7798 T&E Int Reprint€¦ · Card Products Expense Reporting Management Reporting Concepts Explored...

B E S T P R A C T I C E S G U I D E

ENTERTAINMENT

MASTERCARDTRAVEL &

INTRODUCTION 2

TRAVEL POLICY 4

Best Practice #1: The Travel Policy should be Well Communicated Online 4

Best Practice #2:Travel Policy should be Consistent with the Company’s Corporate Culture 5

Best Practice #3: Eliminate Personal Usage on the Corporate Card 6

Best Practice #4: Eliminate Company Disbursement of Cash Advances 7

Best Practice #5: Impose Penalties for Non-Compliance with Travel Policy 8

Best Practice #6: Consider Centralization of Corporate TravelManagement Functions for Domestic andInternational Offices 9

Best Practice #7: Provide Tools and Resources to EducateEmployees Who Travel Internationally 10

CARD PRODUCT 11

Best Practice #8: Mandate One Corporate Card Program for Use of All Travel and Entertainment Expenses 11

Best Practice #9: Implement a One Card 12

Best Practice #10: Select Corporate Liability Option for the Card Program 14

Best Practice #11: Select Central Billing/Central Payment Features 15

T A B L E O F C O N T E N T S

01

02

03

EXPENSE REPORTING 16

Best Practice #12: Explore the Elimination of Expense Reports 16

Best Practice #13: Utilize an Automated Online Expense Reporting System 17

Best Practice #14: Utilize an Automated Expense Reporting System that Provides an Accounts Payable (AP) or General Ledger (GL) Interface 20

Best Practice #15: Notification of Employee ReimbursementsVia E-Mail 21

MANAGEMENT REPORTING 22

Best Practice #16: Utilize Online Management Reporting Features 22

Best Practice #17:Conduct Random Audits 23

Best Practice #18:Utilize Comprehensive Spending Information to Secure Preferred Vendor Agreements within Major T&E Spend Categories 24

TRAVEL AGENCY 26

Best Practice #19:Have a Mandated Travel Agency 26

Best Practice #20:Travel Policy Guidelines should be Fully Integrated into the Booking Agency’s Computer System 27

Best Practice #21:Require Agency to Use Mandated Card Program 28

Best Practice #22:Require Agency to Provide Online Travel Booklings as an Option to Employees 29

Best Practice #23: Deliver Travel Itinerary Via E-Mail 31

Best Practice #24: Utilize Electronic Ticketing (E-Tickets) for Air Travel 32

04

05

06

2

Introduction

Source: Travel Expense Comparative Practice, Gunn Partners Inc. – Dec. 1998

Process

aAdministration. Policy, card program, reconciling, reporting payments, other.

aExpense Report Processing.Processing and filing of report data.

aAuditing. Back-end review of expense reports.

Cost to Process (% of total cost)

35%

40%

25%

The challenges and opportunities forbusinesses have changed dramaticallyover the past 10 years. The Internetrevolution has enabled automation andpersonalized customer contact that farsurpasses what the industry has knownin the past. This revolution has alsocreated a smaller world by enhancingcommunications and forcing everybusiness to think globally. Theseadvances are affecting both the needsand demands of corporate travelers andthe entire travel process from locatingtickets to allocating corporate expenses.

In order to adapt to and utilize thesechanges, program managers areexpected to have increased knowledge

of systems, technology, budgeting, and negotiation. On average, T&E isthe third largest indirect expense (afterutilities and systems/data processing)for large corporations.

MasterCard International developedthis guide as a solutions tool for travelprogram managers to provide insightinto current industry best practices and show how these best practices areenhancing corporate travel policies and procedures.

According to a Gunn Partner’s Report,Travel Expense Comparative PracticeAnalysis, the average processing costsassociated with a typical travel programare as follows:

Auditing25%

ExpenseRept. 40%

Admin.35%

AuditingExpense Rept.Admin.

Total Processing Costs

3

This guide will address industrychanges that have enabled efficienciesin each of these categories, which couldpositively affect a company’s bottomline. The Internet has enabled manyopportunities to significantly reduceadministrative expenses. The surge oftravel-technology product offerings,such as online reporting software,online travel booking, electronicticketing, and online tracking arevaluable automation tools for theprogram manager; which will beaddressed in this guide.

The identified best practices aredescribed in five key areas of thecorporate travel program: Travel Policy, Travel Agency, Card Products, Expense Reporting, and ManagementReporting. The interaction of theseareas within a typical corporate travel program is illustrated below.

Best Practice Segment

Travel Policy

Travel Agency

Card Products

Expense Reporting

Management Reporting

Concepts Explored

Explores ideas on developing,communicating and administeringcorporate travel policy – resulting in maximum compliance.

Provides service features for travelagency use to save corporations timeand money.

Highlights importance of features such as reporting tools, liability, and billing/payment capabilities that can save time and money.

Investigates innovations in expensecapturing and reporting, providing tips on significantly decreasing reportpreparation time and reducing errors.

Reviews enhancements in managementreports that allow companies tomaximize negotiation leverage withsuppliers, conduct audits, and monitorbusiness parameters.

Travel Policyrules and regulations

of corporate travel

Best Practice #1: The Travel Policy should be Well Communicated Online

Travel Policy

4 1 Travel Expense Comparative Practice Analysis - Gunn Partners Inc. - December 1998 Report.

The processing time associated withmaintaining the travel policy accountsfor five percent of managing the travelprogram.1 While this is not a majorcost, ensuring that travel policy is wellcommunicated throughout anorganization can further minimize it.Effective communication can also lowerthe costs associated with the processingand auditing of expense reports andoverall travel program.

