Business travel often involves significant expenses for companies. Moreover, traditional methods of managing travel expenses can lead to cost inflation and errors in reporting.
Therefore, astute CFOs must find ways to optimize travel management. This includes finding solutions that reduce costs while also ensuring employee satisfaction. Fortunately, an employee travel management system helps CFOs lessen the effort required to streamline travel expenses. Moreover, it increases their bandwidth to focus on other critical tasks, such as forecasting.
The travel management system helps make the CFOs life easy in the following ways.
1. Reduces Costs
According to J.P. Morgan, T&E is the second-highest operating expense after payroll. For the same reason, one of the biggest challenges a CFO faces is having control over travel costs.
Negative results of not following the budget include reduced profitability, compliance risks, impact on decision-making, etc. Therefore, it’s crucial to apply cost-control measures to ensure that you manage business travel expenses effectively.
An employee travel management system helps in reducing costs in the following ways:
Centralizing Bookings: Centralizing travel booking allows you to view all travel bookings on a single dashboard. Hence, making it easier for organizations to reconcile, allocate, track, and audit expenses.
Moreover, the dashboard enables CFOs to gain greater visibility and control over their company’s travel expenses.
Offering incentive program: The travel management software has an in-built incentive program feature. This program rewards employees for choosing cost-efficient options when booking travel.
For example, you may provide a fixed amount or a percentage of the savings to employees when they choose more affordable travel packages.
Increasing productivity of employees by automation: Automation reduces the burden of manual and repetitive work on employees. This leads to an increase in productivity.
As a result, there is a lesser need for additional human resources. Moreover, productive employees make fewer errors which indirectly saves money.
2. Ensures Compliance with Travel Expense Policies
One of the major pain points for a CFO is ensuring that travel expense claims comply with the company’s policy. Employees submit out-of-policy expenses due to several reasons. They may not understand the policy or forget the scope of reimbursable expenses. Additionally, unclear communication of policy updates can also lead to non-compliance.
This causes an extra burden for the CFO and finance team as they have to verify all expenses closely to check for compliance and other errors. Not only is this process time-consuming, but it takes away resources from other important financial tasks.
To solve this problem, companies can use an travel management system. This system integrates with the company’s T&E policies. Therefore, if an employee submits an out-of-policy expense, the system flags it automatically.
Moreover, the system reflects policy updates in real-time. So, employees can view these updates while submitting expense reports. This encourages them to abide by the policies. As a result, automatic policy check saves the finance team a lot of time and effort.
3. Improves Travel Receipt Management
Receipts are important in maintaining a proper record of a company’s expenses. It serves as evidence of expenses in case you need to prove them in case of an IRS tax audit.
Lack of receipts can increase your tax liability and also lead to fines. Further, it leads to doubts about the credibility of the financial data provided by the company to the IRS. However, managing paper receipts is difficult as they can get lost or misplaced.
To manage travel receipts properly, companies can opt for an employee travel management system. It allows employees to capture and upload receipts on the go. Next, the software saves those receipts on the cloud.
Saving receipts online benefits the company as they can access them anywhere and anytime. Further, it becomes easier for CFOs to find a receipt in just a few clicks. You can search a receipt based on the category/date of expense, employee name, etc.
Needless to say, online receipt management greatly reduces the time and effort spent on tracking expenses.
4. Expedites Travel Reimbursement
CFOs are responsible for reimbursing employees in a timely manner. However, when T&E is disorganized, it can cause delays in employee reimbursement. These delays can lead to lesser employee satisfaction, lower productivity, and a strained relationship between employees and the organization.
Furthermore, Forbes states that delays in reimbursements cause cash flow problems for 40% of employees.
To tackle this challenge, companies can use travel management software. It helps in speeding up the reimbursement process in the following ways:
- Employees capture and upload the receipt of their travel expenses
- Next, they file the expense report in a few clicks
- The software auto-verifies the expenses
- The report is forwarded to the approver, who is notified
- The approver approves or rejects the expense in just one click
- The report is sent to the finance department
- The finance team processes the payment and transfers the amount to the employee’s bank account
This process is simpler and more streamlined, taking just a few hours compared to 5-7 days with the traditional method.
