International Travel and Expense Implementation

Copyright © 2013 by ScottMadden. All rights reserved.

International Travel and Expense Implementation Best Practices

June 2013

Contact: [email protected]

[email protected]


Introduction

Thinking about expanding the use of your travel and expense (T&E) system globally?

Considering how to choose a system and vendor? Debating how you can get more from your current system and your audit group?

Many challenges exist on the topic of international T&E due to the complexities that come with a global process

ScottMadden recommends several best practices in planning and preparation, requirements and design, and training and audit when implementing a global T&E program

1

• Complex tax and

reporting

requirements

• Foreign

language

requirements

• Policy

standardization

• Regulatory and

data protection

compliance

• Multitude of

system choices

and design

options

• Dispersed audit

resources


Global Business Service Models

In a global business service model, T&E typically fits in a transactional center, which can serve the global population.

2

Regional – Analytical

Accounting close

Settlement

Risk management

Budgeting

Business case

Reporting

SOX

Internal audit

Pricing

Global – Transactional

Accounts payable

Travel and expense

Accounts receivable

Billing

Payroll

Fixed assets



Customer facing hub

Varies: COEs

Rebates and inventory

accounting

Competitive intelligence

Risk management

Deal review

Mergers and acquisition

Workforce management

Tech pool management

Financial systems




Planning and Preparation

Get started early with data protection reviews with your legal team, especially if implementing in Europe

Data privacy and protection is a hot topic for global companies and is marked by significant differences between the United States and Europe in their approach

Significant lead time should be added to the implementation timeline in each country for:

— Internal legal reviews

— Interaction with local in-country legal counsel

— Workers’ Council review cycles

— Required communications to international employees about use of data

For Europe, the “Safe Harbor” framework is in place for U.S. organizations to follow to ensure adequate data protection per the European Commission

— Many systems are “Safe Harbor” compliant. Perform the due diligence with your vendor, legal, and corporate IT to ensure this is the case

While data privacy standards are most stringent in Europe, countries in Asia and South America are becoming more aware and imposing some regulations

— Japan, S. Korea, Mexico, and Brazil all have stipulations for protection in data transfer

Ensure that there is harmonization of T&E policies at the global, regional, and country level prior to system implementation

Country and cultural difference can impact design and implementation requirements. Understand what these are and what should be allowed as a standard in each country

Meal limits, entertainment standards, and travel allowances vary by country. Know what is required and what will be allowed for reimbursement prior to implementing a T&E system

Policy harmonization can take several weeks to accomplish—many stakeholders must be consulted to implement standard policies effectively

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Global

Regional

Country

Harmonized T&E Policy


Requirements and Design

Establish a portfolio of design principles and solutions (which can be re-used across countries)

At first glance, the varying requirements of T&E in regards to tax, deductions, limits, and reporting can be daunting and seem unique by country

However, design decisions can be made from a portfolio of design principles that meet the various requirements but also streamline configuration, testing, and the user experience. Be creative and test solutions to see how the financial postings behave

For example:

— In Sweden, the tax rate on food varies depending upon whether the meal was eat-in or carry-out

— In France, users must select the appropriate tax rate for certain expenses and apply different rates to fractions of the total expense (e.g., one rate applies to food and another rate applies to service)

— The same design in the form used for the expense type can be used for both situations

Use a T&E system that can be flexible in design and has preconfigured modules for international per diems, travel allowances, and tax configurations

Systems are available that come with modules to easily set up your travel policy with international per diems, tax, and travel allowances

— Various rate sources are available who set their rates against market conditions and benchmarks. Software application vendors should initiate updates to the rates routinely and notify you that the rates will be changing

— Be clear on internal requirements and discuss options for use with the vendor before committing to a system design

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Expense Type Mapping

Country Tax Authority State/Province Tax Name Rate Type Calculation Method Tax Rate Effective Date End Date

CANADA CA-GST Alberta GST Standard Percentage 5.0% 1/1/2012 12/31/2014

British Columbia

Manitoba

Northwest Territories

Nunavut

Ontario

Prince Edward Island

Quebec

Saskatchewan

Yukon Territory

CA-HST New Brunswick HST Standard Percentage 13.0% 1/1/2012 12/31/2014

Newfoundland

Nova Scotia

CA-PST5 Saskatchewan PST5 Standard Percentage 5.0% 1/1/2012 12/31/2014

Yukon Territory

CA-PST7 British Columbia PST7 Standard Percentage 7.0% 1/1/2012 12/31/2014

Manitoba

CA-QST Quebec QST Standard Percentage 7.5% 1/1/2012 12/31/2014

CA-PSTON Ontario PST8 Standard Percentage 8.0% 1/1/2012 12/31/2014

CA-PSTPE Prince Edward Island PSTPE Standard Percentage 10.0% 1/1/2012 12/31/2014

