Discovering the Strategic Gold of Effective T&E Expense Management

Windy City Summit

May 26, 2016

Presented By

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Ernie Humphrey, CTPChief Financial Officer

360 Thought Leadership Consulting

Ernie Humphrey currently serves as the CFO of

360 Thought Leadership Consulting. Ernie is a

proven strategy and financial professional with

15+ years of experience. He has diverse industry

knowledge as a seasoned corporate practitioner,

a leader at the largest association for financial

professionals (the Association for Financial

Professionals (AFP)), and as a driving force

behind the development of the largest online

community for senior level financial professionals

(Proformative). During his career he has

supported and delivered thought-leadership in the

arenas of finance, treasury, accounting, and

related disciplines. Ernie has demonstrated

success in building consensus, embracing

change, driving results through innovation,

business development, and community building.

Learning Objectives

• 2016’s leading technology, trends and best practices in travel and entertainment expense management

• The top system features companies are using to effectively manage T&E expenses across the enterprise

• How improving the T&E process at your company will positively impact the bottom line

• The ways excellence in T&E Management impacts productivity for employees on the road and at the office

Today’s presentation will help you understand:

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Today’s Agenda

• Why effective T&E expense management matters

• Approaches to improving expense reporting

• Proven strategies for effective T&E expense management

• Considerations when switching systems

• Closing thoughts and additional resources

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T&E Spending is Substantial

U.S. business travel

spending 2015Estimate: GBTA 2015

$310b$1.25tglobal business travel

spending 2015

INTERNATIONAL DOMESTIC

$2,502 $1,002

Average base cost per business trip

for air, hotel and car rentalTravel Leaders Corporate 2015

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25%of all U.S. companies

spend +$1MM on T&E

expenses annuallyPayStream Advisors 2015

of total annual budget Aberdeen Group 2015

6-8%

T&E Expenses: More than Relevant

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Why T&E Matters

• T&E expense report processing impacts all who travel on

company business; sales professionals to senior management

• Inefficient T&E expense report processing negatively impacts

employee productivity up and down the corporate ladder

• Ineffective T&E expense report processing and management

negatively impacts the bottom line

• Success in forecasting T&E expenses can translate into

improved earnings predictability

• Establishing an effective controls framework to tame T&E

expenses can be a template for expense management and

corporate governance across the enterprise

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With T&E expenses at 8% of total budget, how much is it costing

companies to process each report?

Average cost to process a single expense report:

$6.85fully automated

$17.31 semi-automated

$26.63manual

PayStream Advisors 2015

28%

19%

5%

48%

Under $7 per report

$10−$20 per report

$25 or more per report

We do not track these costs

Reference: Certify’s Annual Travel & Expense Management Survey 2016 9

Expense Reporting Costs

• 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

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Reducing processing costs is the #1 T&E improvement

for 48% of all best-in-class companies (Aberdeen Group 2015)

Hidden Costs of a Manual System

Leading frustrations for T&E program administrators:

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50% employees

losing receipts

45% employee’s failure

to submit reports

on time

38% time it takes to

reconcile, review

and approve

30% reviewing for

policy violations

28% errors on

the report

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

Top Expense Management Pain Points

To what degree are companies leveraging technology to address

pain points and inefficiencies?

Web-based solution (Concur, IBM, etc.)

Microsoft Excel/spreadsheets

Pen and paper

Homegrown solution

ERP/accounting package (Oracle, SAP, etc.)

T&E Systems by Company Size

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MANUAL SYSTEM USAGE

70% small businesses | 26% enterprise

22%

55%

10%

5%8%

37%

37%

9%

4%

13%

46%

16%

4%

6%

28%

SMALL

BUSINESS

MID-SIZE

BUSINESS ENTERPRISE

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

Improving Expense Management

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Are you planning to switch or currently in the process of

evaluating vendors for a new web-based system?

37%SMALL

BUSINESS

46%MIDSIZED

COMPANIES

53%ENTERPRISE

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

62% of all companies planning to make the

switch will do so in the next 12 months

Why are companies looking to automation?

Driving Force Behind the Switch

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25%

28%

32%

40%

66%

Reimburse employees faster

Improve employee compliance rates to corporatetravel policies

Gain reporting and analytics around T&E spend

Provide expense system accessibly fromanywhere (online, mobile)

Simplify the expense reporting process foremployees and managers

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

Expense Management Automation

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• 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 organizations turn to automation?

You Can’t Manage What You Can’t See

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• Spending: analyze company spend by expense

category, department, individual employee,

monthly reimbursements, etc.

• Compliance: review processed and in-progress

reports, policy violations, identify risk and

offenders, and improve company compliance rates

• Workflow: monitor people and process;

documented path of approvals ensure expenses

are reviewed/approved according to guidelines

Actionable insights into key spending and process metrics:

Why does T&E process automation matter?

With a more streamlined process, expense report automation increases employee productivity by 29%.

Aberdeen Group 2014

74% of companies that automate their expense management process achieve full ROI in one year or less.

