Chrome River whitepaper: Expense management as a catalyst to drive revenue
Travel and entertainment (T&E) is often the largest single controllable cost for businesses, and can reach 10 to 12 percent of all spend, second only to payroll. The conventional wisdom for expense management has been to focus on cost control as the primary goal. Creating travel policies that minimize excessive spend, and processing and enforcing these through automated expense management software, has long been favored by finance departments as the preferred approach.
However, as corporate travel expense management programs have become more efficient both in terms of their automation of manual processes, and their ability to control employee spend, we have reached a stage where the improvements that can be delivered are diminishing, as shown with the graph on the right. Automation haseliminated much of the time required to create and process paper-based expense reports, which can now be created with just one or two clicks on a mobile device.
What was previously an activity that could take several hours at the end of a business trip can now be done in just a handful of seconds after each transaction. Automating manual expense submission and approval processes has reached a stage where few efficiencies can be introduced that will further lower the per-report processing cost. In fact, it is already estimated to cost 75 percent less to create, submit and process a report using expense management software than with the traditional receipt-and-spreadsheet method. While AI and machine learning can deliver some further efficiencies in the expense management process, these are incremental, as opposed to the quantum leaps of the past with the introduction of desktop – and later mobile-centric – expense management systems.
Similarly, a combination of built-in pre-approvals, and expense policies which are enforced both at the booking stage (through the corporate travel agency or booking platform) and the report submission stage (through business rules), have drastically reduced the amount of wasteful and out-of-policy travel spend. Companies’ travel and finance teams are reaching the point where the only practical way to further reduce costs is to mandate the use of budget hotels and low-cost carriers, and cutting out-of-pocket allowances. While these may save money in the short term, degrading the traveler experience will likely have a negative long-term impact on the organization through employee dissatisfaction and staff churn.
It’s clear that we have reached the stage where there needs to be a new way of thinking for how organizations view and manage employees’ T&E spend. Instead of making it a cost to be minimized, it is time to view it as a catalyst for growth.
This white paper addresses why the traditional model of expense management is no longer relevant for modern businesses, and looks at how businesses can better use their T&E and sales data to make smarter decisions that drive meaningful revenue gains.