How to Gain Control, Reduce Fraud and Increase Process Efficiency in the Modern Workplace
- 1. Sponsor
- 2. Ask, Share, Learn – Within the Largest Community of Corporate Finance Professionals Travel & Expense Management 2015: How to Gain Control, Reduce Fraud and Increase Process Efficiency in the Modern Workplace
- 3. • The travel and expense management trends that support the need for greater control, reduced fraud and improved efficiency • Key benchmarks that allow you to compare your company's overall T&E spend to that of other organizations • How to identify opportunities to improve the management of and visibility into your T&E spend • What companies like yours are doing now to meet the future of expense management automation Learning Objectives After attending this event you will be able to:
- 4. Proformative Event Notes • The PPT is available under “Handouts.” • We will send you links via email to the presentation and the recording within 24 hrs. • For CPE: Answer all polling questions and remain for the duration. CPE Credits awarded in 24 hours. – Questions on CPE? Email cpe@proformative.com. • We want to hear from you! Ask questions for the Q&A session at the end of the event. • Please take the short survey at the end of the webinar.
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- 6. Ask, Share, Learn – Within the Largest Community of Corporate Finance Professionals Travel & Expense Management 2015: How to Gain Control, Reduce Fraud and Increase Process Efficiency in the Modern Workplace Robert Neveu, President & Co-founder, Certify Ernie Humphrey, CEO, Thought Leadership Consulting
- 7. 7 BENCHMARKS Compare Your Organization’s T&E Spend
- 8. About the Data 8 • Total Respondents: 434 companies (non-Certify clients) • Audience: • 28% Small Business: less than 100 employees • 37% Mid-Sized Business: 101 – 999 employees • 35% Large Business: 1,000+ employees • Location: • 6% International • 94% U.S. • Demographics: • 38% C-level or above finance professionals • 43% Manager, Controller or Accountant • 19% Other (accounting staff, consultant, administrative, etc.) Third Annual Expense Management Trends Survey Conducted in December 2014
- 9. Annual T&E Spend by Company Size 9 $50k – $5mm Mid-Size Company 101 – 999 employees > $5,000,000 Large Enterprise More than 1,000 employees < $50,000 Small Business Less than 100 employees Reference: Certify’s Annual Travel & Expense Trends Data, February 2014
- 10. Spend Trends for 2014 10 Reference: Certify’s SpendSmart Report, Q4, 2014 1. Meals 21% 2. Airfare 16% 3. Lodging 14% 4. Gas 12% 5. Misc. 8% 6. Cell Phone 6% 7. Car Rental 5% 8. Groceries 5% 9. Supplies 5% 10. Taxi 5% 11. Tolls 2% 12. Shipping 2% 13. Parking 1% How the T&E budget was spent by business professionals: MEALS AIRFARE LODGINGGAS MISC. CELL PHONE CAR RENTAL GROCERIES SUPPLIES TAXI TOLLS SHIPPING PARKING
- 11. Benchmark Data by Expense Category 11 Average amounts for common expense categories: Category 2013 2014 Difference Meals $26.08 $25.67 – 1.58% Airfare $329.65 $345.21 + 4.61% Lodging $200.24 $213.90 + 6.6% Car Rental $185.27 $193.58 + 4.39% Taxi $32.76 $31.81 – 2.94% Gas $50.73 $40.41 – 22.65% Parking $32.75 $32.70 – 0.15% Cell Phone $98.88 $89.30 – 10.18% Reference: Certify’s SpendSmart Report, 2013-2014
- 12. Benchmark Data for Meal Expenses 12 Average meal expense amounts compared to GSAs per diem meal rates: Meal Breakdown Average Expense Amounts for 2014 GSA Per Diem Highest Tier (Major Metros) Breakfast $11.88 $12 Lunch $21.46 $18 Dinner $28.24 $36 Total Per Day $61.58 $71* *includes $5 for incidental expenses Reference: Certify’s Annual Travel & Expense Management Survey 2015 | http://www.gsa.gov/portal/content/101518
- 13. Polling Question
- 14. Methods for Managing T&E Reporting 14 Reference: Certify’s Annual Travel & Expense Management Survey 2015 Manual processes are used by the majority of companies, however Excel or electronic spreadsheets, pen/paper and homegrown systems provide little control. 37% WEB-BASED 43% MANUAL 19% ERP
- 15. T&E Expense Management Trends 15 T&E Adoption Rates Manual - 64% ERP - 11% Web-Based - 25% Manual - 19% ERP - 33% Web-Based - 48% Manual - 48% ERP - 19% Web-Based - 34% Small Business Medium Business Large Business Reference: Certify’s Annual Travel & Expense Management Survey 2015
- 16. Why Control is Critical for T&E Management 16 • Travel and entertainment (T&E)—second only to payroll as the largest business expense, accounts for 10–12% of total annual budget • North American companies will spend $186b on travel and entertainment in 2015, according to a report by J.P. Morgan • Nearly 65% of all companies spend $100,000 or more each year on T&E (PayStream Advisors 2015 Travel & Expense Management Report) www.travelpulse.com/news/business-travel/travel-leaders-business-travel-data-unveils-importance-of-corporate-rates.html PayStream Advisors 2015 Travel and Expense Management Report Domestic International $1,002 $2,502 $26.63 Average cost to manually process an expense report Average base cost per business trip for air, hotel and car rental
- 17. 17 Solutions to Gain Control
- 18. Leverage Technology to Gain Visibility and Control 18 You can’t control what you can’t see: • 55% of all organizations’ main priority for 2014 was to enhance visibility into overall T&E spend • Manual processes provide only 30% visibility vs. 61%+ visibility with web- based expense systems • 74% companies using cloud/web- based systems regularly audit expense reports vs. 44% of companies on manual system 61% 57% 74% 57% 30% 40% 44% 29% Visibility into T&E Spend Regular Reporting Regular Audits of Expenses Automated Data Analytics Web-Based Expense System Manual Expense Process Reference: Certify’s Annual Travel & Expense Management Survey 2015