Aberdeen Group 2014

Companies using web-based expense solutions dedicate 83% less funds to processing than with other methods. Certify Annual Travel & Expense Management Survey 2016

The must-have features for a T&E expense management solution

Must-Have Expense Reporting Features

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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

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

Integration: Accounting software, general ledger, HRIS, CRM,

ERP, ACH direct deposit

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

Corporate T&E Policy Compliance

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85%of all companies report

having a written

T&E policy in place

73%of those companies

are manually reviewing for policy violations

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

Manual policy review is inefficient,

prone to error and fraud

6%

31%

42%

20%

26%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

T&E policy is notenforced

Employee isresponsible

Manager manuallyreview each expense

Manager manuallyreview, checking onlyhigh value expenses

T&E systemautomatically flags

out-of-policyviolations

Enforce T&E Policy Compliance

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53% of companies on a

web-based system

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

Expense Report Fraud

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• Expense fraud accounted for nearly 14% of all occupational fraud

with a median loss of $30,000

• Businesses with fewer than 100 employees have a 28% higher

median fraud loss than those 100+

82%

Oversight Systems 2014

Association of Certified Fraud Examiners 2015

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How companies set T&E policy maximums and control meals,

hotel and airfare spending:

25%

25%24%

20%

6%

We do not have expense category limits

Based on internal historical spending

Follow U.S. GSA per diem rateguidelinesDetermined by annual budgeting process

Other

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

Expense Category Spending Limits

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Top 5 Highest Expense Amounts of 2015:

$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’s Craziest Expenses Survey 2015 (non-customers)

A Few Examples of Out of Bounds Expenses

The impact of an investment in improving T&E expense management

Best-in-class expense management practices deliver an 87% or greater compliance rate to T&E policies. Aberdeen Group 2015

Effective T&E expense management strategies

Effective T&E Strategies

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STRATEGIES OUTCOMES

Mobile Accessibility Reduce costs, simplify the reporting process, and improve productivity for employees and managers

Systems Integration Streamline data entry, reduce errors and improve efficiencies in backend processing functions

Automated Controls Automate policy enforcement, streamline workflow process and control spending

Reporting Visibility Leverage real-time access to detailed spending metrics and key workflow analytics

Simplify the Reporting Process

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• Optical character recognition/auto-fill: snap photos

of receipts, automatically parse data into reports

• Mobile report creation: build expense reports from

the road as receipts are captured and saved

• Remote approvals: managers can review and

approve reports from any location to reduce delays

Mobile OCR and AutoFill

Mobile lowers processing costs by 65%,

improves reimbursement rate 40% (Aberdeen Group)

Top mobile features for greater efficiency:

Integrations: the Key to Efficiency

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Expense

• Accounting systems: automate key accounting

functions and streamline workflow

• Corporate credit cards: direct control over

employee spending, faster reconciliation

• Corporate systems: reduce data entry and

errors across multiple redundant systems

• ACH reimbursement: direct deposit for more efficient reimbursement, simplified accounting

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• Make policy automatic: apply built-in spending caps,

reporting requirements (meal attendees, receipts, etc.),

vendor preferences, and more for better compliance

• Eliminate duplicate receipts/expenses: automatic

system reviews identify duplicate expenses, flag out-of-

policy expenses, reduce fraud, and save money

• Seamless travel booking: integrated travel booking

ensures best rates and efficient expense reporting, plus

pre-trip approvals to maximize spending control

• Manage expense reporting on time: set a schedule to

automatically build reports, notify employees and

managers, and submit expenses (specific to Certify)

Automate Policy and Spending Controls

Example Implementation Timeline

• 57,000+ expense report users in North America (U.S. & Canada)

• User-driven selection process; 9 out of 10 participants chose same vendor

• Integration with corporate credit cards, HRIS, single sign-on, accounting software

Go Live with

Certify

MAY OCTOBER

Evaluate

vendors Go-live: Oct. 1, 2014Select vendor

Launch

implementation

57k U.S. and Canadian

users go live—6 weeks

ahead of schedule

AUGUST

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1. When is the last time we did a thorough review of our T&E policies?

2. What is the rate of compliance with our T&E travel policies?

3. What are we doing to actively manage our T&E expenses?

4. How do we benchmark our T&E spend?

5. What is the average time it takes to reimburse an employee?

6. What is the current level of automation in our T&E process?

7. Are we using, or have we looked at a cloud-based T&E expense management solution?

Seven Questions to Ask at Your Company

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1. Identify the opportunities

• Reduce costs, mobile/remote access, compliance, reimbursement times, etc.

2. Identify technical requirements

• Define and align requirements from IT, Accounting, HR and other stakeholders

3. Evaluate vendors

• Weigh requirements against vendor features and capabilities

• Product demos and user reviews on g2crowd.com, capterra.com

4. Build your case

• Hard and soft dollar benefits

• Estimated time to recoup costs (ROI)

5. Implement your solution

• Make sure your vendor owns IT and integration requirements

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Five Steps to Improving T&E Expense Management

1. Review your company’s T&E policies; if you do not have them, create them

2. Improve the travel IQ of employees and take measures to enforce policies

3. Arm travelers with better technologies to simplify expense reporting

4. Automate key components of the expense management process

5. Benchmark company T&E spending regularly

6. Leverage analytics to improve intelligence and data

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Specific Actions to Set the Foundation for Effective T&E Expense Management

Thank You!

Additional Resources

• T&E Policy: 10 Best Practices to Eradicate Inefficiencies that Impact the Bottom Line

• Defining Best Practices for Control, Effective Forecasting, and Impacting Productivity

Across the Enterprise: Unlocking the Strategic Value of T&E Expense Management

• 10 Steps to Building & Delivering an Effective Business Case: Owning T&E as the

CFO (Part I)

• 10 Steps to Building & Delivering an Effective Business Case: Owning T&E as the

CFO (Part II)

Additional Resources

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• Why T&E Should Matter to CFOs (Part I of II)

• Why T&E Should Matter to CFOs (Part II of II)

• The New Frontier of T&E Expense Management: 7 Tech Features to Tame the

Beast

• Out of Control T&E Expenses: Taming Your T&E Beast

• 7 Red Flags Your T&E Expenses are Out of Control

Additional Resources

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