Two effective ways of communicatingpolicy are by providing the policyonline and through educationalseminars. The size and technologicalability of the company can effect whichtypes of communication are costeffective and efficient. The cost of thecommunication program should beweighed against the expected benefits to determine which solutions arefeasible for a particular company. Withthe Intranet and Internet, however,costs for mass communicationsgenerally decrease significantly.

Key Success Factor

aOnline Availability

aNew Employee Orientation

aEducational Seminars

Methods of Achievement

• Display the policy on your company’s LAN -ensure it’s in a public file that is easy to find

• Display the policy on your company’s internalwebsite/homepage via your Intranet

• Require your travel agency to display thepolicy on a web page dedicated to yourcompany for employee access

• Provide a presentation piece during newemployee orientation to educate newcomersto the policy

• Provide a seminar highlighting issues relatingto usage, compliance, and other topics thatseem appropriate

Benefits RealizedEasy access to and understanding of the policy is key. Companies provide online accessibility and education because they:

aProvide quick access to the information

aEnable the information to be timely – easy to update

aSave the travel program manager time in answering phone calls or e-mailsregarding policy questions

aProvide education to both new and existing employees on how the policy works

Best Practice #2: Travel Policy should be Consistent with the Company’s Corporate Culture

Key Success Factor

aCultural Compatibility


• Policy guidelines should reflect the company’s individual culture (i.e.,entrepreneurial vs. corporate)

• The tone of the travel policy should beconsistent with the corporate culture

Benefits RealizedCompanies should develop culturally compatible travel policy guidelines to ensure:

aGreater compliance to policy

aEmployee satisfaction

A policy is only effective if employeescomply with it. Mandating employeecompliance will be a struggle if thepolicy is not compatible with theorganization’s business practices,business philosophies, and overallculture.

Allowing flexibility in travel spendingcan reflect a corporation’s attitudetowards travel. Some corporations allowgreater flexibility in allowances formeals and in choice of hotels andairlines. This may result from the

corporation’s willingness to ease thehardship of significant employee travelby maintaining employee satisfaction or addressing the employees’ needs forflexibility, while entertaining forbusiness. These are corporate factorsthat must be addressed in the policy in order to maintain consistency andcost containment.

5

Best Practice #3: Eliminate Personal Usage on the Corporate Card

2 Travel Expense Comparative Practice Analysis - Gunn Partners Inc. - December 1998 Report.

Travel Policy

6

Benefits RealizedElimination of personal use on the card is a best practice because it:

aSaves time – greatly reduces receipt tracking, reporting, and reconciliation

aDecreases risk of potential fraudulent use

aEnsures efficient expense reporting

Key Success Factor

aPolicy Mandates

aManagement Support


• Corporate Card usage should be limited tocompany T&E charges only

• Secure management’s support - ensuremandates are communicated

A Corporate Card should be issued tothe employee for T&E expenses only.Separating personal receipts can be anadministrative challenge for both theemployee and the receiver of expensereports. Twenty-five percent of thetotal process time of managing theprogram is related to auditingexpenses.2 Elimination of personalusage on the card increases efficiency in the auditing process.

Likewise, this guide will later addressthe use of online automated expensereports, which are pre-populated withcharge card data. If the card is used for personal expenses, then thesecharges will need to be extracted from

the pre-populated reports, possiblycreating confusion and additionaladministrative effort from employeesand expense report auditors. Byprohibiting the use of the card forpersonal charges, the report process can be made more efficient.

Furthermore, by eliminating personalexpenses on the card program, analysison card spending can become a usefultool for budgeting and managingexpenses, and negotiating withpreferred vendors based on previoususage. When personal usage is allowedon the card it affects any analysis thatcan be done on card volumes, thustaking from program managers a keytool they receive from their card issuers.

7

Best Practice #4: Eliminate Company Disbursement of Cash Advances

Employees will always need to use some amount of cash when traveling to pay expenses at merchants where credit cards are not accepted.Methods of obtaining cash advancesinclude company disbursements,ATMs, travelers checks, and use ofpersonal funds.

The least expensive means of providingcash advances is to promote the use of personal funds. Some employees,however, are not satisfied with thisoption, prompting another solutionfrom the corporation. The use ofcompany disbursements is generallyviewed as the most expensive means of distributing cash, which has resultedin increased popularity of ATMs,producing lower average costs forcorporations to process traveladvances.3 However, finance

charges and ATM fees charged toemployees using ATMs not owned by their credit card issuers can makethis method expensive. Therefore,employees should be instructed to limitATM cash advances and maximizeATM use of their credit card issuer.

To track cash advances, appropriateprocedures should be included in thetravel policy and expense reconciliationprocesses. Many companies requireexpenses to be submitted for any cashexpense above $25. However, IRSregulations have increased the “cashreporting” ceiling to $75. As a result,companies should review their currentcash reconciliation procedures with their internal tax department to determine the most efficientreconciliation policies available for the company.