- 19. Leverage Technology to Gain Visibility and Control 19 Using cloud technology: • Documented path of approvals—Has each report been reviewed and approved by the right person at the appropriate time? • Expense reports by employee—Which individual employees are expensing the most? Are there significant differences among employees? • Expense spend by category—Which areas are costing the company the most? Can we add controls or negotiate preferred rates?
- 20. Listen to Your Finance Department 20 Automation—including expense report creation/scheduling, direct credit card feeds and approval workflows Must-have control features requested by finance: Policy Enforcement—integrated policy with automatic employee notification of violations and set expense limits by category IT Integration with Legacy Systems—manage large-scale user data and reporting through integrations with HRIS, multiple ERP systems and accounting software Mobile Technology—manage expenses and approvals remotely with smartphone access including receipt capture images and on-the-go travel booking
- 21. T&E Control = Real Savings 21 Mileage reimbursement before and after using an automated system with Google Maps Oct. '13 - Mar '14 Oct. '14 - Mar. '15 $362,000 SAVED Certify enterprise client: • 12,000+ retail locations • 100,000 employees • 58,000 users creating and submitting expense reports annually in mileage
- 22. Polling Question
- 23. Policy Enforcement Trends 23 14% 35% 36% 21% 1% 4% 31% 27% 19% 63% 0% 10% 20% 30% 40% 50% 60% 70% T&E policy is not enforced It is the responsibility of the employee Manager manually review each expense Accountant manually reviews, checking only high value expenses T&E system automatically flags out- of-policy violations How Companies Enforce T&E Policies Manual Process Web-Based System Reference: Certify’s Annual Travel & Expense Management Survey 2015
- 24. 24 Policy Enforcement Trends Manual policy review is inefficient and creates opportunity for fraud 78% Of companies indicate they have a T&E policy 65%Of those companies are manually reviewing for policy violations
- 25. 4 Types of Expense Report Fraud 25 1. Mischaracterized expenses: Employee requests reimbursement for a personal expense, claiming it to be business related. Sometimes this is an honest mistake or policy misunderstanding, sometimes it’s willful deceit. 1. Overstated expenses: Employee overstates the cost of actual expenses and seeks reimbursement for an inflated amount. Most times this means someone must alter receipts in order to match overstated line items. 2. Fictitious expenses: Employee makes up a purchase and seeks reimbursement for it. Includes misappropriating real receipts to creating and submitting fraudulent documentation (receipts, invoices, etc.). 3. Multiple reimbursements: Employee submits an expense on one report, then submits the same expense on another. Without visibility, approvers can’t tell if an expense has already been submitted and/or approved. Association of Certified Fraud Examiners
- 26. The Impact of Expense Report Fraud 26 • Expense fraud accounted for nearly 14% of all occupational fraud in 2014 with a median loss of more than $30,000 • Businesses with fewer than 100 employees have a 28% higher median fraud loss than those 100+ • Organizations that monitor compliance experience a 70% decrease in fraudulent spending Association of Certified Fraud Examiners Reference: www.businesstravelnews.com/Expense-Management/Study--Fraudulent-Expense-Reports-Have-Cost-Cos--Millions-In-2014 82%
- 27. 27 Solutions to Reduce Fraud
- 28. Automate Policy Compliance 28 1. Establish a corporate travel and entertainment expense policy • Clearly defined for all employees with ongoing training 2. Integrate your policy into the expense system, setting both: • Hard Policies (decline expense exceeding X amount) • Soft Policies (manager’s discretion for approval) 3. Allow technology to enforce policies, notifying employees and managers of violations, including: • Missing receipts • Duplicate expenses • Items exceeding spend limits Flagged violation, notifying manager amount exceeded policy limit
- 29. Integrate Corporate Travel 29 Online Travel Sites Travel Agency Online Booking Tool How companies are booking travel: Open Booking (through direct provider) Online Travel Sites/Agencies (i.e. Expedia, Orbitz, Kayak) Online Booking Tool (OBT) (i.e. Carlson, Get There) Travel Agency (through a travel agent) PRO: Flexibility CON: No control over policy enforcement PRO: Flexibility CON: No control over policy enforcement PRO: Policy enforcement CONS: Contracts and systems; minimum transactions. Best for organizations spending over $2mm on T&E. PRO: Full-service policy enforcement CONS: Cost; $40-50 fee in addition to booking fees. Best for organizations spending over $4mm on T&E. Manual Process Web-Based Process
- 30. Adopt the Latest T&E Technology 30 1. Pre-trip approvals using an integrated online travel booking system can stop out-of- policy expenses before they occur (used by 87% of all best-in-class companies) 2. Mobile applications support policy compliance with timely, accurate data and reduce expense-processing costs by 65%; the #1 feature in selecting expense vendors by 45% of companies 3. An end-to-end expense management system allows administrators to automate controls across a single platform for all company employees, departments, etc.
