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

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

In Part I of Why T&E Should Matter to CFOs, the relevance of travel and entertainment (T&E) expense management to CFOs was established. In a nutshell: second only to payroll, T&E spend comprises the largest business expense for companies; ineffective T&E management negatively impacts all employees who travel on company business; and there are many potential areas of opportunity to improve in the arena of T&E management. How do CFOs tackle the challenges associated with T&E?

Companies of all sizes are finding that the answer to relieving many headaches associated with T&E expense management lies in leveraging the right expense management solution. Organizations who have switched from a manual to a web-based expense management system have experienced the following:
  • Reduction or elimination of spreadsheets

  • Reduced time spent creating, approving, and processing expense reports

  • Faster reimbursements for employees

  • Increased insight into travel and entertainment spend

  • Increased frequency of expense reports being submitted

Investing in improving T&E expense management pays off. Companies quickly experience ROI when investing in cloud-based expense management solutions. The length of time to recoup an initial investment is as follows:
  • 56% of companies experience an ROI within the first 12 months

  • 81% of companies experience an ROI within the first 24 months

  • 28% experience faster reimbursements for employees

  • 28% increase insight into travel and entertainment spend

  • 24% increase frequency of expense reports being submitted by employees

As a finance leader, it could be well worth your time to find the right person, or people, on your team and pose the following seven questions:

1. When is the last time we did a thorough review of our T&E policies?
It may just be well time to review how and why your company manages T&E expenses. As your company grows, effectively managing these expenses while not frustrating employees becomes much more challenging.

2. What is the rate of compliance with our T&E travel policies?
Non-compliance can be costly in terms of hard dollar cost and can contribute to non-compliance with company policies well beyond those related to T&E expenses.

3. What are we doing to actively manage our T&E expenses?
T&E expenses can grow for many reasons. The ability to forecast and react to forces impacting T&E spend will save money, and help mitigate the variance between your company’s actual verses expected financial results.

4. How do we benchmark our T&E spend?
Benchmarking is a great way to assess if your travel expenses are in line with your competitors, and to determine if variances from reactive benchmarks make sense from a strategic perspective.

5. What is the average time it takes us to reimburse an employee once they submit an expense report?
There is no reason to frustrate your company travelers with long periods between when they submit an expense report to when they receive reimbursement. Lower reimbursement cycles lead to happier employees.

6. What is the current level of automation in our T&E process?
Advances in cloud-related technologies have changed the economics of automating manual processes. If your T&E management is primarily manual, there may well be cost-effective ways to save your company money and your employees’ frustration.

7. Are we using, or have we looked at a cloud-based T&E expense management solution?
If the answer is no, it is hard to argue it does not deserve 10 minutes of research to start, given the maturity of these systems and the benefits that companies of all sizes are realizing in managing a critical category of business expense.

The answers to these simple questions may just compel your company to invest in managing T&E expenses more effectively. T&E spending represents the second largest business expense to many companies, is difficult to manage, and impacts travelers and non-travelers across the enterprise. 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. Isn’t it worth 30 minutes or less of a CFO’s time to discover how to give T&E expense management its due?

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.