3 Travel Expense Comparative Practice Analysis - Gunn Partners Inc. - December 1998 Report.

Key Success Factor

aPolicy Mandates

aManagement Support


• Eliminate company cash disbursements andencourage ATM use at issuing bank ATMs only

• Review cash reconciliation procedures

• Secure management’s support - ensuremandates are communicated

Benefits RealizedElimination of company cash disbursements is a best practice because it:

aSaves money – generally the administrative procedures associated with companycash advances are the most expensive means to distribute cash to employees

Best Practice #5: Impose Penalties for Non-Compliancewith Travel Policy

8

Key Success Factor

a Management Support


• Travel policy document should be reviewedand signed by the employee before receivingtheir Corporate Card

• Policy must be supported “publicly” by uppermanagement (i.e., official endorsement onlinewith policy guidelines)

• Provide management with a report whichquantifies the financial impact of non-compliance

• Work with management to develop real andrecognizable repercussions

Travel Policy

Benefits RealizedBy imposing penalties for non-compliance with travel policies, companies:

aReinforce the importance of policy compliance

aCreate employee accountability

aDeter fraudulent use

With advances in managementreporting, program managers,employees, and employees’ managershave access to information regardingemployees’ compliance with corporatepolicies, and can often quantify losses.Some companies recognize policycompliance as a performancemeasurement and create rewards andpenalties based on compliance.

For example, this information can beintegrated into an employee’s and theirmanager’s annual performance reviews.Business units may be charged a fee forquantified losses. Card programs withrewards programs may only rewardthose purchases that are in compliance.These practices place the accountabilityinto the hands of the employees andtheir managers, rewarding those whocomply, and discouraging those who do not.

Best Practice #6: Consider Centralization of CorporateTravel Management Functions forDomestic and International Offices

9

Key Success Factor

aTranscontinental Systems Capabilities(for the company)

aDomestic and International Management Support


• An infrastructure capable of managing bothdomestic and international groups

• International offices’ support of andadherence to reporting structure of centraloffice (if central office is U.S.-based)

With many companies today operatingboth domestically and abroad, it makes economical sense to centralizethe corporate travel program andoperations in one location. Aside fromminimizing administration expenses,consolidating all T&E purchase datawill enable travel program managers to have an even greater advantage when establishing an issuerrelationship, as well as negotiating with preferred vendors.

Centralization of these functions,however, is very dependent on thecorporate culture of an organization.Some multinational corporations have a

very strong corporate headquartersthat exerts significant controls overregional offices; while some of thesecorporations have regional officesacting almost as separate businesses.This culture will determine how much centralization of travel functionsis possible.

Keeping flexibility in the policy toaddress cultural and workingdifferences in numerous countries willalso be a necessity with a central office.The central management team must becognizant of foreign environments andensure that they are addressing theneeds of all constituents.

Benefits RealizedCompanies integrate global and domestic travel policy management to:

aReduce program administration expenses

aCapitalize on total travel data for vendor negotiations

Best Practice #7: Provide Tools and Resources to EducateEmployees Who Travel Internationally

10

Travel Policy

Key Success Factor

a Internet Access for Employees


• Ensure information provided is easy tounderstand and useful to the employee

• Create a policy guideline which enforces theuse of the software/database for employeeswho travel internationally

Benefits RealizedCompanies utilize global travel education resources to:

aEnsure employees are well prepared for international travel

aProvide valuable travel information, such as foreign exchange rates,documentation requirements, time differences, etc.

aPrepare employees on many facets (social, cultural, economic, political) of conducting business in a particular country

Today, many companies that conductbusiness internationally, want to ensuretheir employees are well educated onglobal business practices and protocolwithin other countries. Not only doesthis allow employees to be moreeffective in their business goals, but this education can also create a moreenjoyable experience for the employeesas a result of increased comfort with theenvironment around them. Aside fromglobal travel information such asforeign exchange rates, passport andimmunization requirements, etc., sometravel companies are offering onlinecomprehensive cultural overviews of a particular country. If the corporatemandated travel agency doesn’t alreadyoffer this service, consider securing arelationship with a company that offers

training/software for employees whotravel internationally. These companiesmay offer online databases withvaluable information such as:

Business Practices: Makingappointments, etiquette, negotiating,and entertaining.

Cultural Elements: History of thecountry, social/political makeup, andspoken language.

Social Protocol: Greetings, titles/formsof address (using first name or Mr./Ms.when addressing someone), and gestures.

Local Travel: Use of air, car, train, or taxi within the country.

Benefits RealizedCompanies utilizing this best practice recognize it can:

aSimplify administration and maximize financial benefits of the program

aIncrease process efficiency in reporting and billing

aCapture valuable T&E purchase data for all employees

aMaximize the size of the program

Key Success Factor

a Mandated Card Program


• Endorse one Corporate Card program andmandate its usage for all T&E expenses

• Ensure the card program offers onlinereporting features for effective and timelyexpense management

• Global acceptance of the card is a must foremployees who travel internationally (i.e.,ensure card is accepted where employeesneed to use it)

114Travel Expense Comparative Practice Analysis - Gunn Partners Inc. - December 1998 Report.

Card Product

Card program management mayaccount for 10% of the processing time for the accounting manager.4

Companies can save programadministration time by mandating asingle Corporate Card program for useon all T&E transactions versus the useof an employee’s personal credit card.

Capturing all T&E data through asingle card program also gives acompany greater control and powerwhen negotiating the financial aspectsof the issuer relationship, and whennegotiating rate reductions with T&Evendors.

Best Practice #8: Mandate One Corporate Card Program for Use of All Travel and Entertainment Expenses

Best Practice #9: Implement a One Card

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Card Product

Recognizing the power and importanceof purchase data, some companies havegone a step further than mandating aCorporate Card program for only T&Eexpenses. They are combining theirmaintenance, repair, and operations(MRO) expenses and fleet expenses,with their T&E spending onto onecard. This may result in a shift frommultiple card programs to a One Cardsolution or just an increase in the types of spending placed on the card.Although still widely viewed as uniqueand innovative, some companies have had One Card solutions for nearly 10 years, while others are now in theimplementation process.