- 31. 31 Solutions to Improve Process
- 32. Top Pain Points in 2014 32 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Reviewing for policy violations Reconciling the data Errors on the report Employees losing receipts Time it takes to reconcile, review, and approve Employee's failure to submit reports on time Inefficiency tops the list: Reference: Certify’s Annual Travel & Expense Management Survey 2015
- 33. Top Areas to Improve in 2015 33 Reference: Certify’s Annual Travel & Expense Management Survey 2015 Process is an opportunity: 36% 25% 21% 14% 4% Expense Management Process Integration Between Systems Travel Booking Mobility Software Deployment
- 34. Make it Easy for Travelers and Employees 34 Give travelers mobile apps with the power to: • Automate receipt capture • Eliminate manual data entry • Streamline report creation and review • Approve reports anywhere, anytime (managers) Adopt an integrated T&E system with travel booking to: • Take guesswork out of travel and policy restrictions • Expedite spend capture and expense reporting • Eliminate manual processes and redundant data entry • Provide a single, familiar platform for all users
- 35. Embrace the Future of T&E Automation 35 • Credit Card Integrations—automated data feeds of corporate credit card transactions automates the reconciliation process • Mobile Receipt Capture—employees take a photo of a receipt with their smartphone instantly turning it into an electronic receipt • Online Expense Report Creation—create, submit and approve expense reports online; no more time- consuming spreadsheets • Direct Feeds — automated feeds sync data with accounting and HR systems to simplify reporting and eliminate redundant manual data entry
- 36. T&E Strategies and Tools Used by Best in Class Companies 36 Aberdeen Group: Travel and Expense Management: Spend and Save Maybe …? 88% 58% 87% 77% 68% 63% 34% 63% 50% 35% Expense reports audited regularly Automatic linkage between expense mgt. and back-end systems Online travel booking system Commercial card system/program End-to-end expense mgt. solution Best-in-Class Industry Average
- 37. Benefits of T&E Automation 37 “What are the biggest benefits you have achieved by automating your T&E process?” PayStream Advisors 2015 Travel and Expense Management Report $6.85 automation 0% 10% 20% 30% 40% 50% Better ability to enforce travel policies Improved visibility over spend Quicker reimbursement of employee expenses Improved ability to detect and prevent fraud $26.63 manual $19.78saved per report Average expense report processing costs
- 38. Thank You
- 39. Q & A
- 40. • Join us at www.proformative.com to continue the conversation with your peers in our community • If you want an introduction to today’s speakers or sponsor, or want to know more about Proformative Academy, tell us on the survey! • Thanks to our speakers A Few Final Items
- 41. Sponsor
- 42. Polling Question
Editor's Notes
- #14: How does your organization currently manage T&E spend? Paper-based/spreadsheets ERP system (Oracle, Microsoft Dynamics, etc.) Web-based expense software (Certify, Concur, etc.) N/A
- #23: How does your organization enforce compliance with T&E policies? We have no formal T&E policy Manual review process Automated system that flags violations N/A
- #40: What are some the best-in-class practices for creating an effective T&E policy? What are some of the policy blind spots you’ve seen in other organizations that can lead to excessive or maybe even fraudulent spending? What are some of the challenge faced by companies switching from spreadsheets to an automated T&E process? You mentioned reduced processing times and lower costs as benefits of switching. What are some additional benefits? How long does it usually take for before we could expect to be fully up and running with a system like Certify, implementation to user adoption?
- #43: Which areas of your T&E process do you feel can be more efficient? Employee creation and submission Auditing and reporting Manual data entry into the accounts payable system Other