Expense Management: Best Practices and Benchmarking for 2015

Expense Management: Best Practices and Benchmarking for 2015

February 18, 2015 Sponsored by:!

Bob Neveu Jamie Shada

© 2015 Institute of Management Accountants. Inside Talk Webinar Series. All rights reserved. #InsideTalk!

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Moderator!

Steve Shannon Director

Partnership Marketing

IMA !

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Featured Presenter!

Bob Neveu President and Co-founder

Certify, Inc.

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Certify

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•  Leading travel & expense management provider since 2008

•  Over 15 million expense transactions in 2014

•  Processing over $8 billion/year in expense reports

•  64 languages, 140+ currencies, clients in 18 countries

•  #1 Highest Rated Expense Management Software on G2 Crowd, a 4.8 out of 5 star rating

•  9 Must-Have Apps for Business Travelers – Inc.com, 5 top business travel apps – Employee Benefits Adviser

Featured in:


Featured Presenter!

Jamie Shada Accounting Operations Analyst

Garmin !

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© 2015 Institute of Management Accountants. Inside Talk Webinar Series. All rights reserved. #InsideTalk!10

Garmin


Learning Objectives

Upon completing this webinar, you will be able to:!!1.  Understand current and emerging technologies

surrounding T&E management 2.  Explain how companies are utilizing expense report

software to drive policy compliance rates up and simplify processes for employees and managers

3.  Apply the best practices of T&E automation with Certify’s platform

4.  Recognize the travel and expense management trends and benchmarks for 2015

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The Importance of T&E

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Travel and entertainment (T&E)—second only to payroll as the largest business expense, accounts for 10%-12% of total annual budget


Annual Spend on Travel & Entertainment

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The majority of mid-size companies spend between $50k and $5mm on

T&E

$50k – $5mm

Mid-Size Company 101 – 999 employees

The majority of large organizations spend over $5mm on T&E

> $5,000,000

Large Enterprise More than 1,000 employees

The majority of small businesses spend less than $50k on T&E

< $50,000

Small Business Less than 100 employees

What companies of all sizes are spending on T&E:

Reference: Certify’s Travel and Expense Trends Data, February 2014


About the Data

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•  Total Respondents: 434 companies (non-Certify clients)

•  Audience: •  28% Small Business: less than 100 employees •  37% Mid-Sized Business: 101 – 999 employees •  35% Large Business: 1,000+ employees

•  Location: •  6% International •  94% U.S.

•  Demographics: •  38% C-level or above finance professionals •  43% Manager, Controller or Accountant •  19% Other (accounting staff, consultant, administrative, etc.)

Third Annual Expense Management Trends Survey Conducted in December 2014


Polling Question 1

a)  Pen and paper/spreadsheets b)  ERP system (Oracle, SAP, etc.) c)  Online expense system (Certify, Concur, etc.)

How does your organization currently manage travel and expense reporting?

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Polling Question 1 Results (Placeholder)

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T&E Expense Management Trends

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Benchmarking for 2015: How does your organization stack up to the

2015 Trend Survey data?



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How do organizations currently manage their travel and expense reporting?

Reference: Certify’s Annual Travel & Expense Management Survey 2015



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The Divide Between Small, Medium & Large Businesses

Manual - 64%

ERP - 11%

Web-Based - 25%

Manual - 19%

ERP - 33%

Web-Based - 48%

Manual - 48%

ERP - 19%

Web-Based - 34%

Small Business Medium Business Large Business



Top Pain Points

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0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Reviewing for policy violations

Reconciling the data

Errors on the report

Employees losing receipts

Time it takes to reconcile, review, and approve

Employee's failure to submit reports on time

Largest Pain Points Surrounding T&E



Top Pressures & Areas for Improvements

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Areas to Improve for 2015

Lengthy expense reimbursements (16%)

Frequent instances of noncompliance (16%)

Need to reduce expense costs 46%

Poor visibility into spend

27%

Lack of control over T&E spend

25%


Top T&E Pressures in 2014


Expense Management Features

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1. Automation, 51% of companies named it as top feature For example, automated expense reports, direct credit card feeds, and automated approval workflows.

2. Policy Enforcement, by 42% of companies Employees receive immediate out-of-policy notifications, and companies can set expense limits by category.

3. Integrations with Finance Systems, by 34% of companies Manage large-scale user data through integrations with HRMS interfaces, multiple ERP systems, and accounting software.

4. Mobile Technology, by 33% of companies Mobile apps allow users to report and manage expenses remotely, whether using a smartphone to capture receipt images or for on-the-go travel booking.

Must-have features requested by the finance department:



Polling Question 2

a)  Our T&E policy is not enforced b)  Manually reviewing expenses c)  T&E system automatically flags out-of-policy

violations

How is your organization enforcing T&E expense polices?