The MasterCard Corporate Multi Card® Card is a “One Cardsolution” that employees can use fortraditional T&E, purchasing, and fleet expenses.

This program can be customized toenable different spending abilities

depending on the spending categorybased on the duties of an employee. For example, a card authorized for bothpurchasing and travel can have a$2,000 limit on purchasing card typetransactions and a $5,000 limit fortravel expenditures. In another scenario,a cardholder may only be authorized to complete purchasing transactionswhile all travel- and fleet-relatedsuppliers are blocked.5

All the charge data for each type oftransaction will be housed in a singledatabase providing your company withthe ability to view all informationcollectively and make cash managementdecisions from a broader spendingpicture. While the data is all housedtogether, it can be integrated intospecialty databases, such as fleetmanagement systems, to ensure thatnone of the reporting functionality,which your company currently enjoys,is lost (see diagram below).

Main Account

Vehicle Cards

Vehicle #12345Fuel and Maint. MCC's

Vehicle #23456Fuel and Maint. MCC's

Admin. Asst.Purchasing MCC's

ExecutiveT&E MCC's

Fleet DriverFleet MCC's

Field SalespersonAll MCC's

Middle ManagerPurchasing and T&E MCC's

Employee Cards

5What’s New, Stephanie King, CPR Consulting, Inc. 1998

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The fundamental steps forimplementing a One Card solutionare as follows:

Step 1: Set up account hierarchy

Step 2: Customize cardholder spendingprofiles utilizing MCC’s

Step 3: Customize billing and liabilityoptions by MCC

Step 4: Employees make charges

The MCC codes can also be used to divert transactions for central vs.individual bill charges, central vs.individual liability, rewardsqualification, and diversion of T&Echarges into expense reporting software.

By combining card programs(purchasing, travel & entertainment,and fleet), the company can save onadministrative efforts. With fewer cards to manage, a consistent reportingplatform across all programs, and one accounting process, all concernedparties will have the same data, in thesame time frame, and be able to makebetter management decisions. The ease

of use for the cardholder is also abenefit. Now instead of having multiplecards and potentially using the wrong card for the wrong purpose,the cardholder has one card and oneprocess to follow for all transactionshe/she needs to make to fulfill his/herjob responsibilities.

The level of sophistication of yourvarious card programs can determine an organization’s readiness to migrate to a One Card solution. Credit cardissuers can provide more informationabout the MasterCard Corporate MultiCard® Card program.

Key Success Factor


a Cost/Benefit Analysis


• Get management buy-in for fleet andpurchasing card programs

• Provide cost/benefit analysis of a One Cardsolution and gain management support ( Note: This report can be provided with theassistance of your Corporate Card contact.)

Benefits RealizedCompanies implement a One Card solution because it:

aProvides greater power in vendor negotiations

aMakes purchasing analysis more efficient

aEnsures a central data repository, capturing all card purchase data for thecompany under one program

aGives you process/cost savings compared to administering multiple programs

Best Practice #10: Select Corporate Liability Option for the Card Program

Card Product

14 6"One Card – Best Practices Study", Deloitte & Touche, 1999

Key Success Factor

a Corporate Liability

a Online Management Reporting Tools Via Card Issuer or Expense ReportingSoftware


• Select the corporate liability feature for your card program

• Utilize online management reports to monitor employee misuse

Benefits RealizedCorporate liability is utilized by companies as a best practice because it:

aReduces billing/collecting administrative costs to the issuer

aReduces the potential for delinquency/credit losses to the issuer

aAllows issuer to pass process savings to the company

The move from individual liability tocorporate liability on T&E expenses isoften a difficult choice. Many programmanagers fear employee abuse willincrease if employees are not liable fortheir expenses. In reality, this fear hasproven to be unfounded. Card featuresare more technologically advanced intoday’s environment. Monitoring andreporting of cardholder transactions cannow be done more frequently withelectronic access to data, giving thetravel program manager greater controland flexibility in managing spendingamong employees.

The company can look to theprocedures of other internal cardprograms, such as purchasing cards orfleet, which traditionally have used acorporate liability structure withminimal employee misuse.

Furthermore, many corporations usingan individual liability arrangement withtheir card issuer also report that anylosses are tracked by the card issuerwithin the organization’s programperformance metrics.6 Such lossesusually reduce an organization’s revenueshare. By utilizing corporate liability,the process by which credit is grantedand maintained for a company’semployees, by its card issuer, is greatlyenhanced. This proceduralimprovement provides dividends to the company in terms of an enhancedbanking relationship and a sharing of process savings.

Best Practice #11: Select Central Billing/Central Payment Features

Key Success Factor

a Central Billing/Payment Features


• Negotiate this functionality with CorporateCard issuer

• Establish an e-mail notification to theemployee that expenses have been processed

• Eliminate personal purchase usage on allmandated Corporate Cards.

Benefits RealizedCompanies utilize this best practice because it:

aDecreases payment administration costs, and eliminates potential for late fees and finance charges

aSimplifies account reconciliation

aMinimizes employee responsibilities – allowing them to concentrate on their core activities

Selecting the central billing (receivingone bill online for all of youremployees’ charges) and centralpayment (sending one payment viaelectronic funds transfer to the creditcard issuer for all employee charges)features greatly reduces post-tripprocessing procedures for programmanagers.

