Travel and expense (T&E) management can be challenging for any business, regardless of industry or size. For many companies, the most common obstacles revolve around compiling, processing, and reconciling expenses.
Travel and related expenses represent a significant chunk of a company’s budget. In a recent Navan survey, tracking travel and entertainment was listed as the largest operational headache.
Getting relief from that headache is critical, especially considering that travel is essential to growth for many industries.
When businesses manually manage travel and expenses, there’s a higher chance for human error and a potential increase in the likelihood of expense fraud, among other issues.
Automating processes can solve these travel- and expense-related pain points. Specialised travel and expense software can provide that automation and enhance a business’s ability to scale and open up time for your accounting team to focus on more critical tasks.
Continue reading to understand the common travel and expense challenges businesses of all sizes face.
As small- and medium-sized businesses grow, corporate travel and expense management becomes increasingly complex. Companies of this size may be at the stage where they have to embrace changes and adopt technology to optimise processes, reduce costs, and alleviate frustrations.
Some of the most common travel and expense difficulties for SMBs include:
Manual expense reporting is labour-intensive and prone to human error. The time it takes to reconcile the books can require many hours of manual labour from employees and managers on the accounts and finance teams.
These manual processes also open companies up to a greater potential for employee expense fraud. Often it stems from innocent mistakes, but it can also happen when employees fabricate expenses, overcharge company cards, or find other ways to get extra payouts. It’s important to limit opportunities for fraud or misspend.
In an effort to get a handle on their T&E programme — or lack thereof — growing companies may adopt technology that doesn’t integrate well with the organisation or that fails to provide the features they need to effectively manage their T&E processes.
One common error for small- and medium-sized businesses is to adopt disjointed systems as they grow. For example, a small business might use a travel management company to book and manage travel and a separate expense tracker app for employees to keep a record of expenses.
An all-in-one travel and expense solution enables companies to handle T&E programmes more effectively. Employees can book travel and document expenses in a single system, and administrators have a handle on the process — from the point of sale through reconciliation. There’s one contract to manage, one system to adopt, and one data source for all company spend.
When employees need to use their personal credit cards to make purchases, it places an unfair burden on them. And reimbursements that take longer than necessary can affect employee satisfaction and retention rates.
When using manual processes or outdated expense technology, delays in approvals or missing receipts can cause slow repayments. Managing the process and sending reminders to employees can only streamline the process so much. Adopting virtual corporate cards can reduce the time it takes to reimburse employees and improve the employee experience.
As companies expand and business needs change, policy compliance becomes more important. Policies also have to become more agile as the volume of expenses increases and the organisation becomes more complex.
Effectively creating and communicating a travel policy can solve many travel and expense management challenges, such as:
Policies should define approved travel expenses based on regulatory and compliance standards as well as your company budget.
A lack of policy is a challenge for everyone: travellers, administrators, and accounting and finance teams. But with travel and expense policies in place, employees will better understand what expenses are allowable, and accounting personnel will have the agency to enforce the rules and regulations.
Policies should be accessible and easy to understand. Unfortunately, many companies have complicated travel and expense policy rules that live in lengthy, static documents. This places a burden on both employees and administrators; employees cannot easily access the information, and administrators struggle with staying agile and communicating policy changes or updates.
Modern T&E software like Navan’s incorporates built-in policy controls that inform employees of policy rules as they book travel, which effectively eliminates out-of-policy spend. Administrators can tailor spend parameters based on role, expense category, business context, or other dimensions.
Large businesses and enterprises have bigger budgets and bigger challenges that often necessitate a travel and expense management system with robust capabilities. The sheer number of travelling employees can result in siloed expense information, a lack of visibility, and greater risks.
Some of the most prevalent challenges that impact large business’ T&E management include the following.
Data security is a primary concern for any business, and breaches can end up costing millions. Travelling employees must divulge their sensitive data — and if they are unaware of the risks when interacting with a system, they could make your business vulnerable.
Businesses must take all the necessary steps to strengthen their expense management systems and prevent potential breaches. While travel and expense management software will simplify your management process, it must also offer robust security options such as:
Employees who submit late expense reports could impact the quality and efficiency of the travel and expense management process. Using intuitive software to remind travelling employees will help with compliance and timely reporting.
Handling multiple physical receipts is frustrating and tedious for employees and increases the burden on accounting teams to collect and verify them. Travel and expense reports should include all relevant details, accompanied by original receipts.
Comprehensive travel and expense reports should consist of the following:
That’s a lot to track, especially for on-the-go employees. Automating travel and expense reporting reduces laborious work hours, allows for real-time monitoring, and streamlines the reporting process. Providing employees with “smart” corporate cards that automatically categorise and reconcile transaction details eliminates the need for labour-intensive and error-prone expense reports.
Spend visibility is essential for businesses to measure whether they are operating within their planned budgets. Quality data and reporting are critical for real-time decision-making in the fast-paced business world.
Forecasting budgets is impossible without knowledge of how employees are spending money. Lack of data visibility can cause financial teams to make unnecessary errors, such as creating duplicate reports and missing receipts — challenges that become more troublesome in larger businesses.
Many businesses still rely on spreadsheets or rudimentary expense trackers to categorise and keep track of travel expenses. Manual data entry increases the likelihood of human error, and these mistakes can affect the reporting and reimbursement processes. This has the potential to harm future budgeting and lower employee satisfaction rates.
