Expense Management: Principles and Practices

Transcription

1 Expense Management: Principles and Practices Mary Miklethun Senior Program Manager, Travel & Entertainment North America U.S. Bank Corporate Payment Systems Tammy Wissing Controller Concordia University, Nebraska 1

2 Current Expense Management Processes We are fully automated and use a single/ integrated system 24% We are fully automated but use disparate systems 3% We use a third-party outsourcing provider 3% Our process is entirely manual 42% We have some Automation 21% We are planning to implement an automated system in 6 months 7% Source: PayStream Advisors, Travel & Expense Management Benchmarking, Q

3 Challenges 45% 42% 29% 21% 18% 8% Manual data entry and inefficient processes Inability to enforce corporate travel policies Lack of visibility into spending Increase in overall T&E expenses High cost of processing expense reports Lengthy reimbursement cycles 3

4 Expense Management is Strategic Function Criticality of Expense Management over the Past 12 Months 2% 17% 42% Dropped lower in criticality Moderate criticality 39% Risen in prominence Just as critical as other internal functions Source: Aberdeen, Expense Management for a New Decade,

5 Adoption of Expense Automation Type of Expense Reporting, by Corporations, Fortune 500 Size Large Market * Electronic, pre-populated with travel card data Paper-based Other Type of Expense Reporting Electronic, not pre-populated with travel card data Travel card statement in place of expense report * In 2004 over definition for large and Middle market was different than in this study. In 2004, we defined the large (Middle) Market as competition points with annual sales revenue of $250 million to $1,00 billion ($10 million to $240 million) Source: RPMG, 2011 Corporate Travel Card Benchmark Survey Results 5

6 Adoption of Expense Automation Type of Expense Reporting, Government and Not-for-Profit Entities, Middle Market Government and Not-for-Profit * Type of Expense Reporting Electronic, pre-populated with travel card data Paper-based Other Electronic, not pre-populated with travel card data Travel card statement in place of expense report * In 2004 over definition for large and Middle market was different than in this study. In 2004, we defined the large (Middle) Market as competition points with annual sales revenue of $250 million to $1,00 billion ($10 million to $240 million) Source: RPMG, 2011 Corporate Travel Card Benchmark Survey Results 6

7 Benefits of travel expense management Lower processing cost 56% Improved visibility over spend Better enforcement of travel policies Quicker reimbursement of employee expenses 53% 55% 55% Improved employee satisfaction 36% Better fraud detection and prevention ability 28% Increased card usage and rebates Better regulatory compliance 26% 25% Ability to negotiate discounts with vendors 18% Fewer late payment penalties and interests 8% Source: PayStream Advisors, Travel & Expense Management Benchmarking, Q

8 Cost Savings Breakdown of Processing Costs By Level of Automation Type of Company/Level of Automation Average Processing Cost Our process is entirely manual $22.15 We have some automation $18.67 We are fully automated $10.68 Source: PayStream Advisors, Travel & Expense Management Benchmarking, Q

9 Efficiency minutes minutes Electronic Expense Reports, Pre- Populated with Travel Card Data Paper-Based Expense Reports Time for traveler/cardholder to fill out an expense report Time for supervisors to review an expense report submitted Time for clerical employees to process and prepare an expense report for payment Clerical/accounting personnel to reimburse expense report and reconcile payment to bank data Source: RPMG, 2011 Corporate Travel Card Benchmark Survey Results 9

10 Efficiency (cont d) Cycle Time Average number of days elapsed between the date an expense report is submitted and the date reimbursement is issued Paper-Based Expense Reports Electronic Expense Reports, Pre-Populated with Travel Card Data 14 days 8 days Cost and Quality Metrics Percent of expense reports that are processed without delay or correction 69% 78% the first time through Cost to process an expense report * $44 $20 *Based on a fully-loaded cost per hour of $35, representing the average pay rate of the employee-traveler, supervisor, clerical staff, and accountant involved in the reporting process. Source: RPMG, 2011 Corporate Travel Card Benchmark Survey Results 10

11 Administrative Cost Savings from Electronically Pre-populating Expense Reports with Card Data Fortune 500 Size Large Market 3,000,000 1,000,000 2,500, , ,000 2,000, , ,000 1,500, ,000 1,000, , , , , ,000 0 Paper-Based Processes Electronic Expense Reporting Pre-Populated with Travel Card Data 0 Paper-Based Processes Electronic Expense Reporting Pre-Populated with Travel Card Data Hours needed to process expense reports* Cost to process expense reports # Cost to process expense reports as a percent of travel budget Hours needed to process expense reports^ 11

12 Administrative Cost Savings from Electronically Pre-populating Expense Reports with Card Data Middle Market Government and Not-for-Profit 140, , , , , ,000 80,000 60, ,000 40, ,000 20, ,000 0 Paper-Based Processes Electronic Expense Reporting Pre-Populated with Travel Card Data 0 Paper-Based Processes Electronic Expense Reporting Pre-Populated with Travel Card Data Hours needed to process expense reports* Cost to process expense reports # Cost to process expense reports as a percent of travel budget Hours needed to process expense reports^ 12

13 Control & Visibility Demonstrated Benefits of automating TEM Visibility over spend Brings attention to trends (increasing travel costs, potential fraud) Allows organizations to benchmark against peers Makes long-range planning easier Improved travel policy compliance Prevents non-sanctioned travel spending before it happens Can save thousands per year in needless spending Source: PayStream Advisors, Travel & Expense Management Benchmarking, Q

