agents of change within and outside the organization.
The good news is: CFOs do not have to choose between the devil and the deep blue sea anymore. Expense workflow automation with pre-paid cards are a smarter alternative to cash and even corporate credit cards. Integrated with a web and online platform, these versatile T&E solutions help businesses overcome the disadvantages of cash handling and expedite reimbursements. Armed with intelligent analytics that deliver predictive insights, the CFO has a bird's eye view into the organization's financial health at all times. Therefore, it is no surprise that companies that adopt these technologies see their businesses transform and flourish before their eyes. Apart from happy employees and greater spend control, the benefits they harness are myriad:
-- Receipts can be recorded as photographs on employees' smartphones at any time and place. A welcome consequence of reporting on-the-go would be much-needed respite from petty cash and paper receipts that clog the system.
-- The time taken for manual expense reporting - a whopping 91 minutes - is pared down to just 5.5 minutes when the process is automated and streamlined. Faster expense processing means more productivity at work and smaller reimbursement cycles.
-- Automated T&E solutions offer managers real-time visibility of when, where and how an employee is spending money - as the activity happens. With only a few clicks, customized budget caps and preferences can be set for each employee.
-- Mobile capabilities and intelligent features make seamless integration between employees, managers and accounting team
As enterprises welcome mobile and cloud-based services into the folds of their business, the future looks bright for T&E management. However, it all boils down to one important factor. If Indian organizations want to ride the next wave of automation, it is imperative for them to usher in a culture of acceptance towards technologies that enhance its savings and productivity.
(The author is co-founder and COO at Happay)
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