Imagine a company of 5000 to 7500 employees with revenue of USD $1 billion. Such a company can end up with travel expenses averaging as high as 7% of its total expenses1. If not managed effectively, this company could experience out of control costs, unapproved expenses and inconsistent travel policy compliance. For a CFO who is committed to strong corporate governance, this is not good news. And yet it doesn’t make sense to arbitrarily restrict company executives from strategic business travel simply because of the cost.
Are we likely to see more companies experiencing this dilemma? With the current prolonged economic turmoil, I strongly predict the answer is YES.
It’s true that the majority of midsize companies have travel and expense policies in place, but control, compliance management and analytics are now emerging as larger issues.
If we look at a typical travel and expense management system, you’ll find there are usually three broad components to it. The first is travel sourcing and management, which encompasses planning and booking travel. Next you have activities related to purchasing travel, including transportation and accommodations. The third component is post-trip activities, such as creating and submitting expense reports, approval and auditing, reimbursing employees, and travel management reports.
So the question then becomes: How can we get better control of expense data? And how can we put the data to work for us? Using a single application that automatically pre-populates information, you ensure the quality of the data from the outset. By taking this expense data and breaking it down into granular pieces, you can obtain detailed information about your users. Better auditing capabilities can help safeguard company assets and revenue. Ideally a provider will have a large client base that enables you to leverage its vendor relationships and negotiate significant discounts. This multilayered approach can typically reduce your operating costs by up to 60% to 75% and deliver significant and ongoing reductions in related spend. Because this kind of expense reporting software can be accessed online and by mobile devices, you also make the process faster and easier for your employees. In the end, not only are they more productive, they’re happier with the overall expense report submission process.
Today’s advanced analytics can play a crucial role in tracking, analyzing and integrating expense data across an organization. The right expense management solution can provide comprehensive analysis that helps identify and rectify gaps in vendor contracts and policies. Access to enterprise-wide spending trends and other types of information along with built-in policies and process drive enhanced business intelligence and increased data visibility. Not only that, with more efficient record management, help desk processing support, and application administration you can better protect your sensitive information, improve business controls, support adherence to compliance requirements, and in many cases, detect and prevent fraudulent expenses from occurring in the first place.
When it comes to global IT solutions most midsize companies need to start small and grow. A provider should have not only the analytics piece of it, but capabilities in place that offer scalable pay-as-you-use cloud and software-as-a-service (SaaS)-based options that are cost efficient. A top-tier provider will also be able to easily integrate a solution across your business and help you meet a wide variety of language, tax and geo-political requirements so your expense management system grows in tandem with your business.
Questions to consider:
- How do you build scalable expense management system in an organization?
- How do you integrate a single expense management system across geographic and geo-political boundaries?
- How do you obtain advanced analytics to help identify behaviors, trends and patterns that can improve your overall expense management process?
1Aberdeen Group report: “The Mid-Market Expense Management Program,” by Christopher J. Dwyer, Sept 2011, p2
Tags: CFO, CFO IBM, CFO India, Expense Management, Finance, Global expense management, IBM, IBM India
My name's Robert Parker, and I have been working with IBM India from April 2008 as a Vice President, Finance and Operations IBM India/South Asia. In my 23 years of career with IBM I had a wide range of financial positions within Australia, New Zealand and Japan.
Loading ...