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Why T&E Should Matter to CFOs (Part I of II)

A controller walks into the CFO’s office and says, “we can really impact our bottom line this year if we invest in managing our travel and entertainment (T&E) expenses more effectively.” Unfortunately, to many CFOs it might seem like the start of an accounting joke, but for many companies of all sizes this is a fact, and they just don’t realize it. Second only to payroll, T&E spend comprises the largest business expense. If that is not enough to get a CFO’s attention, here are a few other statistics that might help out on that front: according to a recent study published by the Global Business Travel Association (GBTA), 2015 Global Travel Price Outlooktravel spending reached $1.1 trillion USD in 2013 and is expected to advance by 6.9% and 8.6% in 2014 and 2015, respectively. And according to a 2014 Forrester Report, The Power Of Real-Time Insight: How Better Visibility, Data Analytics, And Reporting Can Optimize Your T&E Spend, which surveyed of 348 financial decision-makers around the world, T&E ranks as the second most difficult operating expense category to control.

The following realities based on the results of Certify’s Annual Expense Management Outlook: T&E Trends and Bookmarks for 2015 offer three more compelling reasons why CFOs need to give T&E expense management its due:

1. 59% of companies state their corporate compliance rate is 80% or less with T&E policies, indicating 20% of expenses submitted are in violation of policy.

  • Over 15% of companies report a compliance rate of 50% or less
  • 10% of companies report a compliance rate of 20% or less
  • These violations can cost companies tens of thousands, if not tens of millions, of dollars right off the bottom line.

2. T&E expense management can be painful for those charged with the administration and management of T&E at your company. The following represents the distribution of the largest pain point across six issues impacting the productivity and morale of those involved in managing your company’s T&E expenses:

  • Employees failure to submit expense reports on time: 39%
  • The time it takes to reconcile, review, and approve reports: 38%
  • Employees losing paper receipts/submitting without receipts: 33%
  • Reconciling the data: 23%
  • Errors on the report (incorrect codes, payments amounts): 23%
  • Reviewing for policy violations: 20%

3. The average time from when an employee submits an expense report to when they receive reimbursement is eye-opening and impacts the morale of all those who travel:

  • Over 7 days for 48% for companies leveraging a manual expense management
  • Over 7 days for 37% for companies leveraging an automated expense management system
  • Over 12 days for more than 15% for all companies, whether leveraging a manual or automated system

The good news for CFOs is that a pain reliever for their company’s T&E headaches does exist: the right expense management solution. Part II of Why T&E Should Matter to CFOs will focus on the results that companies are seeing when aligning a proper diet of processes and procedures with the right pain reliever (expense report management solution).

Comments

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

I find that employees never like filing and complying with T&E policies, no matter how lax or how stringent.

From providing no receipts to sending it in months late, many times (at least in privately owned businesses) a complaint to the owner solves their issue.

So, whether you use a manual system or the easiest, simplest automated system, it comes down to whether the exception is the rule or the rule is the exception.

Mary Schaeffer
Title: Publisher & Editorial Director
Company: AP Now
(Publisher & Editorial Director, AP Now) |

There is another very good reason for taking T&E expense reimbursements very seriously. As Ernie so accurately states, there can be a bottom line impact. But, more than that, according to the ACFE, 75% of the instances of expense reimbursement fraud were committed by individuals who were also defrauding the company elsewhere.

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