10 Steps to Building & Delivering an Effective Business Case: Owning T&E as the CFO (Part I)

10 Steps to Building & Delivering an Effective Business Case: Owning T&E as the CFO (Part I)

In previous blogs I established why T&E should matter to CFOs and identified 7 red flags for CFOs to look for that signal the need for more effective travel and expense management to positively impact their bottom line and improve the morale of company travelers. Now comes the hard part: how to build and deliver an effective business case for improving T&E management built so this important function gets the attention it deserves. We’ll tackle these challenges in my next two blogs. Here, we’ll focus on how to build a compelling business case, and, yes, CFOs need to justify and win approval for investments just like every other business leader.

Building a compelling business case for any investment involves constructing the five pillars of its foundation, and will define the first five steps in our ten-step process for CFOs to realize the benefits of effective T&E management at their companies:

1. The Problem Statement – What are the exact issues you are trying to address in making the case for the investment of company assets, the consequences of not addressing them, and the urgency in addressing them? In the case of investing in more effective T&E management: define the inefficiencies in the creation of expense reports and processing of expense reports, and the cost of non-compliance with your company’s T&E policies. This will require T&E due diligence consisting of six questions which I outlined in a previous blog Why T&E Should Matter to CFOs (Part II of II) :

• When is the last time you did a thorough review of our T&E policies?
• What is the rate of compliance with your T&E travel policies?
• What are you doing to actively manage our T&E expenses?
• How do you benchmark our T&E spend?
• What is the average time it takes you to reimburse an employee once they submit an expense report?
• What is the current level of automation in your T&E process?

2. The Lay of the Land – Define the root cause(s) of all potholes in your company’s landscape, which define the need for investing your company’s resources to fill them, and identify any inherent barriers that may cause construction delays in terms of people, process and technology. For T&E, what are the root causes and main benefits in terms of both soft and hard dollar savings in filling each T&E pothole? Common T&E potholes include the following: employees not submitting expense reports in a timely manner, the excessive amount of time it takes managers to reconcile, review and approve expense reports, employees losing T&E related receipts, errors on expense reports, time spent manually reviewing reports for policy violations, and a long time lag between the submission of and expense report and when reimbursement occurs.

3. Potential Solutions – You need to offer more than one option to address your issues so those you are “winning over” feel as if they have a real say in the company’s investment. Just a high level description of each option with the relative costs and benefits associated with each one, or a simple matrix depending on your audience will suffice. In the case of improving T&E management, options that accomplish any or all of the following could be offered for consideration:

• Automating key components of T&E expense management
• Enacting measures to improve and enforce corporate T&E policies
• Arming travelers with better technologies to make T&E expense management simpler and faster (mobile applications, globally accessible tools)
• Leveraging analytics to improve T&E intelligence and data

4. Cost Benefit Analysis – It is critical that you accurately define and quantify the costs and benefits of an investment. You must have clearly defensible methodologies for estimating both costs and benefits including all assumptions and how they drive your numbers. You also need to consider all types of costs that will you will incur in making and managing an investment. If you do not do your homework here someone will find a valid reason to torpedo your business case, and you will not win approval for your investment proposal. The realm of T&E expense management benefits can include:

• Time saved by travelers in creating expense reports
• Time saved by managers in reviewing and approving expense reports
• Time saved in the accounting reactive to expense reports
• Money saved by raising the compliance rates with T&E policies
• Time saved in reviewing reports for violations
• Improving the accuracy of forecasts of T&E expenses and related cash flows
• Improving traveler morale as creating reports is easier and more convenient while they get reimbursed in a more timely manner

When investing in T&E automation, costs that need to be included are initial costs to purchase the software and/or licenses and any technology associated upgrades that need to be made, implementation costs including training costs, and ongoing costs for any system maintenance and ongoing training. The good news is that most companies realize a positive ROI after switching to a cloud-based expense management solution within one year (57% of companies and 70% of small businesses according to Certify’s Annual Expense Management Outlook: T&E Trends and Bookmarks for 2015).

5. Executive Summary – The executive summary was not the initial pillar discussed even though it is the opening for a formal business case. You need to have all your ducks in row before you can craft a compelling executive summary. This is where you set the table for success, or failure, for your proposed project. A poorly written executive summary will keep any project from getting off the ground. A concise summary of issues, why they need to addressed, and how you propose to address them will show that have done your homework and set the stage for the “buy in” and support you will need to win approval for an investment.

Building an effective business case for any investment of company resources is seldom, if ever, easy. However, doing your homework and constructing a business case built on the foundation of five solid pillars will set the table for you to deliver your business case effectively, and win approval for an investment. Investing in T&E management effectiveness can make the lives of all company employees who travel easier, result in significant cost savings, and increase long-term shareholder value in the process. How to communicate a compelling business case and make such an investment happen at your company will be the focus of my next blog.


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.