Leading trends in travel and entertainment expense management: The finance professionals guide to reporting best practices for 2016

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2016 Leading Trends in T&E Expense ManagementJANUARY 28, 2016

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Learning Objectives

T&E expense spending benchmarks by category and average amount

Common expense management headaches and expected benefits

The factors and estimated costs to process an individual expense

report

Types of systems and processes currently used for expense

management

What it takes to achieve a return on investment with a new system

After attending this event you will understand:

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• Today’s event will be recorded and all attendees will be kept in listen-only mode to eliminate excessive background noise.

• Links to today’s presentation and the recording of this webinar will be sent out to all attendees within 24 hours of the event.

• Please ask questions on today’s topic via the “Questions” box in your GoToWebinar control panel at any time during the event. We will do our best to get to your questions during the Q&A/panel discussion at the end of the event. If we do not get to your question, we will follow up with you directly.

Webinar Learning Objectives

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360 Thought Leadership Consulting helps companies define and unlock the strategic value of their thought leadership programs. Formerly, Ernie served as Vice President, Educational Programs for Proformative, as the Director of Treasury Services and as a Director of the Corporate Treasurers Council for the Association for Financial Professionals.

Ernie HumphreyChief Executive Officer

Featured Speaker

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• Industry-leading with first fully automated expense system

• 64 languages, 140+ currencies, clients in 80 countries

• #1 highest rated expense management software for user satisfaction on G2 Crowd

• Over 30 million expense transactions in 2015• Processing over $10+ billion/year in expense

reports

About Certify

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T&E Spending Trends

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T&E Spending is Substantial

$1.25tU.S. business travel

spending 2015(estimate: GBTA 2015)

$310b

global business travel spending 2015

INTERNATIONAL DOMESTIC

$2,502 $1,002

Average base cost per business trip for air, hotel and car rental

(Travel Leaders Corporate 2015)

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25% of all U.S. companies spend $1

million or more on annual T&E expenses

(PayStream Advisors 2015)

Series1

of total annual budget for T&E(Aberdeen Group 2014)

10-12%

Business Investment in T&E

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Total Respondents: 508 companies (non-Certify clients)

Audience: • 24% Small business: less than 100 employees• 49% Mid-sized business: 101 – 999 employees• 27% Large business: 1,000+ employees

Demographics:• 46% Director-level or above with expense reporting responsibility (CEO,

CFO, etc.)• 45% Manager, controller or accountant• 9% Other (accounting staff, consultant, administrative, etc.)

Fourth Annual Expense Management Trends SurveyConducted in December 2015

About the Data

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MEALS

AIRFARE

MISC.LODGING

GAS

CELL PHONE

CAR RENTAL

GROCERIES

SUPPLIESTAXI

TOLLSSHIPPING

PARKING

1. Meals 19%

2. Airfare 17%

3. Misc. 17%

4. Lodging14%

5. Gas 11%

6. Cell Phone 5%

7. Car Rental 5%

8. Groceries 5%

9. Supplies 5%

10.Taxi 3%

11.Shipping 2%

12.Tolls 1%

13.Parking 1%

Reference: Certify’s SpendSmart™ Report, Q4 2016

How the Expense Budget is Spent

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Category 2014 2015 Difference

Meals $25.67 $26.06 +1.52%

Airfare $345.21 $274.00 –20.62%

Lodging $213.90 $223.45 +4.64%

Car Rental $193.58 $186.45 –3.68%

Taxi $31.81 $31.82 +0.03%

Gas $40.41 $30.32 –24.96%

Parking $32.70 $32.23 – 1.43%

Cell Phone $89.30 $92.24 +3.29%

Reference: Certify’s SpendSmart Report, 2014-2015

Category 2014 2015 Difference

Meals $25.67 $26.06 +1.52%

Airfare $345.21 $274.00 –20.62%

Lodging $213.90 $223.45 +4.64%

Car Rental $193.58 $186.45 –3.68%

Taxi $31.81 $31.82 +0.03%

Gas $40.41 $30.32 –24.96%

Parking $32.70 $32.23 – 1.43%

Cell Phone $89.30 $92.24 +3.29%

Benchmark Spending by Category

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Meal Category Average Expense 2015 GSA Per Diem Tier 1

