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- July 11, 2016
- Ethan Laub
For a young company, letting people book their own travel and report their expenses on Excel spreadsheets works just fine. Until it doesn't. Developing a formalized Travel and Expense Management (TEM) program requires some thought and effort, and usually gets pushed to the back burner until the status quo becomes too painful to ignore.
Excuses for putting off implementing a TEM program abound. I’ve heard everything from “the current process works,” to “our people won’t adapt” to “we have other priorities.” For smaller companies, resistance may come from a well-intended person who books everyone’s travel and likes things just the way they are.
However, there comes a time when things really aren’t fine just the way they are. T&E typically accounts for 10-12 percent of an organization’s budget, and it’s the easiest cost center to dial up and down as needed--if you have programs in place. A managed travel program can help with reporting, policy compliance, and duty of care, and lead to corporate discounts and preferred supplier agreements that save your business money.
Here are eight signs it's time for your company to develop a more formalized program.
1. Tallying up spreadsheets has become a huge burden for your staff
If you have to staff up your AP department to take in manually submitted expense reports, tally up spreadsheets, and sort through paper receipts, it’s time to put an automated solution in place. It’s not just a question of implementing a system that makes it simpler to keep people in policy, handle expense reports, and improve visibility and controls. It also makes it easier to be responsive—rather than panicked--when your CEO or CFO asks how much the company is spending on T&E, or requests data on spend patterns.
2. It’s taking months for employees to get reimbursed
In the absence of a formalized program, it’s not uncommon for employees at small companies to buy a lot of things on their personal credit cards in order to get things done quickly. But, nothing rankles employees more than continually having to finance company spending out of their own pockets, especially when you have employees coming in from larger companies where they’ve become accustomed to more efficient processes.
3. Late expense reports are causing cash flow issues
On the flip side, maybe it’s taking employees months to submit their reimbursements, even though you’re hounding them to do so. Then when they finally do, the company owes them thousands of dollars. That’s a sign that your processes are too cumbersome. If you have enough employees doing that, it makes it hard to manage cash.
4. Travel costs are rising rapidly, but you’re not sure exactly why
The culprit might be something you can’t control, such as rising airfares, or something that you can, such as employees failing to follow proper protocols. Either way, implementing an automated, streamlined TEM solution can help your company understand your employees’ travel habits and uncover economies of scale that can save money.
5. There are issues with fraud or abuse in your company’s T&E spending
It’s one thing to charge lunch to the company; it’s something else if it’s a $1,000 lunch. It’s one thing to pay for your employees’ travel; it’s another thing if they book a first class ticket and stay at the Ritz Carlton. Maybe you’ve even had to fire an employee because he or she has been making exorbitant purchases. Clear policies and automated TEM programs make it easier to flag irregularities that may be costing your business money long before the expense report hits, and nip abuses in the bud.
6. Employee safety is keeping you up at night
What can you do when your employees do business in less stable parts of the world and you are concerned about their safety? If something were to happen, would you be scrambling to find out if everyone is safe? With terror on the rise globally, the safety of any destination is never assured. Managers can lose sleep, or implement a system that makes it easier to track your people’s whereabouts or activate an emergency plan, should the need arise.
7. Your travel arranger left and no one wants the job
Has your travel management office become a revolving door of disgruntled workers who can’t do the job effectively because they have 50 people to book for and don’t have the information or support they need? Lots of times in a small company there’s a key person who runs travel efficiently as it grows, and no one realizes how much that person was doing until they’ve gone, and taken all the institutional knowledge with them. If you have systems in place, you have records and processes that can be handed off to a new person.
8. No economies of scale
Everyone’s booking trips on their favorite websites, but as the company grows and you add more travelers, you should be able to get better pricing if you could get everyone on the same page.
One of the reasons people like working at a small company is that there aren’t a lot of formal rules, so inevitably there will be push back when you start to put policies and systems in place. However, as the company grows, eventually the stakes become too high not to. That doesn’t mean you need to go to the other extreme; in fact if you go from no rules to a draconian system that’s totally locked down and painful to use, that may only be slightly better than nothing.
If you can ease your way in with a lightly managed program with user friendly systems and a few basic rules to ensure compliance, cost efficiency and traveler safety, you’ll get people on board and be well positioned to iterate as your company grows.