• Pablo Fernández

Turning expense management into asset (s)


This article was originally published by MATHIEU NEU.


The current context of economic uncertainty is prompting decision-makers to look at ways to reduce costs. Digitalising expense reports is one of these levers. It is also an opportunity to discover the other benefits of this modernisation.


The Covid-19 crisis seems to have given a boost to digital projects, mainly because of the savings and efficiencies they bring. But what about expense management? 74% of decision-makers believe that improving Travel & Expense management processes and tools is essential, according to a 2020 survey by Forrester for business travel specialist Amadeus.


While many companies are still using spreadsheets to track expenses, the pandemic could well accelerate the digitalisation of processes in this area.


Gilles d'Huiteau, CEO and founder of payment services provider C2A, is confident: "Remote payments and their convenience have led the way. Work habits have recently changed in many areas. It is very likely that executives will look more closely at the value of new technologies for expense management."

Volume of data

The transformation of practices through digital means is becoming all the more unavoidable as the volumes to be processed are putting a strain on cash flow.

Pierre Lahbabi, General Manager of payment provider Galitt, believes that "the effects of Covid-19 have made it possible to gain 3 to 4 years in terms of maturity in adopting the potential of technological innovations, such as contactless payments, which have now become the norm".


In this context, there is no doubt that the burden of processing expense reports without innovative tools is already causing practices to be questioned. Based on an analysis of payments extracted from its customer panel in 2019, the specialist in the field Traveldoo reveals that n expense report includes an average of 5.8 different expenses. In addition, there are an average of 34 expense reports per employee in a company every year. The volumes of data to be processed are therefore rapidly becoming considerable, with large numbers of staff.


In a study published in 2020, the business travel specialist Amadeus points out that 74% of travellers say that a poor payment experience can affect the quality of a trip. A majority of executives also say that expense management is a source of frustration for the traveller and concern for the executive team. This results in a degraded experience and dissatisfaction for the employee, which may well be the reason for the high rate (65%) of business travellers in the European Union who book outside of internally authorised channels, as highlighted in a 2018 survey by the GBTA association.


Frustrations

Digitalisation of expense management has the direct effect of increasing agility and saving time. When a payment is made, the employee sends a photo of the ticket corresponding to the expense, which allows the data to be integrated into the company's system without delay. The accounting entries are generated automatically, together with other essential information such as the VAT rate.


The management of VAT is " one of the difficulties that companies want to simplify", says Pierre Queinnec, president and founder of the expense management solutions publisher Jenji. " As some expenses are not subject to VAT recovery, the recovery work can be tedious. Here again, digitalisation makes the task considerably easier by automatically taking into account differences between types of expenditure or between countries." 80% of European companies do not systematically recover foreign VAT in the case of business travel. This negligence is the cause of significant losses. In Europe, they represent an annual amount of 2 billion euros out of a total of 7 to 8 billion euros concerned, according to VAT IT, a company specialising in European VAT refunds.


Such a technological shift also makes it possible to remove the obstacles linked to advance fees. The consultancy firm Axys Odyssey notes that these are still in force in almost 30% of companies, with the result that they are very cumbersome to manage. " It is incredible to realise that this practice is still so widespread in this age of innovative technologies", exclaims Gilles d'Huiteau. The centralisation of automated payments does not require any input by the employee and offers immediate feedback of expenditure data into the company's information systems.

More compliance and transparency

Jenji has recently launched a solution that can give an opinion on the level of travel-related costs by aggregating CSR data and other elements. " The aim is to be able to compare different schemes, such as the level of car mileage allowances, including parking costs, on the one hand, and the use of taxis on the other, both from a CSR and a financial perspective. A relevant choice in one area is not necessarily interesting in another area", illustrates Pierre Queinnec. This type of tool makes it possible to know whether a subsidiary is more virtuous than another, by establishing comparisons, within the framework of a roadmap to be respected on social or environmental commitments.


A digitalized approach thus makes it possible to gain in transparency and compliance with regulations. It becomes very easy to conduct audits of expense reports and to establish whether or not they are consistent with internal control or Urssaf obligations. It is also a tool to reduce unwanted behaviour such as spending with suppliers that is incompatible with purchasing policies.



Digital could also put an end to the endemic problem of expense fraud. Nearly 30% of employees admit to having inflated their business expenses, as revealed by a survey conducted by the accountancy platform Wity.fr. This subject is one of the main causes of the recovery procedures initiated by the Urssaf. In addition, there are expenses that are not in compliance due to simple errors.

Enhancing the value of mobility data

In order to highlight the economic interest of digitalisation, the payment solutions provider Airplus has evaluated the average cost of processing an expense report: it is 53 euros, and requires management time ranging from 40 minutes to one hour. In addition to the quantitative gains, the tools available offer advanced reimbursement policy settings. The management of authorised ceilings by type of expenditure, maximum amounts per zone or the possibility of payments given to a category of employees are other advantages.


By being linked to an activity, digital expense reports provide full visibility of the cost of a trip or a type of expense, thanks to dedicated dashboards. They therefore make it possible to better understand certain issues and problems and thus provide additional decision-making support. Many of the tools in this field also integrate time-saving functionalities such as multi-currency management, facilitating the accounting work to be done downstream.


At a time when the search for efficiency and cost reduction is of concern to all categories of companies, Pierre Queinnec is pleased to see that " these solutions are now accessible to smaller companies. They are less and less expensive. At the same time, there are large quantities of data that have never been used in organisations. This is an opportunity to put it to good use."

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