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Travel expense management best practices

I have worked in multiple industries and sectors in my career. The one constant is abuse of T&E, especially when traveling.

In fact, T&E is the first issue I address at any new company (the second is advertising). Is it reasonable? Usually not (way too high on T&E, too low on adv.). By pairing both of these expenses together I am able to offset the concept that I'm hurting the sales effort, because when you start to analyze the who what when of T&E dollars, they seem to be on the same clients, not new business.

Without advertising, how are you bringing in those new clients. Some what circular, but the sales team only see the free lunches and dinners...

What policies, procedures, rules of thumb do you use in Travel expenses to reign them in?

Answers

Ernie Humphrey CTP
Title: CEO & COO
Company: Treasury Careers
LinkedIn Profile
(CEO & COO, Treasury Careers) |

Wayne, I have a few blogs on Proformative, and I have a the Proformative learning platform Course all focused on Effective T&E Expense Management:

T&E Expense Management: The Foundation for Control & Effective Forecasting (https://www.proformative.com/blogs/ernie-humphrey-ctp/2015/10/27/effective-te-management-foundation-control-effective-forecasting),

T&E Policy: 10 Best Practices to Eradicate Inefficiencies that Impact the Bottom Line,
(https://www.proformative.com/blogs/ernie-humphrey-ctp/2015/08/11/te-policy-10-best-practices-eradicate-inefficiencies-impact)

25 T&E Expense Management Tips that Can Impact the Bottom Line
( https://www.proformative.com/courses/travel-expense-management-best-practices-training-course )

Anonymous
(Manager) |

In my experience, policies are one thing and practices are often something else. It's all great to make the occasional show of how important it is to stick to a certain written policy.

What really matters is what one actually does. Exceptions granted in practice make much more of an impression as to the way things really work than all the stern emails in the world.

If you demand receipts/credit card statements by a certain time limit, then that's just the way it has to be in actual practice. It's like lovable kids and dogs; do it once and all of a sudden it's a tradition. Same goes for virtually un-examined reimbursable expenses. Employees get the idea that anything goes and they you're off to the races. In fact, I would go so far as to create further questions about submitted expenses, just to telegraph that expense reports are in fact reviewed.

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

To your vein of thought, I caught an employee (whether by design or ignorance) submitting exorbitant cell phone bills (our employees talked with Europe constantly, 24x7 so large cell bills were not necessarily out of the norm), especially since this employee was not traveling.

After reviewing the bill, I found one number being constantly called. When asked about the number, I found it was her boyfriend in the UK.

She promptly paid back thousands of dollars.

Due to the attitude displayed by the owner, who would talk on his cell phone while sitting at his desk, and not the desk phone, everyone began this habit. In addition, the extension to that behavior was "anything" went as far as use of their cell phone.

Everyone realized every report was scanned and not just approved.

Anonymous
(VP - FInancial Planning and Analysis) |

I believe you have to put the onus on the approver. Too often I have seen expense reports blindly approved with obvious questionable expenses. Once some of these were brought to light and reviewed in management meetings, things started to change. I do think employees traveling away from home need to be comfortable and save and not have to focus on travel considerations vs. business needs.

Ashley Collins
Title: Director
Company: 3D Procurement Solutions
LinkedIn Profile
(Director, 3D Procurement Solutions) |

Hi Wayne
Firstly to your example of cell phone account abuse; unfortunately this issue is almost always detected retrospectively and is a very difficult to control real time despite the most robust EMS / Policy guidelines a company might have in place. This will boil down to the diligence of managers to detect when reviewing expenses for approval & payment.
More generally there are many ways to facilitate compliance for general T&E activity within the confines of policy. An expense management system (EMS) as provided by the likes of Concur / Spendvision / Fraedom is a great start. There are a multitude of options as governing rules or policy requirements that can be embedded into an EMS to control T&E spend in accordance with budget etc. In association with the EMS platform the use of a T&E card that has spend limits / and preferred vendor usage rues will also assist with compliance.
There is quite a great deal of detail that goes into the successful implementation of the above solution. Happy to take offline if you like.
Cheers
Ashley

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

Ok, so I am going to take a different approach. I like what Netflix says (you can Google their slide deck "Netflix Culture") about "Freedom & Responsibility."

Netflix Policies for Expensing, Entertainment, Gifts & Travel:
“Act in Netflix’s Best Interest”.

They go on to explain:
"Expense only what you would otherwise not spend, and is worthwhile for work
Travel as you would if it were your own money
Disclose non-trivial vendor gifts
Take from Netflix only when it is inefficient to not take, and inconsequential
“taking” means, for example, printing personal documents at work or making personal calls on work phone: inconsequential and inefficient to avoid"

Instead of micro managing this, simply explain to people that if they violate this, then they are done. If you cheat on your company expenses, we won't tolerate it.

Of course, the execs have to live this rule too. Absolutely.

Topic Expert
Keith Perry
Title: Consulting CFO and Business Operations A..
Company: Growth Accelerator
(Consulting CFO and Business Operations Advisor, Growth Accelerator) |

Wayne,

An interesting B-School case we had was regarding company profitability. They took "outlier" companies that in competitive markets had much higher than average profitability, and dug into the "why".

Aside: granting that good process and guidelines are critical....

The answer was leadership from the CEO on down. If the CEO travels coach*, so does everyone else. The best results came from highly-visible penny-pinching. A waste of CEO time to save nickles, except that it set an example in a way that simple policy didn't.

In a similar vein, when I was at Intel, Andy Grove drove his old Saab to work every day, until the BOD forced him to buy a newer Saab and a driver (on the latter: so the rumor went. On the former, I could see him arrive daily from my window, so yes, it was him in a Saab). He obviously could have shown up in a new Daimler every week...but he didn't. That both set a tone *and* helped morale, the latter because a billionaire exec flaunting their wealth is simply toxic**. Creating an environment of austerity through leadership is the most successful tool I've seen or researched.

KP

*In a particular company researched, when on the company dime the CXX staff flew coach, and didn't do upgrades with miles or personal $. That would have been, in their minds, a cheat, and would have diluted the message.
**For further reading on the psychology / toxicity of spending by highly compensated parties in a social structure, I highly recommend
http://www.amazon.com/Falling-Behind-Rising-Inequality-Wildavsky/dp/0520280520

Ernie Humphrey CTP
Title: CEO & COO
Company: Treasury Careers
LinkedIn Profile
(CEO & COO, Treasury Careers) |

Automate T&E Policy compliance by using a T&E Expense management solution. Then the politics of compliance "go away". Or, you can also benchmark expenses and show those who might feel "above the law" how they are overspending on the company dime. Review your T&E Policy, or create one, and improve the Travel Policy IQ of your travelers, do not let them use the excuse of ignorance of policies.

Anders Liu-Lindberg
Title: Regional Finance Business Partner
Company: Maersk Line Northern Europe
LinkedIn Profile
(Regional Finance Business Partner, Maersk Line Northern Europe) |

Perhaps go about this from two angles.

First, don't get your sales force tied in T&E micro management. Track their sales calls by type (phone, f2f etc), how much they add to the sales pipeline, how much of the pipeline they close and how much they actually bill in the end.

Second, make it easy for them to submit and report T&E in a structured way that follows internal guidelines (rules based ERP or cloud system should do the trick) and then perform controlling on each sales rep. If someone spends a lot but wins little business you have a problem. If someone spends a lot but wins a lot of business I'd say you don't have a problem.

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