New Research: Using Best Practices to Maximize Travel & Expense ROI

T&E Robert Wilson/Adobe Stock

Travel and expense management goes beyond making sure employees aren’t submitting dubious expenses like, say, $1,000 toward adult entertainment or $80 worth of drinks to keep a spouse “calm and occupied” (both of which were real expenses, by the way, as reported by Inc.).

According to a new London School of Economics report commissioned by Amadeus, companies can cut the cost of processing a transaction by more than 50% by actively managing T&E and implementing best practices.

But what exactly is “actively managing” T&E? The report proposes a three-stage approach: creating a T&E strategy; optimizing T&E spend management processes; and incorporating technology into these processes.

From interviews with global executives, the researchers learned that companies tend to skip T&E best practices, “[including] enforcing process compliance through a managed-buying channel; ensuring sufficient spend visibility to enable strategic sourcing; establishing demand management enabled by ‘smart approval; and driving corporate card utilization.”

Setting a Strategy

The researchers also found that the executives shared a number of strategic priorities: growth; cost minimization; operational efficiency; employee productivity; risk mitigation; and management information and analytics. But as you can see from the chart below, these executives held a wide range of opinions on which objectives are the most important.

Source: “Managing Every Mile: How to Deliver Greater Return on Investment from Travel and Expense”

There is a strong correlation with function. CPOs and CFOs overwhelmingly cited operational efficiency as their top strategic priority, with cost minimization coming in second. Chief human resources officers tend to put employee productivity at the top. And CEOs are most concerned about overall growth. As one Europe-based CEO told the researchers, “It’s not about minimizing a cost line… it’s about supporting the business.”

Boosting T&E Spend Management

A formal travel policy is the most basic must-have here. This is already in place at many, if not most, companies, but compliance is a separate issue. Among the companies represented in LSE’s report, compliance rates hovered between 80%–85%.

If the compliance rate at your company is below 80%, that’s a sign that your T&E costs may be unnecessarily high. Earlier research from Amadeus has shown that companies with T&E policy compliance rates of over 80% rack up 23% lower total indirect costs per traveler than companies with low compliance rates.

Beyond travel policies and compliance, there are a number of ways companies can improve T&E management. These include using a managed-buying channel, facilitating “smart approvals” and using corporate cards — all of which encourage compliance and help make the process of booking and reporting travel more hassle free.

Bringing in Technology

T&E management, like pretty much any other sub-area Spend Matters covers, can be improved with the smart use of technology. The executives LSE interviewed emphasized the importance of IT activities in implementing T&E solutions, and 60% said they are considering changes to their IT and T&E systems in the next few years in order to use best practices in T&E management.

Mobile booking and automated alerts for lost savings are the two most requested IT-enabled features. Regarding the former, 85% of employees already use mobile phones in some capacity to plan their travel, and mobile bookings make up 11% of total bookings. And regarding the latter, there is some skepticism as to whether employees would actually use the feature. As one COO explained, “We would like to know about it so that we can track it and use the data for T&E sourcing deals.”

The main takeaway here? There are numerous opportunities to adopt best practices and improve ROI in T&E. After all, T&E is the second largest indirect spend category for many companies, and thus it’s crucial to manage it strategically.

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