All about travel expense management
Travel and expense management (T&E) is the process of collecting all travel-related expenses in order to not pay taxes on that amount. In most countries, business-related travel and entertainment costs, including flights, hotels, and ground transportation count as tax deductible expenditures.Whether or not food purchases are fully expensable depends on the country. In the US, food and beverages are 50% deductible, whether the expense is incurred during an event, a business trip, or a client dinner in your home city. Meanwhile, in the UK, food and beverages are fully tax deductible.While the rules may differ by country, one thing holds true: tracking all deductible employee expenses is essential for lowering a company’s tax liability. T&E software is designed to track these expenses for tax write-offs and financial analysis accurately. With the right data in place, businesses can benefit from greater financial visibility and make smarter budgetary decisions.Pain points of ineffective T&E processes
If your travel and expense management processes are inefficient, your employees will experience a lot of frustration. High processing costs and inefficient workflows are just some of the challenges facing small businesses without a travel expense management solution.Here are just a few of the obstacles that businesses face with travel expense management processes.A need for comprehensive guidelines
A key reason businesses face issues when managing travel expenses is that they lack a comprehensive travel policy. Without a policy that clearly outlines your guidelines on business travel expenses, including rules on accommodation, meals, entertainment expenses, and reimbursement processes, the entire process becomes unwieldy, expensive, and inefficient.Every company that engages in business travel needs a solid travel expense management policy to help eliminate any confusion over what is and isn’t covered, and how and when employees will be reimbursed.Lack of control and autonomy for travelers
The old-school way of T&E management was all about control. An office or travel manager would book all trips to control costs. But this frustrated travelers, stripping them of choice and often leading to an endless chain of emails.Nowadays, most corporate travelers book their travel arrangements online, but this presents its own challenges….Inaccurate T&E spend reports
Expense report processing is a costly exercise, especially when these processes need to be repeated due to inaccurate and/or late expense form submissions. Outdated, manual systems consist of slow and laborious submission workflows, as well as multiple opportunities for human error.Lack of real-time T&E cost tracking
Manual travel expense management processes prevent you from gleaning insights and data into your travel costs and expenses. Not only can this manually managed data be recorded inaccurately, but you also cannot access a higher level of visibility offered by digital platforms. When your expense processes are slow, your data collection is slow too. Without tracking expenses in real time, you can’t make informed business decisions or predict and plan for future travel costs. Plus, instances of expense fraud can easily go unnoticed.What an effective T&E management tool can provide
Using the latest travel and expense management solutions can revolutionize your company's corporate travel. A comprehensive tool will assist with:- Full visibility into real-time travel spending: With automated expense reports and consolidated travel booking, your finance team will have real-time expense tracking to help them better understand your travel program.
- Options and autonomy for travelers: By integrating company policies, a travel management solution empowers business travelers to choose their own trip options. No need for travelers to pay upfront: Big business travel purchases like airfares and rental cars shouldn’t require travelers to request a reimbursement. When booking on a business travel platform, the company can pay one monthly invoice and reduce admin for everyone.
- No need for travelers to fill out expense reports: The right expense management solution will automate T&E workflows. A mobile app can scan receipts so travelers don’t have to enter data into the expense management tool manually.
- Fast for office managers to collect invoices: When you consolidate your travel costs into one corporate travel management system, you receive just one invoice at the end of each month.
- Automated purchase reconciliation: Expense data from receipt scans and corporate credit card purchases should be automatically reconciled.
- Automated reimbursement approvals: Automate your company’s T&E policy with rules so that food or taxi purchases under a certain amount can be automatically reimbursed without needing approvers to review manually.
- Quicker reimbursement funds for travelers: Even with consolidated business travel booking, the odd per diem expense will still be generated on the road. But with an automated expense reimbursement process, your employees won't be left waiting.
The best systems for travel and expense management
To manage your travel expenses accurately, you need the right corporate travel and expense management software. An enterprise resource planning (ERP) solution that isn’t purpose-built for travel won’t cut it. In fact, you need two different programs that are fully integrated, a travel management platform and an expense management software.Travel management platform
You need a travel management platform to help you control company travel, without actually micromanaging anyone. A modern travel management platform allows you to create customizable travel policies that work at the time of booking. This is not just a static travel and expense policy document.A business travel platform also reduces manual work associated with business travel, because travelers can book for themselves and choose the options they want within policy. What’s more, there’s no need for reimbursements, as a business travel platform should consolidate spend into one monthly invoice for the finance team to pay.What to look for:- Great trip inventory
- Customizable travel policies and approvals
- Monthly invoice to consolidate payments
- High-quality customer support
- Insightful travel spend analytics and reporting
- Easy-to-use mobile app for travelers
Consumer-grade functionality to inspire greater policy compliance Travel and expense management that works like a dream
See how TravelPerk makes travel and expense management stress-freeExpense management platform
On the other hand, an expense management platform doesn’t actually help you purchase travel. Instead, it pulls all transactions from company credit cards into one place. It also securely stores your receipts and invoices for tax audits. And, expense management systems also provide complex analytics and simplify the reporting process.Make sure to choose a modern SaaS version that works in the cloud on any device. This way, employees can use their mobile phones to scan and upload receipts in real time.Some purchases require reimbursement. For example, if a traveler pays a local taxi company. Your expense management platform should help speed up reimbursement processes, and reduce manual work.What to look for:- Receipt scanning to reduce manual data entry
- Automated expense approval and reimbursement workflows
- Rules and automatic approvals for low-cost expenses
- Easy-to-use mobile app for employees
- Corporate card integrations and data importing
- Expense reporting and analytics
Let’s take a look at some of your options.3 Top travel expense management solutions
These travel expense management solutions help you get full visibility over your company spending and improve the employee experience for your traveling employees. It’s essential to consider your location, as different countries have different rules and regulations regarding various business expense categories. Here are our top three picks, each serving a different region.We caught up with Katharina Wodischeck from adsquare to hear her thoughts on Travel & Expense management.
How important do you think it is to have visibility on a company's travel expenses and why?"With having a clear visibility on travel expenses, a company is able to accurately track travel spends, and therefore budgeting and forecasting can be made more precisely.Beside that, the visibility gives the opportunity to analyze expenses by travel category, departments, and therefore helps streamlining the reporting process. And finally, having insights on the travel spend helps the company to create effective expense policies."In your opinion, what are the biggest challenges in managing T&E?"In my opinion, one of the biggest challenges is that too many businesses are still managing T&E using excel sheets and therefore wasting a lot of time for manual processes and reconciling receipts.That lack of visibility makes it difficult for finance teams to identify which employees incur what expenses. Another challenge I see are unclear T&E policies. This can lead to unexpected and unauthorized purchases and moreover to consequences in terms of cost control and overseeing travel budgets."What advice would you give to someone who's struggling with managing their company's travel expenses?"My advice would be to find a technical solution and therefore to automate the process as much as possible. It would make sense to capture all travel bookings and expenses in one system and enable all employees to manage travel bookings and expenses on their own according to the corporate travel policy."
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