UNITED KINGDOM UK UK Standard Percentage 15.0% 1/1/2011 12/31/2012

Reduced Percentage 5.0% 1/1/2011 12/31/2012

Zero Percentage 0.0% 1/1/2011 12/31/2012


Requirements and Design (Cont’d)

Do internal analysis on country regulations and requirements

Use data from historical financial postings to prove design concepts

— Look back at T&E postings from the past year to gain insight on how expense and tax amounts need to be posted

— Test assumptions and findings with project team and leverage design portfolio

Gain local leadership and subject matter expert approval on outputs

— Ensure that local reporting requirements are met

As you test the various design concepts, ask an in-country finance representative to validate the results. Involve in-country representatives and project team members in the user-acceptance testing phase

Use a stable implementation team who can share insight on design and configuration for various country requirements

Build the functional and technical knowledge within the team as the vendor cannot always provide the design and integration support needed for complex solutions

Use a cross-functional team with representatives from HRIS, IT, finance, and corporate travel. Test the system with frequent T&E submitters to validate the functionality

Be thoughtful, creative, and test the design and configuration thoroughly. Use solutions that were successful in other countries to expand the use of the design portfolio

5

Gather Requirements

Conduct Analysis

Propose Design

Test Design

Approve Design


Training and Audit

Understand requirements for language translation, and translate both system and collateral communication and training materials where required

There are both regulatory and cultural reasons for translating a system into the local language

— In countries like France and Germany, local language translation may be required by the Workers’ Councils. In places like Japan, it may not be common for employees to read and write in English; therefore, Japanese translation is required

— Ask for advice on translation from international HR representatives and legal counsel

Some applications, like Concur, offer in-system language translation that can be easily applied to an existing configuration. Custom fields can be translated with assistance from representatives in country to ensure fluency and accuracy

Centralize your T&E audit function for efficiency in audit and consistency in policy interpretation

Once T&E policies are harmonized, efficiencies and cost savings can be gained by centralizing T&E audit in one location

— Using one group to administer T&E policy ensures consistency across the organization. Reporting centrally will provide consistency in audit, allowances, and exceptions that can be difficult to achieve in a decentralized model

— Cycle times for review and approval of T&E do not require 24-hour employee support and can be managed with e-communication, documented approval and processing schedules, and a clear escalation procedure

— A global company might leverage additional locations or processors to optimize parts of the financial process

Hire T&E auditors with foreign language proficiency to ensure accuracy and provide support in reviewing expense reports from international locations

— Many U.S. cities offer a diverse workforce with many language capabilities

— Vendors exist who can offer support for foreign languages that are not frequently used in the organization

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Category

Category

[Japanese] Expense Type

Exp Type

[Japanese]

02 - Meals and Entertainment 食事・接待交際費 Per Diem 国内出張：食事日当

ガソリン代03 - Transportation 交通費 Gas / Petrol

空港使用料

03 - Transportation 交通費 Car Rental レンタカー

03 - Transportation 交通費 Airport Tax

航空運賃

02 - Meals and Entertainment 食事・接待交際費 Special Events 全社イベント

03 - Transportation 交通費 Airfare


Training and Audit (Cont’d)

Train on site and in person; the importance of change management through face-to-face interaction during go-live and training should not be minimized

Pair the go-live period with an on-site training program to increase adoption and reduce go-live errors and issues

— Trouble-shooting errors can happen quickly while on site locally to provide a smoother launch experience

— Identify local “super users” who are trained early on the process and can act as contacts locally post-launch

— Follow-up and Q&A sessions can be offered remotely; but these are often more effective once the relationship is established face to face

A standard portfolio of communication and training materials should be developed and used across all T&E system users; however, customization and modifications can be completed where required. For example:

— Translation into local language when required on advice from local HR or legal counsel

— Special instructions for assistants and approvers

— Customized reference guides for different country requirements

— Training webinar sessions delivered in local language with the assistance of a local “super user”

7

airfare

航空運賃

pasaje

aéreo

passagem

aérea

flygresor

billet

d'avion

flugpreis


Contact Us

To learn more about our approach to implementing the best practices for international T&E, please contact us.

8

ScottMadden, Inc.

3495 Piedmont Rd, Bldg 10

Suite 805

Atlanta, GA 30305

Phone: 404-814-0020

[email protected]

Jerred Crosby

Partner

Molly Donofrio

Director ScottMadden, Inc.

2626 Glenwood Ave

Suite 480

Raleigh, NC 27608

Phone: 919-781-4191

[email protected]

mailto:[email protected]

mailto:[email protected]

Education

International Travel and Expense Implementation