The rewards of central payment lie intwo areas – processing efficiency andfinancial management savings. Inregards to the processing efficiency,now the company only needs to sendone check to its card issuer instead ofthe huge amount of reimbursementchecks sent to individual cardholders to forward to the issuer. The financialmanagement savings are derived fromthe flexibility the corporation now hasin sending the payment. Thecorporation now has the ability tomanage the float of funds and ensureprompt payments, eliminating orminimizing late fees and financecharges. This can result in significantsavings for the corporation.

In addition, employees’ satisfactionincreases due to the ease of centralpayment. Employees need only toaccount for their expenses and thecompany does the rest.

The central bill/pay feature, coupledwith corporate liability, greatlysimplifies the payment cycle at both the corporation and issuing bank, withresulting process savings and anenhanced partnership.

A movement to corporate liability andcentral bill/pay for travel andentertainment expenses is an importantfirst step in moving towards a OneCard solution. This standardizesadministration of card programs andhow the corporation buys differentcommodities. At this point, movingspending for different types of goods(T&E, fleet, and indirect purchases) to a One Card solution is relativelystraightforward.

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Some companies believe they have metIRS regulations for tax-deductibleexpenditures by manually designatingwhich expenses are tax-exempt on theircardholder statement and attaching allreceipts in an envelope to thatstatement. Since hotel expenses mayinclude tax-deductible items, specialprocedures may exist for highlightingthese expenses on the hotel receipt,which includes details of the expenses.These processes seem to satisfy the IRSrequirements without the costly effortof creating expense reports. A company’sinternal tax department should reviewthese processes to verify all IRSrequirements are met.

As this document will address later,management reports available for allexpenses placed on a card can allowmanagers and auditors to spot signs ofemployee misuse without looking at anexpense report. Therefore, the primaryreasons for having expense reports havebeen alleviated through other methods.

Typically, other categories ofexpenditures, such as fleet or indirectpurchases, made with a card productare reconciled by the employee whenthey review their card statement. Thisprocess has not resulted in employeemisuse, lending credence to the viewthat applying a more simplified processto T&E expenses will not result inincreased employee misuse.Furthermore, standardizing expensereconciliation for different types ofexpenses eases the burden on theemployee. This standardization alsomoves the corporation in the directionof a One Card solution.

The decision to eliminate expensereports may have cultural repercussionson a company. Therefore, it should be an individual company decision. All companies, however, shouldevaluate the benefits of expense reportelimination against the costs, in orderto make a sound business decisionregarding their use.

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Expense Reporting

Best Practice #12: Explore the Elimination of Expense Reports

Key Success Factor

a Employee Education

a Tax Department Involvement



• Ensure that the travel policy includesguidelines on which expenses require receiptsfor IRS purpose

• Gain tax department approval of travel policyguidelines on expense reporting processes

• Enable managers to audit spending viamanagement reporting

Benefits RealizedCompanies eliminating expense reports:

aEliminate the costly procedure of creating expense reports

aSignificantly save employees’ time in complying to travel procedures and increase employee satisfaction

7 Travel Expense Comparative Practice Analysis – Gunn Partners Inc. – December 1998 Report.

Accounting for an astonishing 40% ofthe total processing cost for travelprogram management – expensereporting deserves close evaluation.Costs per expense report can rangefrom $2 to $25, with costs includingthe compensation and benefits ofpeople defined as ‘within the scope’, aswell as the related systems, facilities,and overhead costs.7 Expense reportsfill a variety of needs, primarilyproviding receipts for tax-deductiblebusiness expenses and acting as acontrol mechanism to monitoremployee spending.

17

Best Practice #13: Utilize an Automated Online ExpenseReporting System

transaction into different categories toaddress what portion of the expensewas spent on meals, lodging, meetingexpenses, etc. The tax departmentshould review the process to ensure the capture of all necessary informationin order to support tax-deductibleexpenses.

Based on the business rules set in theprogram, reports can automatically berouted to managers or auditors forapproval, or may only require approvalif certain business parameters areexceeded. The cardholder may berequired to submit receipts as well tocomplete the process.

The Expense Reporting Stepsillustration, on the following page,elaborates on the procedure required to perform an online expensemanagement solution transaction.8

This demonstration will highlight howemployees use the system to input data, and how managers can utilize it to ease the approval process. While this solution is highlighted, manysolutions are available that offer thisfunctionality. Card issuers will be able to consult on such solutions.

Many of these software systems areinvestigating integration with web-enabled personal devices such as cell

phones or palm pilots. While on theroad, employees find it cumbersome totrack non-receipt incidentals, such astips and cab fare. Employees can keepup to date on submitting these expensesand tracking the status of outstandingreports by entering information intotheir wireless devices, such as anInternet-enabled cell phone. This willenable employees to document cashexpenses as they happen, furtherdecreasing the manual inputs oftransactions at a later date. Managerswill find helpful, the ability to view andapprove expense reports while traveling.

Given the small penetration of web-enabled devices, this feature is definitelymore forward-looking. Corporationsshould review this functionality anddetermine if it meets the culture of the organization.

8Captura expense reporting software, Web site demonstration, January 2001.

Key Success Factor

a Automation

a Online Capabilities


• Secure a system that has the ability toperform the "lifecycle" functions of theexpense reporting process

• Secure an online automated paymentprocessing software system

While eliminating expense reports may be an option for somecorporations, others may find expense reports a necessary piece ofthe travel reporting process. If this isthe case, companies should investigatean automated online expensereporting system.

