Travel Expenses Predictions From Expense Management Experts 2018

Fang Chang
Fang Chang
Vice President, Product Management, Coupa Software

Fang is a SaaS business leader with strong track record in bringing new products to market, growing existing product lines and managing teams.

Read time: 13 mins
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The days when everyone dreaded dealing with expense reports are slowly but surely coming to an end, thanks to new technology. Over the past five years, there has been lots of innovation in the industry, and that’s making life better for both travelers and for the back office. There’s more goodness in store for both this year, as startups that have emerged in recent years mature and/or get incorporated into mainstream providers. There’s more innovation on the way, as technologies such as machine learning bring even more in the way of choice and ease of use to a once-hated process. Our expense management team, Ethan Laub, Maggie Joy and Fang Chang share their predictions for the year ahead.

1. Travel platform consolidation. There has been a ton of startup activity in travel platforms over the past five years, all with the general aim of providing a better, more consumer-like user experience.

It’s pretty hard to build a new booking tool and win business based on a better user experience alone, because all the major players are also investing in user experience, and they’re starting to catch up with consumer technology. The more interesting players are doing something unique such as embedding incentives into the booking flow, or creating chatbots that can handle basic communication, notifications and standard booking tasks.

Most of these tools are not comprehensive enough to make it as standalone businesses. However, they could be a good add on for travel agencies that want to differentiate or expand upon their existing booking and servicing channels, so in 2018, we'll see a number of these startups being acquired (a la Amex GBT/KDS and Certify/NuTravel) and woven into the booking and servicing mix of large corporate travel agencies and booking tool providers.

2. Expense management provider consolidation. There’s also been a lot of startup activity on the expense management side of the industry over the past five years, to the point where there is a glut of options, ranging from innovative tools such as Abacus, to basic tools targeting the SMB sector.

In this day and age, you really have to stand out in order to take on the bigger players, so we will also see continued consolidation among smaller expense management providers, particularly in the SMB space. We already saw one such rollup of four companies this past summer. We’ve hit a point where basic point solutions for expense management are becoming a commodity. Customers are looking for solutions that span other areas of spend management, and drive measurable results for their bottom line.

3. Choice within budget. Business travelers will have new opportunities to choose how they’d like to travel, as long as they stay within macro budget limits. Right now, most company policies typically set limits for each line item of a trip. For example, let’s say you’re going from San Francisco to Australia. The budget for the flight is $1,000; the hotel room, $200 per night; car rental, $30 per day and so forth.

We will start to see more companies applying technology to data from a variety of sources to determine what the overall cost of the trip should be. That becomes the budget, and the employee is free to spend it however they like. If they want to take a cheap flight and spend a little more on the hotel, they can. If they want to have a nutrition bar for lunch and spend a little more on dinner, that’s okay too, as long as they stay within the total budget.

4. More pressure to bring homesharing into policies. There’s a bit of a generational change in the way people travel that’s been happening, with younger people showing more of a preference to share accommodations. That will put pressure on more companies to allow the use of Airbnb or other home share sites.

This is another dimension of offering people options, as long as they stay within budget. It makes sense when you have co-workers who are comfortable traveling together. They can still have their own bathroom and private space, but the company can usually save a lot of money. Offering such options in-policy could turn out to have broad appeal among all age groups of frequent travelers, or consultants on long term projects, who just get tired of living in hotels and eating out all the time, and want to stay someplace more homey.

5. Rewards for frugal travelers. 2018 will see a rise in adoption of incentive programs rewarding travelers for being frugal. Obviously travel rewards programs have been around for a while, but programs targeting business travelers are a newer phenomenon. Companies will focus on partnering with existing program providers (ie. Upside, Rocketrip, and TripActions) rather than build internal programs.

These reward programs don’t preclude travelers from using contracted providers and negotiated discounts, but there are potentially more and better discounts available than individual companies can stay on top of. These apps give travelers an incentive to go find them by rewarding them with points or gift cards. The company benefits from the savings, without the overhead of setting up such a program themselves.

6. Companies get more confident with open booking. Open booking—wherein employees book their travel outside of the official channels—has always been a thorn in the side of corporate travel managers. The internet, the sharing economy and the expectations of digital native workers made the problem worse.

A couple of years ago, technologies emerged to help companies capture open booking data and bring it back into the program, so managers could let travelers use their preferred booking method while retaining visibility and control. Still, old habits die hard, and many managers remained suspicious. Now that early adopters of these tools have seen that they really are able to maintain visibility and control, companies may be able to embrace open booking confidently. This will be further aided by the maturation of employee incentive programs and intelligent trip budgeting, described above.

7. Machine learning streamlines AP processes. There’s goodness ahead for AP in 2018 too, thanks to machine learning, which can help streamline expense report processing in a couple of ways. First, it can help with expense categorization. Over time, the machine can learn to identify different types of expenses with increasing accuracy, and categorize them automatically.

It can also help with fraud detection. We already have rules-based systems for identifying and flagging suspicious looking expense line items for audit. However, fraudsters are clever. They steal in small amounts that might fly under the radar in a rules-based system, or use other techniques that would require an auditor to not just scrutinize one specific expense line in isolation, but potentially look at that user’s history and compare expenses across time, or even across multiple users.

That’s a hard thing to do, but machine learning systems will allow us to consider more data points and trends over time, taking spend at risk into account as well. For example, let’s say someone expenses something for $100. That’s an amount small enough that it might not be flagged for audit. However, over time, they expense that $100 item 50 times across many expense reports. Now we’re looking $5,000 worth of fraud. That’s the kind of trend you could spot with machine learning.

The converse is also true—let’s say someone expenses a $2,000 line item. That might trigger a manual review in a rules-based system, but a machine learning system could identify that this is part of a regular and authorized pattern of travel and let the report through, speeding employee reimbursement and saving the person in accounts payable the trouble of a manual audit. That should put smiles on the face of AP folks who don’t really enjoy auditing hundreds, or even thousands of expense reports a month.

All in all, 2018 looks to be a very exciting year, with lots of technology driven progress for travelers, program administrators, and the industry as a whole.