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Policy Enforcement

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14%

35% 36%

21%

1% 4%

31% 27%

19%

63%

0%

10%

20%

30%

40%

50%

60%

70%

T&E policy is not enforced

It is the responsibility of the employee

Manager manually review each expense

Accountant manually reviews, checking only high value expenses

T&E system automatically flags out-

of-policy violations

How Companies Enforce T&E Policies

Manual Process Web-Based System



T&E Policies

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Corporate Travel

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Online Travel Sites

Travel Agency

Online Booking Tool

How companies are booking travel:


Manual Process Automation

Open Booking

(through direct

provider)

Online Travel Sites/Agencies

(i.e. Expedia, Orbitz, Kayak)

Online Booking

Tool (OBT) (i.e. Get There,

Amadeus)

Travel Agency

(Carlson / BCD)

PRO: Flexibility CON: No control over policy enforcement

PRO: Flexibility CON: No control over policy enforcement

PRO: Policy enforcement CONS: Contracts and systems; minimum transactions. Best for organizations spending over $2mm on T&E.

PRO: Full-service policy enforcement CONS: Cost; $40-50 fee in addition to booking fees. Best for organizations spending over $4mm on T&E.

Manual Process

Web-Based Process


Fraud in Expenses

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•  59% of companies indicated 20% of expenses submitted are in violation of T&E policy. •  6.3% of all transactions are “out of compliance,” according to a report by Oversight

Systems. Of these noncompliant transactions, 19% of expenses submitted are “fraudulent” with average amount of $115, amounting to $13.7 million in losses.

•  Organizations who monitor compliance have a 70% decrease in fraudulent spending.

Reference: www.businesstravelnews.com/Expense-Management/Study--Fraudulent-Expense-Reports-Have-Cost-Cos--Millions-In-2014


The Craziest Business Expenses on 2014

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$125 Cher Concert Tickets “Because I was in Vegas and had a free evening.” Expensed by an employee at a small insurance company

2nd Monitor “Because I have two eyes.” Expensed by an employee at a mid-sized company

Beers at $100 each “Liquid to maintain life in the tropics.” Expensed by an employee at a mid-sized company


Spend Trends in 2014

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Reference: Certify’s SpendSmart Report, Q4, 2014

1.  Meals 2.  Airfare 3.  Lodging 4.  Gas 5.  Misc. 6.  Cell Phone 7.  Car Rental 8.  Groceries 9.  Supplies 10. Taxi 11. Tolls 12. Shipping 13. Parking

How the T&E budget was spent by business professionals:

21%

16% 14%

12% 8% 6% 5% 5% 5% 5% 2% 2% 1%


Benchmarking Data: Expense Categories

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Reference: Certify’s SpendSmart Report, 2013-2014

The average expense amounts, based transaction data from the 2014 Certify SpendSmart Report:

Category 2013 2014 Difference

Meals $26.08 $25.67 – 1.58% Airfare $329.65 $345.21 + 4.61% Lodging $200.24 $213.90 + 6.6% Car Rental $185.27 $193.58 + 4.39% Taxi $32.76 $31.81 – 2.94% Gas $50.73 $40.41 – 22.65% Parking $32.75 $32.70 – 0.15% Cell Phone $98.88 $89.30 – 10.18%


Benchmarking Data: Meal Expenses

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Reference: Certify’s Annual Travel & Expense Management Survey 2015 | http://www.gsa.gov/portal/content/101518

A breakdown of meal expense amounts, based on Certify transactions and the GSA’s per diem meal rates:

Meal Breakdown Average Expense Amounts for 2014 – Certify Data

GSA Per Diem Highest Tier (Major Metros)

Breakfast $11.88 $12

Lunch $21.46 $18

Dinner $28.24 $36

Total Per Day $61.58 $71*

*includes $5 for incidental expenses


Benchmarking Data: Popular Vendors

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A breakdown of most expensed vendors of 2014:

Vendor Average Expense Cost

Most Expensed Restaurant Starbucks $10.45

Most Expensed Airline Delta $412.53

Most Expensed Hotel Marriott $240.07

Most Expensed Car Rental National Car Rental $179.71

Reference: Certify’s SpendSmart Report, 2013-2014


Polling Question 3

a)  Follow GSA per diems b)  Based on internal spend habits c)  We do not have spend limitations on those items

How does your company set travel policy spend amounts on items such as meals, hotel, airfare?

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Switching from Spreadsheets

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53% of companies on a manual process—who indicated they will switch to a web-based expense system—estimate they will switch

within the next 24 months.