Previously, expense reports weregenerally completed using a standardtemplate, with employees inputting allcard and cash purchases. Options nowexist for a much more efficient process,where an online expense reportingtemplate is automatically pre-populated with card data. Eachtransaction can be automatically linkedto a general ledger code based on thetype of merchant from which thepurchase was made. Then thecardholder has to verify thetransactions and the accounting codes,and add cash transactions to completethe process. For hotel expenses, thecardholder may be required to split the

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Expense Reporting

Benefits RealizedCompanies utilize an automated expense reporting system because it:

aDecreases/eliminates manual processing, a significant savings in time and money

aFacilitates tax compliance (with pre-populated report fields)

aSignificantly reduces expense reporting errors as a result of the pre-population of fields, and subsequently, export of the data into accounting systems withoutmanual re-keying

aIncreases employee satisfaction – spends less time completing reports

aEffectively saves money – integration of policy guidelines with actual expensesincurred enables “red flag” expenses to be quickly and easily recognized

Expense Reporting Steps

1. Upon log-in into the system, anemployee will see his or her currentexpenses listed – those expenses paid with the Corporate Card.(See Screen 1)

2. The employee must create a nameand add a business purpose for theexpense report. (See Screen 1)

3. Next, the employee reviews cardexpenses and adds all applicabletransactions to a given expensereport.(See Screen 1)

4. If any card expense is listed asincomplete, the employee wants toadd information to a transaction, orthe employee wants to change theaccounting code expense categoryattributed to a transaction, theemployee can double click on thetransaction. (See Screen 1)

5. By double clicking on thetransaction, the employee can seetravel detail and add/changeinformation. (See Screen 1)

6. If an employee wants to add a cash, or other type of expense, theemployee can click “add expense”.(See Screen 1)

7. The employee can then input dataabout that transaction and assign itto an expense category, which willgenerate an accounting code.(See Screens 2, 3)

8. When an employee completes theexpense report, the employee cansubmit it for approval. The approvalrouting will depend upon thebusiness parameters defined in thesoftware. (See Screen 1)

9. Upon submission, the employeewill see a confirmation that the expense report was submittedwith the requested reimbursementamount. (See Screen 4)

10. The employee must then submitthe required receipts based on thetravel policy requirements.

11. All approved reports will then be automatically transferred to acompany’s general ledger system.

Screen 1

19

Screen 2

Screen 3

Screen 4

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Expense Reporting

Best Practice #14: Utilize an Automated Expense Reporting System that Provides an Accounts Payable (AP) or General Ledger (GL) Interface

The final step in effectivelystreamlining an automated expensereporting system is to ensure it providesthe capability of downloading expensereport data into the Accounts Payableor General Ledger systems. Thisinterface capability greatly decreases

manual processes – keying, manualposting, manual audits, etc. It alsoeliminates errors caused by multiple re-keying of data.

Key Success Factor

aAP or GL Interface


• Secure an automated expense reportingsoftware system that exports expense datadirectly into the company’s internal AP or GL system

Benefits RealizedCompanies utilize an automated expense reporting system with an AP or GL interface because it:

aEliminates manual process of keying data into both systems – saves time and money

aEliminates human keying errors – ensures accurate data

aEnsures items are posted to the correct internal accounting codes

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Key Success Factor

aAutomated Expense Reporting System

aE-mail Access to all Employees


• Secure an automated expense reportingsystem with an e-mail notification ofreimbursement feature

• Have the automated expense reporting systeme-mail the reimbursement notificationmessage to employees

Benefits RealizedCompanies notify employees of reimbursements via e-mail because it:

aIncreases employee satisfaction

aDecreases/eliminates unnecessary expense report reconciliation forthe employee

aEliminates employees’ calls to program managers regarding the status of reimbursements

Employees who travel frequently areoften overwhelmed with the number of expense reports they need to submit,and when reimbursement for cash or incidental expenses is received,employees often don’t know whatexpense report it’s related to. An e-mailnotification of the reimbursement

amount, and its associated expensereport, would save the employee timein researching and reconciling theirreimbursements. Some automatedexpense reporting systems have this as a built-in feature. The followingnotification could be sent to anemployee:

To: (Name of Employee)From: (Name of Program Manager)Re: Expense report #243Expense report #243, submitted by you on 12/12/00, was processedon 12/13/00. Reimbursed amount of $72.99 was sent to payroll,and will be included in your 12/22/00 paycheck.

Best Practice #15: Notification of EmployeeReimbursements Via E-Mail

USAirwaysEast coast travel:

Mid west travel:

West coast travel:

$ 250 ea/RT YTD: 15 $ 3,750

$ 350 ea/RT YTD: 10 $ 3,500

$ 450 ea/RT YTD: 12 $ 5,400

TOTAL $12,650

$ 450 ea/RT YTD: 15 $ 6,750

$ 800 ea/RT YTD: 10 $ 8,000

$1,200 ea/RT YTD: 12 $14,400

TOTAL $29,150

OtherEast coast travel:

Mid west travel:

West coast travel:

Merchant Name Preferred Vendor Rate

Total Trips Using Preferred Vendor

Total TravelDollars Spent(YTD)

Total Dollars Lost (YTD)

Total TravelDollars Spent (YTD)

Merchant Name Non-Preferred Vendor Rate

Total Trips Using Non-Preferred Vendor

$3,000

$4,500

$9,000

$16,500

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Best Practice #16: Utilize Online Management Reporting Features

Key Success Factor

a Online Availability

a Automated Expense Reporting System


• Secure a card program that offers onlinemanagement reporting

• Secure an automated expense reportingsystem that offers the management reporting feature

reports to meet the needs of multipleinternal constituents. Reports can beprovided to assist with theadministration of card programs,provide transaction information,identify policy compliance exceptions,conduct financial analysis, and assistwith vendor negotiations. Based on thetype of the report, it may be utilized bycard program managers, senior financeexecutives, purchasing managers,cardholders, and their superiors.

