How Do You Master Travel Expenses?
Anders Liu-Lindberg
Leading advisor to senior Finance and FP&A leaders on creating impact through business partnering | Interim | VP Finance | Business Finance
To kick off the Finance Master series we’ll start with a “light” topic like travel expense management. If you want to know why it’s not a light topic you can read the latest article from another finance professional Ernie Humphrey about why travel expenses can easily run out of your hands! Back on topic, the purpose of the Finance Master series is to review a wide range of topics related to the finance function’s finance capabilities and business capabilities and how to perform them efficiently and effectively. When it comes to travel expenses, Ernie has referenced situations where it can go wrong but here we will look at it from the positive side i.e. how to make this easy for the users and the finance function.
How should your travel expense system work?
The first principle you should follow is that it should be easy for the user. The more complicated it gets the less likely is it that the settlement will happen on time, with all receipts attached and in a correct manner. Yes, you can try to put all sorts of rules in place to achieve the same such as…
- …a time limit on when they must be completed
- …privately settled credit cards
- …having your employees pay expenses which cannot be substantiated with receipts
- …sanctions for late or erroneous completion
There are more rules you can put in place but as soon as you think about what rules to put in place you’re making a classic mistake. You think about what you and the finance department need to achieve rather than how it impacts your customers. It’s true that you have some requirements to fulfil for legal and statutory reasons but there’s a positive way to fulfil them rather than the negative rules-based one. This leads us to the second principle to follow. To make it easy for the user you need a system that has the following features.
- Matching of credit card statement with individual activities
- An app for photos of receipts on the spot
- The app should also support instant categorization of expenses into trips, meetings etc.
- Automatic mapping of chart of accounts and travel expenses
- If outside your ERP system (hello Cloud!) it should support automatic posting to your accounting system
If you follow these two principles you will find travel expenses management to be quite easy and your users will submit what they have on time, with fewer mistakes and less losses of receipts.
What do the real masters do?
You might think that above is nothing special and something that we’ve been talking about for years, however, in many companies it still doesn't work like that. Not five years ago, I was using Excel to do travel expense settlement with manual matching to credit card statements and manual postings to the accounting system. Not to mention the painful scanning of all the receipts. We did away with all of it by implementing a cloud solution and everyone loved it. Like immediately! All you need to remember to get this done is that it needs to be easy for the user and that you need certain features to support the ease of use. Then you don’t need to think more about travel expense management as it’s not an area where you want to invest all your money. You just want to make sure it gets done. Of course, you can get systems that include analytics so you can better control your travel spend if that’s what you want but if the person approving the expenses does what (s)he’s supposed to do then no one will overspend for too long regardless.
You're the Master and your input is needed!
The Finance Master series is looking for your input as well. What advice do you have when it comes to travel expense management? What good practices would you recommend? Do you have a favorite system you use and want to share a recommendation? I encourage you to add it all in the commentary field and I will update the article as they tick in. If you disagree to some of the statements in this article what would you do instead? Finally, if you want to be a part of the Finance Master series then send me a message or write in the comment section with a topic you think you master.
This is the first installment in the new Finance Master series and you can read last week’s kick-off article here. Let me know what you think of it by liking, commenting and sharing so we can spread the Finance Master message to all finance professionals. You can follow me on Twitter for continuous updates about what’s happening in the finance function.
I encourage you to take a tour of my old posts on finance transformation and not least “Introducing The Finance Transformation Nine Box” which is really that starting point for the transformation. Finally, you should join my Finance Business Partner Forum where we will continue to discuss this topic.
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Anders Liu-Lindberg is the Head of Global Finance PMO for Maersk Transport & Logistics and is working with the transformation of Finance and business daily. I have participated in several transformation processes such as a (business) finance transformation at Maersk Line, going Beyond Budgeting at Maersk Drilling and transformed a finance team from Bean-counters to Business Partners. I would love the chance to collaborate with you on your own transformation processes to help you stay out of disruption. Don’t be shy! Let’s get in touch and start helping each other.
Vice President Controlling Industrial Region Americas
5 年I agree that it is very important to find a user friendly solution however, I can also understand it is hard to get the investment. We can always argue about efficiency but if one transaction costs as much as one ECR, then we have to think differently. With a lot of accounting and other shared service functions in low cost countries, the cost per transaction has to come down for systems like Concur. From an internal control perspective, using technology is great. Savings can be found by centralizing the analysis. In this way it could justify the higher transaction costs.
Owner BKS Consulting B.V.
6 年We are using Concur. But there are advanced ways of using Concur we are looking into. This will reduce the manual effort of doing your expenses. But Concur is the technology piece of it. It also involves change management since People have to do their expenses differently. The accounting behind it will become easier if people adopt the new way of working. Last but not least also you really need to look at the T&E process as such and see how this can be optimized. Important here is to evaluate which activities in the process can and should be eliminated.