With companies spending significant amounts of time and money correcting expense reports, it’s no surprise that companies are turning to expense automation to eliminate opportunities for human error and free up administrators’ time so they can engage in meaningful and productive work.
An expense process won’t work if there is any friction with the company’s business operations. This includes stitched-together travel, expense, or accounting solutions that do not integrate seamlessly. If the systems don’t mesh well, travel and expense management becomes a laborious, expensive, and error-prone endeavour.
A lack of system integration in travel and expense management software can result in increased costs, reduced efficiency, and increased risk for businesses. By implementing an integrated, all-in-one system, businesses can streamline their processes, improve visibility and control, and reduce the risk of fraud and non-compliance.
The approval management process is one of the most significant travel expense management challenges for businesses of all sizes. A manager or approver who validates expense claims is critical for accountability and transparency throughout your business.
The more convoluted the approval process, the longer it takes to reconcile expenses and reimburse employees. Typical issues that complicate the approval process include bottlenecks and approval overloads, siloed operations, and excessive approval levels. Standardising and automating the approval process is vital to ensure compliance throughout your organisation.
Larger organisations could be particularly susceptible to travel expense fraud. When tracking and verifying expenses is tedious and labour-intensive, the likelihood of administrators catching fraud attempts diminishes.
Watch for common fraud attempts like these:
Regardless of your business' size, corporate travel and expense management can take time and effort.
There are many simple and practical solutions to these challenges, such as:
Companies with many travelling employees must strike a delicate balance between cost savings and employee satisfaction. Automating travel and expense management is the answer. The additional efficiency relieves frustration for all employees and allows decision-makers more autonomy over their budgeting and management procedures.
For many businesses, the most complex problems include unclear travel policies, complicated approval processes, delayed reimbursements, and time-consuming management. Travel and expense management automation can relieve these challenges and many others. Some of the many benefits include the following:
Automated expense reporting frees your travellers and administrative teams from spreadsheets and physical receipts, reducing the likelihood of errors. With automation, paperwork is unnecessary — your expense management systems allow employees to capture receipts and other relevant data via mobile devices. They can upload everything directly to the expense application and provide the finance and administration teams with a complete view.
Human bias is also a possibility when validating or approving expenses. Automation is impartial, improving your system's transparency and levelling the playing field for all employees.
Modern T&E software can simplify the enforcement of travel expense policies across your organisation. Administrative and finance personnel no longer need to verify expenses one at a time, and out-of-policy costs are flagged for review or eliminated altogether at the point of sale.
Automated expense management systems are customisable to reflect your company’s unique travel policies and routinely alert administrators to unusual expenditures. The system automatically notifies approvers of violations as they happen, which means they can address compliance challenges and approve or reject expense requests in real time.
Expense fraud is easier to commit manually, and controlling these behaviours can become complicated, especially for larger organisations. Automating expense management processes is an excellent way to mitigate the effects of expense fraud. The system immediately picks up duplicate entries and notifies the appropriate parties so they can delete or merge the expense.
With an all-in-one travel and expense management solution and corporate card programme, you can set explicit travel parameters and stop deliberate expense fraud as well as accidental errors.
Inefficient workflows cause delayed reimbursements, which frustrates employees. Automating company workflows reduces the need for manual intervention, accelerates the reimbursement process, and ensures that employees will get their money back as quickly as possible.
A modern expense management solution like Navan allows administrators to build hyper-custom policies that proactively eliminate out-of-policy spend before it happens. Whether paying with cash or a personal credit card, employees can submit expenses in seconds and then be reimbursed in days. This process is lightning fast compared to traditional expense solutions, which typically use payroll to reimburse employees. It can take weeks before the money is back in employees’ pockets, which can cause unnecessary financial stress.
Keeping a close eye on company spend is imperative for long-term, measured success. But achieving a comprehensive view of spend requires a single source of truth. Cloud-based corporate travel and expense management solutions can integrate with existing systems and centralise spend monitoring, allowing administrators to comprehensively view company-wide expenses.
Using insights gleaned from high-quality, comprehensive data, finance teams can make real-time, informed decisions while monitoring cash flow. It’s easier to get a handle on the company’s financial performance, identify opportunities to improve, and better forecast where the business is headed.
Clear policy guidelines clarify the rules and reduce confusion for employees. This practice also levels the playing field: when everyone understands and follows the same policies, employees feel they are being treated fairly, which helps foster a positive company culture.
With the peace of mind that they’re adhering to the rules, some control over their decision-making, and an assurance of quick reimbursements, employees will be happier and more focused on their work.
With a single, automated system that takes care of travel and expense management, approvals, and reimbursements, companies can eliminate time-consuming and expensive manual processes. Administrators spend less time tracking expenditures and explaining rules to employees and can free up their time for more fruitful tasks.
Travel expense management can be complex and challenging, no matter the size of your business.
Navan provides the next generation of software designed with the user at its heart. Our all-in-one, mobile-first travel, corporate card, and expense management solution is here to solve every travel expense management challenge you might encounter. Navan's software allows you to book and manage business travel and expenses from one centralised hub, providing complete transparency from swipe to reconciliation.
Ready to streamline company spending and implement an all-in-one travel and expense management solution? Schedule a demo today to see how our spend solutions work.
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