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Beneath the surface

GBTA study

Beneath the surface. GBTA study

Minimising travel costs is the noblest task of a travel manager. But whether budget or luxury hotel – at the end, every trip has to be paid, invoiced and booked. For the first time, a study has now proven that the direct costs are often merely the tip of a gigantic iceberg.

How long does an employee actually need, on average, to complete his travel expense report? And how long do the human resources and the accounts departments need to check and further process the forms and receipts? How many reports are incorrect? What time and effort is required to correct these? And what costs does all of that generate within the company? Questions, questions, questions – and probably very few travel managers or controllers could answer them. The reason is that these processes are simply not questioned in most companies.

With the support of HRS, the largest business travel organisation worldwide, the Global Business Travel Association (GBTA), has now taken a look behind the scenes of all these processes. The result: The direct travel costs that are visible are only the tip of the iceberg. Beneath them lies astonishingly high administrative expenditure. For example, employees take on average a full 20 minutes to write the report for an single business trip with overnight stay in a hotel. A whopping €53 is what it costs companies on average for each report – from booking through payment, compiling the accounts, including the receipts and approval right up to payment and archiving.

And that is not all: Almost one in every five reports is actually incorrect as well. A further €47 in costs are then incurred for the correction process. In large companies, these figures are actually significantly higher – on average, €89 for preparing a report and €72 for correcting errors. These are amounts which should make many people in responsible positions sit up and listen who up to now predominantly had an eye on their direct travel costs – without looking to see what was below the surface.

Practical experience shows that the results of the study are by no means just random conjecture. "Trouble with travel expense reports was almost a regular occurrence for me," a former consultant at a global consulting firm reports, for example. In one case, the Polish hotel on the invoice had written the international name of the company instead of the correct Polish company name; in another case business-related and private ancillary expenses were not distinguished clearly enough. "I had no choice but to request an new invoice," the consultant reports – with the associated time and effort on the part of the traveller, the travel expense depart and the accounts department.

Dissatisfaction with settlement processes
It is no wonder that many travellers are dissatisfied with the settlement processes within their companies. In a survey taken earlier this year, the GBTA Foundation had already discovered that although 71 percent of business travellers surveyed were satisfied overall with the handling of their business trips within their company, only 55 percent were satisfied with the travel expense accounting. For example, travellers complained about the lack of control over their own reports and the manner in which these had to be completed.

The results of the current survey among travel managers revealed a similar picture. They saw a need for optimisation particularly in the preparation of the reports and in receipt administration. Next on the list were the error checking and the approval process. The crux lies primarily in missing and incorrect information. For a total of 77 percent of travel managers, missing receipts as well as missing or incorrect expense report forms were the largest hurdle on the way towards greater efficiency.
Basically, inefficiencies and potential sources of errors arise everywhere paper is used, where its content has to be recorded and transferred onto forms.

And paper is still in widespread use worldwide, particularly in Europe: While the United States has already made considerable progress in electronic processes, for example the use of scanned and original electronic receipts as well as the mobile recording of receipts using smartphone photos, paper still dominates by a wide margin in Europe, where receipts are still being submitted on paper in four out of every five companies.

Joe Bates, Vice President, Research and Strategic Initiatives at the GBTA Foundation, has a clear opinion on this: "The way in which travel expenses are settled is currently undergoing rapid change," especially because of new technologies, providers and payment methods in business travel. "What was still considered best practice in a company only five years ago can already be outdated today."

 
Joe Bates, Vice President,  Research and Strategic  Initiatives GBTA Foundation
Joe Bates, Vice President, Research and Strategic Initiatives GBTA Foundation

For example, trip payment methods. Generally, flights are booked using a corporate or central travel department credit card. Thus these expenses are also usually incorporated directly and allocated precisely into the travel expense report. The effort required for processing and checking the data is minimal. In the case of hotels, however, the converse applies. They are usually paid using corporate cards or employees' own personal credit cards, in some cases they are even still paid out of cash advances.