To identify policy complianceexceptions, managers can produce a“Lost/Savings Report,” which detailsdollars lost from the use of non-preferred vendors, particularly withinthe major T&E spend categories – refer to the Lost/Savings Report shownbelow. This report highlights howmuch tickets would have cost acorporation if preferred vendors wereused versus the actual spending on thesame trips. The information can beused to reward or impose penalties forcompliance to the travel policy.

Information is a very powerful tool –particularly when it’s timely andreadily available for use. A corporationcan collaborate with its card issuer andexpense reporting software vendor toreceive a variety of management

Benefits RealizedCompanies utilize online management reporting because it:

aProvides important data on how and where dollars are spent

aProvides important data for use during vendor negotiations, audits, and monitoring spend category trends

ABC Company Lost/Savings ReportAirline Travel Use of Preferred vs. Non-Preferred Vendors

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Best Practice #17: Conduct Random Audits

Auditing expense reports can be a time-consuming task for the FinanceDepartment of a corporation. Audits are generally conducted to ensurecompliance with current tax authorityrequirements, recognize employeemisuse, correct expense category oraccounting code errors, and ensurepolicy compliance. Changing technologycan ease audit requirements through theutilization of management reports.

Management reports can highlightemployee misuse and policy exceptionswhen employees exceed the businessparameters defined by the organization.Instances of accounting code errors aresubstantially diminished with the use ofan expense management package thatmaps to a GL or AP system. Finally, as

previously discussed in the expensereporting section, often a company’sreporting requirements exceed those of the taxing authorities. A review andsynchronization of these requirementsmay ease the necessity of auditing.

Select auditing will still be required.The Finance Department should followup on employees documented in policyexception or other types of employeemisuse reports. Also, the FinanceDepartment should conduct spot auditsof the remaining employee population.The spot audits should be carried outusing a statistical sample of the totalpopulation. These spot audits shouldexpose any employee misuse that exists.

Key Success Factor

a Automation

a Comprehensive Audit Procedure


• Secure an automated expense reportingsystem with automated audit

• Complete audits based upon statistical sample(audit every 30th report)

• Continue to conduct audits for thoseemployees who are high risk for "potentialfraudulent use"

• Ideas for audit parameters may include:

* a certain dollar amount

* a letter of a last name

* a certain department

* a type of expense

Benefits RealizedCompanies conduct random audits because it:

aUtilizes the investment in reporting technologies to highlight employees exceeding defined business parameters

aSaves time and money by catching employee misuse through statistical sampling

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Best Practice #18: Utilize Comprehensive SpendingInformation to Secure Preferred Vendor Agreements within Major T&E Spend Categories

Key Success Factor

aOnline Management Reporting Tools viaCard Issuer or Expense ReportingSoftware


• Negotiate preferred supplier agreements withlimited vendors

• Types of discounts a corporation considerswhen negotiating include:

* Purchase in bulk (i.e., airline)

* Flat rate discount – 10%

* Tiered discount – up to "X" dollars

* Discount on annual dollars spent

Benefits RealizedCompanies utilize comprehensive spending information to secure preferredvendor agreements because they:

aHave a better negotiating position by utilizing actual spending data

aSave substantial dollars on frequently used products and services

Controlling costs for a company’s thirdlargest operating expense is a verychallenging task for travel managers.One of the most effective ways to better manage your expenses is through pre-negotiated rates with vendorswhom the corporation conductssignificant business with.

By placing all T&E spending on theCorporate Card or One Card, all data iscaptured in one depository for use innegotiations. Typically, card issuers arealso providing enhanced data on thesetransactions, which may allow thecorporation to track such information aswhich flight legs the corporation ispurchasing most frequently or which caragencies are most cars being rentedfrom. Using management reporting toolscan help you identify vendors utilizedand services purchased, and provide thedata needed to leverage the best possiblerates from airlines, hotels, car rentals,and telecommunications companies.

Examples of three types of managementreports that are available viaMasterCard Smart Data OnLine™

(SDOL), a web-based MIS reportingapplication, can be found on thefollowing pages:

• A Merchant Category MonthlySummary Report (SDOL ScreenShot 1)

• A Merchant Monthly SummaryReport (SDOL Screen Shot 2)

• An Airline City Pair DetailReport (SDOL Screen Shot 3)

These reports provide enhanced detailsto the category or merchant level toassist with vendor negotiations. Travelnegotiation staff can now inform ahotel chain how much money is spentyearly on lodging by the corporation,creating an incentive for the hotel chainto offer special discounts to capture thissum of business.

While the MasterCard Smart DataOnLine application is highlighted here,many reporting solutions exist thatoffer this functionality. Card issuers willbe able to consult on such solutions.

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SDOL Screen Shot 1

SDOL Screen Shot 2

SDOL Screen Shot 3

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Travel Agency

Best Practice #19: Have a Mandated Travel Agency

To get the most for travel dollars spent,a corporate travel program shouldsecure an exclusive relationship with atravel agency – and all employeesshould be mandated to use it. Bookingall travel through one agency enables

the corporation to accrue importanttransaction data for managementreporting purposes, as well as vendornegotiations.