Breakfast $12.33 $17

Lunch $21.56 $18

Dinner $25.06 $34

Total Per Day $58.95 $74*

*includes $5 for incidental expenses

Reference: Certify’s SpendSmart™ Report, Q4 2016 | http://www.gsa.gov/portal/content/101518

Benchmark Spending for Meals

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Expense Category Spending Limits

How companies set T&E policy maximums for meals, hotel and airfare:

25%

25%24%

20%

6%

We do not have expense category limits

Based on internal historical spending

Follow U.S. GSA per diem rate guidelines

Determined by annual budgeting process

Other

Reference: Certify’s Annual Travel & Expense Management Survey 2016

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Expense Management Practices

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a) Paper-based/spreadsheetsb) ERP system (Oracle, Microsoft

Dynamics, etc.)c) Web-based software (Certify, Concur,

etc.)d) Not applicable

How does your organization currently manage its T&E spend?

POLLING QUESTION 1

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Methods for Managing T&E Reporting

The mix of expense management systems remains consistent:

Reference: Certify’s Annual Travel & Expense Management Survey 2013-2016

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37%

37%

9%4%

13%

Web-based solution (Concur, IBM, etc.)Microsoft Excel/spreadsheetsPen and paperHomegrown solutionERP/accounting package (Oracle, SAP, etc.)

T&E Systems by Company Size

MANUAL SYSTEM USAGE70% small businesses

26% enterprise

22%

55%

10%

5%8%

37%

37%

9%

4%

13%

46%

16%

4%

6%

28%

SMALLBUSINESS

MID-SIZEBUSINESS ENTERPRISE


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Integrated Efficiencies

System Integrations Currently Used

GENERAL LEDGER

ACCOUNTS PAYABLE

CREDIT CARD

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

67%

61%

77%

Web-based


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Travel Booking Systems

A COMBINATION OF ABOVE

A TRAVEL AGENCY

CORPORATE TRAVEL SOFTWARE

ONLINE TRAVEL SITES

0% 10% 20% 30% 40% 50% 60%

43%

22%

15%

20%

29%

15%

5%

51%

Manual Web-based


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a) We have no formal T&E policy b) Manual review processc) Automated system that flags

violationsd) Policy is not enforced

How does your organization enforce compliance with T&E policies?

POLLING QUESTION 2

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Corporate T&E Policy

85%of companies indicatethey have a T&E policy

73%of those companies

are manually reviewing

for policy violations

Manual policy review is inefficient, prone to error and fraud


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0%5%

10%15%20%25%30%35%40%45%

6%

31%

42%

20%26%

Enforcing T&E Policy Compliance

Methods Used to Enforce Policy Compliance

52% of companies on a web-based system


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Why Policy Enforcement Matters

$35,000 for a dozen cases of wine

$25,000 house rental for one day

$20,000 private plane rental

$18,000 night out in Las Vegas

$4,000 for one bottle of champagne

Reference: Certify Craziest Expenses Survey 2015 (non-customers)

Top 5 Highest Expense Amounts of 2015

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Improving T&E Expense Reporting

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Expense Management Automation

• Cost savings: reduce costs in time and materials required to process expense reports

• Process efficiency: eliminate data entry and errors, improve administrative reporting

• Increased productivity: mobile and cloud-based accessibility simplify expense management

• Policy compliance: integrate company T&E policies and spending controls

Why do best-in-class companies turn to automation?

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Improving Expense Management

Are you planning to switch or currently in the process of evaluating vendors for a new web-

based system?

