There are $120 trillion of B2B transactions going over check, wire, and ACH today. How much of that are you managing for your business?
For a long time, the vast majority of employee spend fell neatly into two categories: travel and expenses incurred either while traveling or entertaining clients. But today, teams are incurring business expenses that don’t necessarily fit cleanly within a single T&E category. Digital ads, SaaS subscriptions for software tools, consulting services, and home office equipment are all now part of regular modern employee spend.
With broader spend types now on the horizon as well as an increase in remote, contactless payments, expense management has moved from a legacy, time-consuming bygone to an absolute priority for finance teams.
Here are three huge issues an outdated system can cause—and what your team can do about it:
We believe most employees want to do the right thing. Often, however, they don’t know exactly what being “in policy” actually entails—or take the time to look it up. And even when they do, the shifting demands of business travel require shifts in policy. How is the employee expected to keep up?
This is a common problem with legacy systems. Policies are buried deep in a company handbook or gather dust in a document on the shared drive.
But when that policy is updated in real time, and enforced at the point of use, then out-of-policy spend ceases to be a problem. For example, if an employee is booking travel or expensing a charge and that charge is declined even before it goes through, it reduces errors in policy violations and saves everyone—employee, travel manager, finance department—a lot of time and headaches.
The rise of fraud
How much of a problem has fraud become during the pandemic? Consider this:
- In the U.S. and Canada, expense reimbursements are the third most common occupational fraud scheme, accounting for 19% of total fraud.
- In just over a year, the Association of Certified Fraud Examiners found 2,504 cases of fraud across 125 countries, equaling more than $3.6 billion in total losses.
And the situation keeps getting worse. Expense violations in 2020 have skyrocketed by more than 200% year-over-year, despite a drop in travel and entertainment spending. Within that dataset, expense reimbursement fraud accounted for 21% of total fraud in small businesses and 11% in large businesses.
Why? Part of the problem is visibility—or the lack thereof. Old-school corporate cards and outdated expense schemes left enterprises open to abuse and fraud.
But these issues can be addressed through a modern T&E management platform that delivers automation, greater visibility, and tighter control to remove the highly manual reviews and analyses that go along with old-school expensing.
The lag in reporting
Here’s another problem with the traditional process: Employees have been expected to carry the burden of their expenses.
For example, a quarter of travel managers surveyed for a report from TripActions and Skift said the most common problem employees and managers face is the burden of employees paying for travel expenses on a personal credit card. More than 50% of employees and travel managers report that employees are expected to pay for expenses with a personal credit card.
Another study found that 2 in 3 employees in the U.S. use their own money to pay for work-related expenses, averaging $111 a month—and a lag in reimbursement leads to personal cash flow issues for 45% of respondents. Why the wait? After employees front the expense, they’re expected to save the receipt and submit it through clunky business platforms, where it’s entered into a complex, drawn-out approval process. Accounting teams can spend days reconciling transactions and often have to follow up with employees to ensure compliance. It’s usually weeks before employees are reimbursed.
The process may be broken, but change is happening. Work-issued corporate cards are becoming more common, giving finance leaders better visibility and control over spend, while removing the burden of carrying costs on employee’s personal cards.
The secret for solving today’s expense management challenges
Fortunately, thanks in part to advancements in artificial intelligence, companies don’t have to solve these problems on their own.
Innovative fintech infrastructure can create a better experience for employees and managers; it can also empower finance teams with the ability to customize limits, control spend, and access real-time data to make informed decisions, automate reconciliation, and minimize fraud.
One solution is virtual cards, which offer a level of accuracy and security that wasn’t possible in the past. That includes policy and limit controls at the card level, data captured at the moment of transaction, automated reconciliation, data feeds into company systems, and improved efficiencies with the removal of manual processes and highly secure payments.
Both physical and virtual cards, however, should be a part of any modern corporate payment program; fortunately, new advances in corporate cards make them more accessible to everyone. And thanks to technology, physical and virtual cards can be used in concert across physical transactions, through the mobile wallet, or even directly in an app.
Everyone from small businesses to global enterprises is adopting new technology to simplify and expedite reconciliation and expense management. The launch of innovative corporate T&E solutions like TripActions Liquid™ is quickly changing the game by offering physical and virtual cards and smart approval workflows along with automated expense reports and centralized billing.
Optimizing T&E policies, programs, and technology has never been more important to business success. The tools to make it happen exist, and now’s the time to reap the benefits.
Learn more at www.tripactions.com.
Fast becoming the default for corporate travel and expense management, TripActions is the leading, cloud-based T&E platform that combines industry-leading tech with best-in-class travel agency service. Trusted by 4,000+ companies globally including Zoom, Okta, Pinterest, Crate & Barrel, GameStop, Lennar, Wayfair, Financial Force and SurveyMonkey, TripActions empowers organizations with real-time data and insights to make business decisions, paired with flexible T&E management tools that enable them to adapt to changing market conditions to keep traveling employees safe, control costs, and save money.