Gaining Control, Unlocking Value in T&E Spending American Express/CFO study on managing T&E processes

Download Now

Gaining Control, Unlocking Value in T&E Spending

Travel and entertainment (T&E) processes can be a pain point for the CFO and the finance function. The pain appears in the form of pushback from employees who are testing the boundaries of compliance with T&E policies and processes, frustration from finance team members who are asked to process T&E submissions manually and across multiple systems, and concern from finance team leaders about what T&E management says about the efficiency of the finance function and the firm itself.

Gaining Control and Unlocking Value in T&E Spending, a new report by CFO Research in collaboration with American Express, argues that well-managed T&E processes can help prevent the pain and help the company save on its T&E spending, and provide data that helps better manage the business. The report, based on a survey of 317 senior finance executives, plus in-depth interviews, outlines three goals for managing T&E spending processes: managing complexity, using data, and pursuing process efficiencies.

Managing Complexity

Lack of oversight and control of T&E spending means that the CFO can’t know precisely whether value is being realized from T&E spending or not. A company’s payment methods are often adapted to the control processes a company has in place, the type of employee making the purchase, the kinds of technology available both to make purchases and process transactions, and the corporate culture.

Finance executives are well aware of the problem. In the survey, more than two-thirds (69%) of senior finance executives agreed that their companies would benefit from better control over T&E. Consolidating payment methods and streamlining reporting and payment processes can be important toward controlling T&E spending. A retail chain treasurer commented on the corporate card program his firm chose: “It really gives us a more controllable and mechanized asset for going through the expensing process … it is an opportunity to get more value out of [T&E], and better manage and control the process.”

Using Data

The sheer volume of data generated by T&E processes can be a barrier to its effective use. And the wide range of processes used in any one firm to pay T&E expenses can make it more difficult to gather data in compatible/comparable forms, analyze spending patterns, consolidate spending data to inform negotiation of discounts, and ultimately reduce spending. “Negotiating discounts with vendors and suppliers” and “Identifying opportunities to consolidate spending” were cited as the key savings opportunities not being realized by survey respondents. “Identifying spending patterns for use in business planning” was cited as a key strategic opportunity not being realized.

Mandating the use of a corporate credit card for all T&E spend is one option for organizing, consolidating, and streamlining payment methods and processes as well as providing better data to the CFO. Survey respondents and interviewees debated the advantages and disadvantages of mandated corporate card policies, but 65% agreed that mandating a corporate card program for T&E would help their company save money.

Pursuing Process Efficiencies

Disjointed T&E processes may not deliver maximum value because they require more manual intervention, raise the risk of introducing redundancies and errors, and can be more costly to operate. Many finance executives acknowledge the cost of continuing inefficient processes, writing survey comments such as “I would like the process to be simpler. It takes too long to input and categorize expenses.”

Survey respondents at companies that enforce T&E discipline by mandating the use of a corporate card were more than twice as likely as others to rate their processes as “excellent” in a number of key areas, including monitoring, control, and transaction processing. The CFO of a building products company described the benefits of technology-enabled T&E: “Anyone who is still submitting paper expense reports and receiving a paper check shouldn’t be.”

Conclusion

Well-managed T&E processes reflect a well-run finance function and a well-run company.

More efficient T&E management can make employees’ and CFOs’ lives better, help the company save on its T&E spending, and provide data that helps better manage the business.

For more information, download Gaining Control and Unlocking Value in T&E Spending.