The example of one of the large German statutory health-insurance companies shows the effect that converting the payment process can have. Last year, this company had switched the payment of the hotel rooms booked through HRS to its Airplus company account, such that these expenses are now transferred directly from its corporate bank account. The travel manager there states that time and effort for settling and checking the company's hotel expenses had been reduced by a whopping 50 percent because of this measure.

Because, according to GBTA, digitisation and automation are the two key parameters that can be adjusted to reduce settlement time and effort. Here are two examples: Electronic invoice data save travellers the effort of collecting and attaching paper receipts and reduce the time and effort in the accounts department, smartphone photos and mobile settlement solutions in turn enable data to be recorded directly during the trip. In both cases, the traveller does not just save time. He also avoids potential errors resulting from the manual entry or the loss of individual receipts up to the time of the settlement.

However, neither the results achieved by other companies nor the average figures in this study can serve as a yardstick for the savings potential in one's own company, as a travel manager at one Finnish corporation noted. She herself had undertaken the effort to collect the data individually and was "quite surprised about some aspects" of the results. Her tip: "Do not develop your business case on the basis of assumptions, but solely on your company's specific figures!"

But travel management frequently does not have the lead role, especially in settlement processes. Because while the travel manager generally concentrates on the procurement of travel services and their supervision, in many companies it is the finance department who looks after the settlement processes downstream from this – and thus, for example, also decides which procedure is selected and which software is used.

»Choose an integrated approach!«
Thus the key recommendation to come out of the GBTA study is: "Choose an integrated approach!" That means: Travel Management should sit down around a table with the finance, human resources and the other departments involved to take a good look at the entire process, from booking up to archiving the receipts, and develop an insight into how changes at one stage will affect later stages of the process chain.

"That is exactly what we did," the travel manager at a large plant engineering company reports. This enabled her company to optimise processes significantly and additionally take the travellers' perspective into account to a greater degree, she says. One key point, but a simple and time-saving process for the traveller which makes manual entries and attaching invoices unnecessary, makes a decisive contribution to avoiding what the study has found to be the greatest hurdle in achieving more efficient processes: missing or incorrect information. A nice little side benefit of this measure is that travellers' adherence to the travel guidelines is likely to improve.

Because they will tend to select those booking channels which are going to save them the most paperwork in the expense accounting process.

The study
In the study, the GBTA Foundation and HRS surveyed a total of 533 travel managers worldwide. Of these, 42 percent were in Europe, 38 percent in North America, 12 percent in Latin America and 8 percent in Asia. The survey was conducted from 22 September to 6 October 2015. The GBTA Foundation is the research organisation of the international business travel association GBTA. The entire study can be downloaded free at: corporate.hrs.com/en-uk/solutions/payment-solutions.

The multi-billion-euro bill
If one extrapolates the study results for a company with 20,000 overnight trips per year, the entire process of travel expense accounting generates costs of €1,060,000 every year. Corrections add another €179,000 on top of that. Thus it occupies approximately 7,800 hours of employees' time. Extrapolated to include the entire number of German business trips, which lies at almost 176 million every year, according to the German Business Travel Association (VDR), this adds up to several billion euro every year.

Receipts: Predominantly on paper
The numbers speak for themselves: Paper is still very widespread in travel expense reports. Although in the meantime the lion's share of reports worldwide are completed using special travel expense management software, yet one in every four companies still uses reports on paper also. However, the receipts still have to be submitted predominantly on paper. Scanned and email receipts take second place in the order of frequency. And while smartphone photos of receipts are becoming increasingly widespread, they are still bringing up the rear in terms of frequency. 

A particularly interesting aspect in this respect is the marked discrepancy between Europe and North America. While paper is still in first place by a wide margin, its predominance in the United States and Canada has dropped far behind the electronic variations.