14 Use of Commercial Cards Do not use card for T&E expenses 35% Use card for T&E expenses 65% Separate cards for procurement and T&E 49% Same cards for procurement and T&E 51% Source: PayStream Advisors, Travel & Expense Management Benchmarking, Q

15 Commercial Card Policy Card usage is mandatory, wherever suppliers accept them 33% Employees are encouraged to use cards, wherever possible, but not required to do so 46% No formal policy employees use cards at their discretion 21% Source: PayStream Advisors, Travel & Expense Management Benchmarking, Q

16 What to Look for in a TEM System Pre-population of expense reports with data from corporate credit card (eliminates need for data entry, reduces errors and fraud) Receipt image capture Allocation of expenses to appropriate cost centers Automated approval workflow notifications/reminders Electronic expense reimbursement Reporting on top vendors, compliance with policy, spending trends Ease of implementation Reasonable Cost 16

17 Commonly Adopted Features Which of the Following Features of the Automated T&E Solution Do you Currently Use or are Planning to Use? Currently Using Planning in 6 Months Electronic reimbursement of expenses 68% 2% Automated workflow for approval of expenses 63% 5% Integration with AP and financial systems 58% 8% Reporting and analysis capabilities 56% 10% Imaging/faxing of expense receipts 52% 8% Offline access to expense reports 26% 5% Integration with online booking tools 24% 12% Pre-trip authorization 23% 3% Ability to use PDAs/mobile phones for approval 17% 17% Hotel e-folio data integration 16% 11% Source: PayStream Advisors, Travel & Expense Management Benchmarking, Q

18 A Little Bit About Concordia University Nebraska Founded 1894 by Lutheran Church-Missouri Synod Main campus is 25 miles from Lincoln 2200 students from 43 states, several countries Ranked in the top tier of U.S. News and World Report's Midwest Regional Colleges rankings 18

19 Concordia s T&E Process Entirely Manual in 2004 Budget owners not monitoring spending Difficult to enforce our travel policies Could take 2-3 weeks to reimburse employee Accounts Payable process was costly 19

20 Began Seeking Ways to Automate Our Expense Management Process Our Criteria: Cost Effective User Friendly Compatible with Banner Software Could be used in and out of the United States and accepted by most vendors 20

21 Began Seeking Ways to Automate Our Expense Management Process (con t.) Our Criteria: Capable of creating an expense report from within the system that was easy to read and understand Provide Cost Savings Capable of setting individual card limits/ non-sanctioned travel spending Automated allocation of expenses to appropriate cost centers 21

22 In 2004 We Chose U.S. Bank One Card Put Admissions Counselors on first By 2006 most of campus had transitioned 22

23 2009 though Happy with One Card We were Still Looking to Gain More Automation with Our T&E Process Began moving employees to another card which promised more automation New system not as user friendly as the U.S. Bank system we were used to Vendor required us to open a new bank account with vendor This added more work duties to the Accounts Payable office 23

24 In 2010 We Again Began Looking for a New Tool to Provide: Pre-population of expense reports notifications/reminders Automated approval workflow Receipt Image Capture 24

25 Became Part of Testing Group for New U.S. Bank Expense Management Tool Concordia University is now realizing: Lower processing costs Improved visibility over spending Better enforcement of travel policies Quicker reimbursement of employee expenses Improved employee satisfaction 25

26 Walk through of a T&E Transaction with the Expense Management System Card is ordered for all new employees and set with individual limits Employee uses the card during business travel for all expenses and also for purchasing supplies for the University Cardholder receives an each night listing any transactions that are incomplete and need their review Once the transaction is complete approving manager is sent an stating transactions are ready for their approval 26

27 Walk through of a T&E Transaction with the Expense Management System (con t.) At monthly closing period automatic lets cardholders know it is time to print their expense report and attach receipts Within 5-7 days from the period closing, accounting will perform a Flush Monthly Financials are generated Automatic payment for the total monthly spend is made on the 6 th of each month 27

28 Comments Received from Cardholders System is very easy to use I like being able to search through the available cost accounts Reports are easy to generate I love the reminders 28

29 Comments Received from Cardholders (con t.) I like that we don t have to wait 15 minutes to print off our expense reports if we make a change to an account or comment. The change is reflected right away and the report can be generated I love being able to approve right from within the reminder (Manager) Foreign currency is easy to match to receipts because the foreign currency amount is also listed with the USD amount on the expense reports 29

30 Comments Received from Cardholders (con t.) I like that the expense reports reflect the cost centers right on the face of the report and within the s to the approving manager I like that we can choose when we flush a period. If there is a holiday involved and we want to give the cardholders an extra day or two to get in the system and complete and approve, we determine the flush date (Administrator) 30

31 Where Concordia Wants to Go in Future Increased Card Usage and Rebates Negotiate Discounts with Vendors Spend Wizard Module Receipt Image Capture 31

32 What s Next? Mobile expense reporting is gaining traction Benefits include shorter processing time due to increased access to approve expense reports Potential concern that using mobile capabilities to approve expense reports will result in more cursory review Supplier optimism about mobile expense management outpaces that of buyers by 15-20% Source: The Wire from AirPlus, Expense on the Go February

33 Questions? 33

34 Thank You! Mary Miklethun U.S. Bank Tammy Wissing Concordia University, Nebraska 34