Travel and expense spending can account for a significant chunk of most businesses operational costs. It’s estimated that businesses spend as much as 10 percent of their total budget on T&E, which makes it extremely important when it comes to strategizing, planning, and setting spending objectives.
The goal of T&E budgeting should be to ensure that costs are as low as possible, without sacrificing. Most organizations also want to focus on efficiency with regard to T&E.
Despite the best intentions, it’s tough to control costs of T&E, and there’s a lot of difficulty in even bringing together relevant data in a centralized way to see where there’s the potential to lower those costs.
So how can organizations be strategic with their spending in this area?
Centralize Everything with Expense Management Software
The best thing a business can do when it comes to controlling T&E spending and being more strategic in this area is to have the right technology in place. Streamlined, modern and user-friendly expense management software should be a top priority, and it should have mobile expense capabilities tied in as well.
With the right technology, businesses can bring together all the data that was at one point scattered in different places, and start to see patterns and trends. That data can be used to drive strategic decision making because it’s much more accessible than it would be otherwise.
Centralized visibility is essential when it comes to changing how your business handles T&E spending, sets budgets and controls costs.
One of the reasons it’s difficult to control costs that relate to T&E and to strategically plan in this area is because so much of it is left up to employees, and they’re not always compliant. Even when an organization has a strong T&E policy in place, employees might not be well-trained on the specifics, or there may be a culture of non-compliance. Whether purposeful or inadvertent, non-compliance is expensive.
To stop excessive costs and the lack of control associated with non-compliance, businesses should think about automating as much of the process as possible. By automation T&E reporting, there are far fewer opportunities for non-compliance. It’s also easier for administrators to see where there are red flags much earlier on, and be proactive in putting a stop to the problem before it becomes much larger.
Link Spending To Business Outcomes
With pretty much any other area in a business, there’s a big focus on ROI. Business leaders want to see why spending on X led to the results it did regarding Y. For whatever reason, this isn’t the case with T&E spending.
Whenever possible travel and expense spending should be linked to clear, specific and measurable outcomes. It’s so important when building a T&E strategy that’s effective and controls costs to be able to see how the money that was spent impacted the bottom line of the company.
Finally, remember that how you manage T&E compliance is going to have an impact on your employees. Think of T&E strategies as part of your overall talent management strategy. You want employees to feel like the process is one that’s efficient, and you don’t want them to feel frustrated or like their ability to be productive are impacted by the processes they have to follow in this area. For example, employees who have to follow complex procedures to submit an expense report or who have to wait long periods to receive reimbursements are going to be less engaged and productive in general.