62% of all companies planning to make the switch will do so in the next 12 months

37%SMALL

BUSINESS

46%MIDSIZED

COMPANIES

53%ENTERPRISE


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Driving Force Behind the Switch

Integrate multiple finance & HR systems into one system

Increase frequency of expense reports being submitted

Reimburse employees faster

Improve employee compliance rates to corporate travel policies

Gain reporting and analytics around T&E spend

Provide expense system accessibly from anywhere (online, mobile)

Simplifying the expense reporting process for employees and managers

0% 10% 20% 30% 40% 50% 60% 70%

14%

14%

25%

28%

32%

40%

66%


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Leading frustrations for T&E program administrators:


Top Expense Management Pain Points

50% employees

losing receipts

45% employee’s failureto submit reports

on time

38% time it takes to

reconcile, reviewand approve

30% reviewing for

policy violations

28% errors on

the report

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Key Areas of Improvement for 2016

Process improvements top the list:

Systems and data integration

Mobility/mobile access

Travel booking

Transparency/visibility into reporting data

Expense management process

0% 5% 10% 15% 20% 25% 30% 35% 40%

9%

10%

11%

21%

37%


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Must-Have Expense Reporting Features

Automation: Expense report creation, workflow process and approvals, direct credit card feeds

Mobile Applications: Smartphone-enabled receipt image capture, mobile report creation and approval, and policy tools

Reporting: Complete visibility into process and spending by category, department, employee

Compliance: Duplicate receipts/expenses, category spending limits, automatic notification of violations

Integration: Accounting software, general ledger, HRIS, CRM, ERP, ACH direct deposit

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Achieving Return on Investment

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a) Under $7 per reportb) $10−$20 per reportc) $25 or more per reportd) We do not track these costs

What is the average cost to process a single expense report at your organization?

POLLING QUESTION 3

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Average cost to process a single expense report:

$6.85fully

automated

$17.31 semi-

automated

$26.63

manual

(PayStream Advisors)

28%

19%

5%

48%

Under $7 per report $10−$20 per report$25 or more per report We do not track these costs


Expense Reporting Costs

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• Hard costs for paper, printing and postage

• Hours to create, review and approve reports

• Time required for reconciliation and reimbursement

• Storage fees to archive expense reports • Lost productivity

$$$Hidden Costs of a Manual System

Reducing processing costs is the #1 T&E improvement for 48% of all best-in-class companies (Aberdeen Group)

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2015 Expense Trends Survey

2016 Expense Trends Survey

Average Time to ROI is Improving

Reference: Certify’s Annual Travel & Expense Management Survey, 2015 & 2016

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How ROI is AchievedWhat are the ways you’ve achieved ROI on your

new expense management system?58% 53%

33%26% 22% 22%


58% 53%

33%26% 22% 22%

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Benefits of Investing in Automation

Actual benefits of using a web-based system surpass expectation in every category


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Unexpected ResultsWeb-based expense systems and data are being leveraged for other business functions:

% o

f com

pani

es re

porti

ng

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Annual budgeting and planning: 44%

Auditing: 43%

Invoicing and payments: 39%

Regular forecasting (monthly, quarterly, etc.): 28%

Financial reporting (Sarbanes-Oxley, SEC, etc.): 25%


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Closing Thoughts

1. When is the last time we did a thorough review of our T&E policies?As your company grows, effectively managing T&E expenses while keeping employee

frustration to a minimum becomes much more challenging.

2. What is the rate of compliance with our T&E travel policies?Non-compliance can be costly in terms of hard dollar cost and can contribute to non-

compliance with company policies well beyond those related to T&E expenses.

3. What are we doing to actively manage our T&E expenses?The ability to forecast and react to forces impacting T&E spend will save money, and help mitigate the variance between your company’s actual verses expected financial results.

4. How do we benchmark our T&E spend?Benchmarking is a great way to assess if your travel expenses are in line with your

competitors, and to determine if variances from reactive benchmarks make sense from a strategic perspective.

Considering what you just learned in this presentation, ask yourself the following:

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Closing Thoughts (cont’d)

5. What is the average time it takes to reimburse an employee once they submit an expense report ?

There is no reason to frustrate company travelers with long reimbursement. Faster reimbursement cycles leads to happier employees.

6. What is the current level of automation in our T&E process?Advances in cloud-related technologies have changed the economics of automating

manual processes. If your T&E management is primarily manual, there may well be cost-effective ways to upgrade systems.

7. Are we using, or have we looked at a cloud-based T&E expense management solution?If the answer is no, it is hard to argue it does not deserve 10 minutes of research to start,

given the maturity of these systems and the benefits that companies of all sizes are realizing in managing a critical category of business expense.

Considering the information in this presentation, ask yourself the following:

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Q & A

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Thank You