Key Success Factor

aExclusive Agency Relationship


• Secure an agency that is capable of servicingthe travel needs of employees

Benefits RealizedCompanies secure an exclusive relationship with a travel agency for:

aEmployee convenience – use one agency

aAssistance with vendor negotiations

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Best Practice #20: Travel Policy Guidelines should be FullyIntegrated into the Booking Agency’sComputer System

Key Success Factor

aSystem Integration


• Secure an agency that is capable of providing integration of travel policyinto its booking system

Benefits RealizedCompanies recognize that integrating policy guidelines within the agency’s systemis important because it:

aEnsures the success of policy compliance with regard to travel booking

The travel policy is effective only ifemployees are complying with it. Travelagency reinforcement of the policywhen processing travel purchasesensures compliance with a company’spolicy guidelines. As a result oftechnological advances, these policies

can be added to a booking agency’scomputer system to ease the agent’sability to recognize policy exceptions.The travel agent can then highlightexceptions to the employee and suggestalternatives.

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Travel Agency

Best Practice #21: Require Agency to Use Mandated CardProgram

By placing all T&E expenses on amandated Corporate Card or One Cardsolution, all data is captured in onerepository for later use. Corporate Cardnumbers should be provided to the

travel agency for automatic use when atrip is being purchased. Mandatingyour travel agency to use that cardprovides another seamless, automatedstep in an efficiently managed travelprogram.

Key Success Factor

a Mandated Card Program


• Mandate the use of one Corporate Cardprogram for all T&E expenses

• Require the approved travel agencies to maintain employee profiles with the correct Corporate Card information

Benefits RealizedCompanies recognize mandating the use of a Corporate Card for travel purchaseis important because it:

aEnsures the capturing of all travel purchase data

aProvides key management reporting data for vendor negotiations

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Best Practice #22: Require Agency to Provide Online TravelBooking as an Option to Employees

Key Success Factor

a Internet/Intranet Access

aOnline Booking Capability

aSystem Integrated Travel Policy


• Ensure employees have access via theInternet/Intranet

• Provide online booking on either yourcompany’s Intranet website, or a designatedpage on the travel agency’s website

• Encourage employees who frequent aparticular destination to utilize the system

• Ensure the travel agency integrates travelpolicy guidelines

Benefits RealizedCompanies recognize the benefits of providing online travel booking because it:

aProvides another booking option to the employees

aDecreases the need/use of internal corporate travel department assistance –increasing automation efforts

Providing online travel booking cansave money for a corporation, whileincreasing employee satisfaction.Online travel booking is viewed as afast, flexible, and convenient alternativeto contacting an agent via telephone.Most online booking systems alsoprovide the ability to integrate acorporation’s travel policy into thesystem. The system then automaticallyidentifies transactions that conflict withthe policy and denies the request.

Online booking systems can, therefore,be extremely valuable in ensuring policycompliance.

Typically, online travel booking is idealfor simple itineraries. Employees shouldstill have access to a travel agent formore complex travel arrangements.MasterCard’s internal online travelbooking solution provided byGetThere, a Sabre Company, isillustrated on the following page.

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Travel Agency

Slide three (Itinerary Plan page)

3. The employee can thenview which flights werechosen and add car or hotel service to thechosen destinations.

Slide two (Flight Availability page)

2. The online bookingsystem will then suggesta list of flights fromwhich the employee can choose.

Slide one (Home page)

1. After logging onto thesystem with a User IDand password, theemployee can choosefrom multiple options,such as air, car, hotelsearch, or flight status.Under Air Search, theemployee can specify all of his or her travelparameters.

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Best Practice #23: Deliver Travel Itinerary Via E-Mail

Another cost-saving measure inbooking and confirming travel foremployees is the delivery of the travelitinerary via e-mail. Many automatedtravel-booking systems offer thefunctionality to generate an e-mail to

the employee. Online booking systemsenable employees to print the itinerarythemselves. The company saves moneyby eliminating the costs to print anddeliver itineraries, while employeesbenefit from increased accessibility of the itinerary information.

Key Success Factor

a Internet Access for Employees


• Have the agency e-mail the travel itinerary to employees

Benefits RealizedCompanies recognize the benefits of this best practice because it:

aSaves the company postage and handling fees of hard copy itineraries when they need to be mailed, or, in an emergency, sent overnight

aProvides employee convenience as employees can simply “screen print” the itinerary, or access it via a wireless web device if arrangements are madewhile on the road

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Travel Agency

Best Practice #24: Utilize Electronic Ticketing (E-Tickets)for Air Travel

Key Success Factor

a Internet and E-mail Capabilities forTravel Agency and Employee


• Have the agency e-mail the travel itinerary with e-ticket confirmation number to employee

• When utilizing the online booking system,screen print your confirmation, or utilize awireless device to retrieve the information,when checking in at the airline

Benefits RealizedCompanies recognize the benefits of this best practice because it:

aEliminates in-line ticketing; employees check in at the gate

aEradicates the need for inter-office mailing/hand delivery of tickets

aSaves the travel agency the expense of printing hard copy tickets

aEliminates the need to have a “physical ticket” in hand in order to travel

The corporation should promote e-tickets for air travel use. The travelagency can provide the ticketconfirmation number in the employee’se-mailed itinerary, alleviating the needfor any inter-office delivery ofitineraries or tickets. The employee canthen go directly to the gate or airline-provided kiosks for check-in and seat

assignment, by providing the reservationnumber and proper identification. Theemployee can receive a receipt uponcheck-in or utilize the Corporate Cardstatement as a receipt. Travel managersshould contact preferred airline vendorsto verify correct check-in procedures.

Learn how MasterCard CorporatePayment Solutions® can work for you.Contact us at 888.321.9119 or visit us on the web atwww.mastercard.com/corporations

7798 T&E Int Reprint€¦ · Card Products Expense Reporting Management Reporting Concepts Explored...

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