7 Red Flags Your T&E Expenses are Out of Control

7 Red Flags Your T&E Expenses are Out of Control

In Part II of my recent two-part blog series Why T&E Should Matter to CFOs, I challenged CFOs to find the right person or people on their teams to pose the following seven questions:

1. When is the last time we did a thorough review of our T&E policies?
2. What is the rate of compliance with our T&E travel policies?
3. What are we doing to actively manage our T&E expenses?
4. How do we benchmark our T&E spend?
5. What is the average time it takes us to reimburse an employee once they submit an expense report?
6. What is the current level of automation in our T&E processes?
7. Are we using or have we looked at a cloud-based T&E expense management solution?

This blog will identify seven red flags for a CFO to look for in the responses to these questions to help identify specific areas of opportunity to improve T&E management. In my next blog, Taming Your T&E Beast, I will offer specific advice regarding how to address T&E problem areas, and how to construct the business case for investing in effective T&E expense management.

The following are seven red flags that may indicate, “Houston, you have a problem”, and T&E expense management is not getting its due at your company:

1. Your travel policy is on autopilot—The last time you reviewed your travel policy was when disco was cool. This could mean that you have little or no control over what is more than likely a top five expense category at your company.

2. Your employees’ travel policy IQs are in the single digits at best—When you ask a group of co-workers a basic question about your travel policy, none of them know you even have a travel policy. This response would not be surprising, as according to a 2015 report from PayStream Advisors 41% of large corporates report that do not even have the ability to enforce their travel policy. You can’t enforce a travel policy if no one knows it exists.

3. You no have idea what it costs to process an expense report—This response would also not be surprising, as according to a 2015 report from PayStream Advisors 80% of companies do not know their processing costs. You can’t manage what you can’t measure.

4. Show me the money; it often takes two weeks or more to process an expense report request—Your VP of Sales and sales staff are always in your accounts payable department complaining and asking why we can’t do better.

5. You have no idea how you compare to other companies relative to our T&E expenses—How can you effectively manage anything without a benchmark?

6. You use inter-office mail to submit expense reports—This is 2015, not the era of the pony express, and given the amount of free document sharing solutions and related technology the use of inter-office mail should seem archaic. That said, according to a 2015 report from PayStream Advisors, 69% of companies still submit paper receipts to their Accounts Payable departments via inter-office mail. This is low-hanging fruit to improve T&E expense management as inter-office mail is fraught with loss receipts, time delays, and many other inefficiencies.

7. You process at least 5-10 expense reports per week manually, including your T&E submission and reimbursement processes—Any processes that involve the repetition of tasks, replication of the same tasks (including keying), and manual handling of documents by multiple parties are great candidates for automation. Automation removes inefficiencies and lowers processing costs in almost all cases where the aforementioned conditions exist.

T&E spending represents a meaningful business expense at your company, it’s difficult to manage, and it impacts travelers and non-travelers across your organization. Investing in T&E management effectiveness can make the lives of every company employee who travels easier, and it can result in significant cost savings with increased long-term shareholder value in the process. You know you have T&E problem areas that need attention, now what? Stay tuned for my next blog Taming Your T&E Beast and find out.


Ernie Humphrey - CEO Thought Leadership 360
Written By Ernie Humphrey
Guest Contributor

Ernie currently serves as the CEO of 360 Thought Leadership Consulting. 360 Thought Leadership Consulting helps companies define and unlock the strategic value of their thought leadership programs. Formerly, Ernie served as the Vice President, Educational Programs for Proformative, and the as the Director of Treasury Services and as a Director of the Corporate Treasurers Council for the Association for Financial Professionals. Ernie has a BS and MS in Economics both from Purdue University.