Things are coming back. Each week looks better than the last, with bookings for one airline running just 20% below 2019 levels. The number of people passing through airport gates is starting to climb as well, hitting 1 million travelers per day between March 11 and 15, 2021.
Timelines Are Optimistic
While this understandably is driven by leisure travelers who are ecstatic to get out of their houses for the first time in months, this could be a welcome side for the other side of the plane. In fact, with leisure numbers so high, this faster than expected return could move the timeline for business travel recovery down from a seven or ten year recovery window to five, four, or three years.
Both salespeople and executives are looking to being the personal touch back to business communications in a way that a Zoom Call couldn’t.
Beware Old Habits in the New Normal
With business travel and a hopeful return to the “old normal,” it’s time to look at one of those things we might have forgotten during the past year—business expenses. Without hotel stays or business dinners, companies were able to reallocate one of the most uncontrollable expense categories to other activities. Unfortunately, many also forgot about how things were.
Shoeboxes of receipts were still surprisingly common in 2019. Manual and time-consuming expense management practices created headaches, and any project related to improving them was probably the first to go once the pandemic hit.
However, as we start to see things coming back, there’s good reason to put expense automation atop your list of priorities before the first receipt comes through.
Expensing a Coffee: Five Dollar Transaction, Thirteen Steps
Though there are many facets to expense management, even the simplest of them can become a drain on your business. Consider the simple trip to Starbucks. A necessity for the average business traveler and often something that is well within the $15 or so allotted for breakfast. But here’s the problem. Just five dollars spent can create a ripple effect that costs the company a lot more. In fact, this simple cup will involve three departments and thirteen steps.
- Reviewing Policy: Before the coffee is even bought, the employee has to make sure that policy covers it. At some point before traveling, he or she took time out of the day to read the convoluted policy to make sure there would be reimbursement available.
- Fronting Personal Dollars: Knowing this is reimbursable, the employee pulls out a personal card and completes the transaction. This is just the beginning.
- Saving the Receipt: Can’t forget the receipt—after all, it’s the only way that $5 is going to come back. By the end of the trip, the wallet starts looking like George Costanza’s.
- Submitting the Details: This is where things start to take a turn. Maybe the employee takes the time at the end of the day to submit a convenient and organized approach to expense that one day of reports. But considering the time that goes into steps five through fourteen, he or she thinks, “why bother?”, and just drops the receipt into an envelope.
- Wait… And Wait. The receipt is in the system, and the employee’s part is done.
With this simple $5 cup of coffee submitted, be it the day of the transaction, at the end of the month or even the end of the year, the process rolls on. Now comes the approval process.
- Analyze the Details: Receipt submitted and now it’s time to make sure everything checks out. The manager now gets to look at the receipt and cross references the day and the policy.
- Review for Errors: Not only does the manager need to look at the receipt, he or she also needs to make sure it was submitted properly. Every penny needs to add up, so if the employee accidentally typed in $4.98 instead of $4.89, the transaction needs to go back.
- Approve: And wait, because the transaction needs to go through five more steps before everything is cleared out.
And the expense report enters the final stretch, experiencing another review for accuracy, before it can be reviewed for compliance, reconciled, and entered into the books.
- Review: You can’t bee too careful. Accounting needs to check the travel manager’s work to reaffirm the manager’s details, cross-cross-referencing the time the employee traveled and the details.
- Ensure Compliance: With two reviews complete, a third is on the way.
- Reconcile the Transaction: Again, another area where the numbers have to add up and the mistyped $4.89 could turn out to derail the transaction.
- Enter into the Books: Approved, reconciled, and now it’s ready to enter the books—often manually.
- Transfer from ERP to Payroll or AP: And it’s finally ready for reimbursement.
Achieving Convenience, Control, and Clarity in the New Normal
Accountants and managers often wonder why employees are slow to submit expense reports, often waiting until the last possible moment to submit them in bulk. Look at it from the employee’s perspective. He or she is going to have to wait days or weeks anyway, why not simply make the reimbursement worth it?
The saying is that many hands make light work—not here. At least three people had to touch the transaction, with none of them adding value. Worse yet, none is helping the company at large to get worthwhile data about spending trends and their impact on budgeting.
Spend management can be improved, it just requires you to think of the giant hassle that your pre-pandemic practices left on people. There is a better way—and automation can deliver.
Learn more in The New Realities Changing T&E Management Post-COVID.
Learn More: Free Webcast Explores T&E Best Practices
With operational efficiency being one of the top priorities for CEOs in the coming year, one of the easiest ways to improve this is through expense automation. 74 percent of IT leaders believe that improvements to T&E tools is the key to reducing costs, and few products deliver as much benefit as an automated solution.
After employee payroll and benefits, T&E (travel & expense) is the second-largest controllable expense for companies. In this uncertain economy, effectively managing your T&E budget is critical for accurate auditing, budgeting, and forecasting.
Join Ram Bartov, Corporate Controller of TripActions (formerly Corporate Controller at Snowflake), who reveals how high-performing finance teams today are embracing automated expense management technology to gain a better line of sight, control, and real-time reporting. Learn how this next wave of innovation can improve your organization’s overall T&E process and help you keep pace with changing business realities. Click here to watch this on demand now.