5. Enhances Spend Visibility
Effective financial monitoring plays a vital role in the success of any company. CFOs that know where their travel funds are going can make better financial decisions.
However, manual processes of tracking travel expenses are inefficient. Even a small error in tracking data can cost the company heavily. Moreover, a lack of visibility can result in teams exceeding budgets, making unnecessary purchases, and causing cost leakages.
To increase the visibility of travel spending, companies can opt for an employee travel management system. This system allows CFOs to access travel expense data in real-time. This data can aid in identifying areas of excessive and unusual spending.
Further, the data enables you to explore areas of renegotiating terms with vendors for better pricing. This leads to finding cost-saving opportunities. Ultimately, deeper spending visibility allows you to take control of your budget and redistribute your funds in a better way.
6. Enables Data-Driven Decisions
Businesses collect vast amounts of travel data. However, the real value lies in interpreting the data and understanding its impact on financial outcomes. Without the ability to identify key trends in financial data, decision-making becomes less informed. This can cause adverse effects on the business.
To make strategic decisions, CFOs can use travel management software. It comes with built-in analytics that help you identify weaknesses in your travel program and tells you ways to improve it.
Travel analytics provides you with insights such as last-minute bookings, out-of-policy bookings, etc. This enables you to take preventative actions at the right time.
Overall, adopting travel management software can empower CFOs with actionable insights to optimize business travel management and expenses.
7. Tracks Mileage Accurately
Many employers provide mileage reimbursement to their employees to cover transportation expenses. To do this, businesses must keep an accurate record of the miles driven by employees. However, many companies use just odometer readings to reimburse employees.
This method has many drawbacks. Firstly, the IRS can impose fines if they find errors in the mileage record. Secondly, estimations make it difficult to know how much an employee actually traveled for business purposes.
Therefore, it’s crucial to invest in a mileage-tracking application. A travel management software solution that integrates with GPS solves this problem. The employee can start and end the trip, and the application calculates the time, location, and distance traveled. Accurate mileage tracking allows companies to optimize routes and reimburse employees correctly.
8. Reduces Travel Expense Fraud
Expense fraud occurs when employees deliberately claim false expenses. According to the Association of Certified Fraud Examiners, such activities comprise 21% of fraud cases in small businesses and 11% in large businesses.
Expense fraud often goes unnoticed because the amounts involved may appear insignificant. However, the combined number can majorly impact a business’s financial well-being. Some types of expense fraud include claiming fictitious, duplicate, or inflated expenses.
Companies that verify travel expenses manually often struggle with preventing expense fraud. To effectively prevent fraud, you can automate fraud detection using an employee travel management software.
The system promptly detects and flags false expense claims on submission of an expense report. At the same time, it notifies the approver, enabling them to take proper action. Furthermore, you can enforce penalties to deter employees from committing expense fraud in the future.
9. Streamlines Credit Card Reconciliation
Credit card reconciliation is a crucial process for businesses to ensure the accuracy of their financial reporting. Without proper reconciliation, companies may risk errors and even legal issues.
Credit card reconciliation is usually done manually, where accountants compare credit card statements with accounting logs. However, this process can be time-consuming, error-prone, and requires much effort.
Fortunately, with travel management software, credit card reconciliation becomes more efficient. The software matches all receipts and bank statements in a few clicks. This streamlines the process and reduces the burden on the CFO.
Leverage an Employee Travel Management System to Streamline T&E
An employee travel management system can be a smart investment for CFOs looking to improve their finances.
ITILITE is an advanced corporate travel management software solution that can help you streamline your T&E. It enables fraud detection and auto-verifies expense reports. Moreover, you get access to advanced analytics so that you can make better decisions.
To experience all benefits, book a demo now.