21% 32% 26% 9% 9%

Within the next 6 months

6 – 12 months 12 – 24 months

24 – 36 months Not sure

The timeframe anticipated to switch to a cloud-based expense system:



Reason for Switching

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0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Improve employee compliance rates to corporate travel policies

Provide an expense system accessible from anywhere

Gain reporting and analytics around T&E spend

Simplifying the expense reporting process

What are the forces driving the switch to a web-based system?



ROI on Expense Management Software

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Time to recoup costs after switching to a web-based expense management system:

Small Businesses Experience Fastest ROI

of small businesses experience 100% ROI in one year or less

70%



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Best Practices: What are the best practices in T&E for 2015?


Key Strategic Actions to Improve Processes

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2.  Take measures to improve and enforce corporate T&E policies

•  Ranked #2 by 48% of companies

3.  Arm travelers with better technologies to make T&E expense management simpler and faster •  Mobile applications •  Globally accessible tools

4.  Leverage analytics to improve intelligence and data Reference: Aberdeen Group 2014, The Traveler & Expense Management Guide for 2014

1.  Automate key components of T&E expense management •  Ranked the #1 top priority in 2014 by 52% of companies in the

2014 Aberdeen Report


Automate Key Components of T&E

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Reference: Aberdeen Group 2014, The Traveler & Expense Management Guide for 2014

Companies who utilize automated expense management systems experience:

1.  A 50% lower expense-processing cost than other companies 2.  A 43% higher rate of business travel spend under management 3.  A 31% higher rate of corporate policy compliance

Automating the expense management process is the first step to a “Best in Class” expense management program, according to 55% of companies in the Aberdeen Expense Management Benchmark report.


Polling Question 4

a)  The expense report creation process b)  The auditing and reporting process c)  The manual process of keying in data into

Accounts Payable systems

What key area of your travel and expense management process would you most like to automate?

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Improve & Enforce Corporate Policy

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Organizations using cloud-expense are experiencing up to 91% compliance rates to corporate travel policies and guidelines

“Setting hard travel policies around formerly ‘gray areas’ such as seat upgrades has trimmed travel spending by 10% to 20%”

Linda Parcher, VP and CPO, Diebold, Inc. Wall Street Journal

#1 way to reduce T&E costs: Improve compliance to T&E polices

Reference: Certify Annual Travel & Expense Management Survey 2014


Utilizing Technology to Gain Control

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How to increase policy compliance: 1.  Create corporate travel and

entertainment expense policy 2.  Integrate policy into expense system,

setting both: •  Hard Policies (decline expense

exceeding X amount) •  Soft Policies (manager’s discretion for

approval) 3.  Allow technology to enforce policy,

notifying employee and manager of policy violations •  Missing receipts •  Duplicated •  Items exceeding spend limits

Reference: Certify Annual Travel & Expense Management Survey 2014

Flagged violation, notifying manager amount exceeded policy limit


Arm Travelers with Technology

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•  Online travel booking system •  Used by 87% of all Best-in-Class companies •  Control the expense before it occurs •  Spend captured quicker and in compliance to policies

•  Mobility: Second most important feature when selecting an expense vendor; 45% of companies named it #1

•  Users of mobile expense applications have reduced their expense-processing costs by 65%

•  Enable travelers with the power of mobile: receipt capture, enter expense data, review & approve expense

•  End-to-end expense management system: •  Robust platform helps streamline and automate processes •  Accessible from anywhere, anytime


Leveraging Technology for Visibility

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•  55% of all organizations name main priority for 2014 to enhance visibility into overall T&E spending

•  Visibility into T&E spend: 30% visibility with manual process; 61%+ visibility with web-based system

•  74% companies using cloud expense systems regularly audit expense reports vs. 44% of companies on manual system Types of visibility gained with cloud technology •  Documented path of approvals •  Expense by employee •  Expense spend by category

61% 57%

74%

57%

30%

40% 44%

29%

Visibility into T&E Spend

Regular Reporting

Regular Audits of Expenses

Automated Data

Analytics

Web-Based Expense System

Manual Expense Process


Questions & Answers!

Use the Q & A Panel to send your questions to our panelists.

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Use the Q & A Panel to send your questions to our panelists.


Certify, Inc.

Steve Shannon Director

Partnership Marketing IMA

Jamie Shada Accounting

Operations Analyst Garmin


Thank You to Our Presenters!!

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Certify, Inc.

Jamie Shada Accounting Operations Analyst

Garmin


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Final Reminders

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Next Webinar: •  Strategic Performance Management for a Future

Ready Enterprise Ø Wednesday, February 25, 2015, 1 p.m. EST

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Notification of Future Webinar Schedules!

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Thank You to Our Sponsor!

www.certify.com

Expense Management: Best Practices and Benchmarking for 2015

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Transcript of Expense Management: Best Practices and Benchmarking for 2015