The travel and expense management market is booming. New research from TechNavio found that the T&E software sector is expanding at a compound annual growth rate of more than 6 percent, and that much of the fuel behind this growth is the need for companies to reduce costs associated with business travel.
Unfortunately, TechNavio also found that one of the main obstacles for businesses, especially SMEs, in adopting these software solutions is the cost of migrating from legacy T&E tactics like manual data entry and spreadsheets, to more sophisticated tools like a cloud-based solution.
But another study released earlier this month by T&E software firm TriNet uncovered some unexpected ways businesses can suffer from outdated expense management practices.
The Cost To Employees
TriNet’s research found that more than half of corporate travelers have allowed themselves to cover the cost of at least one expense on a business trip – for the simple reason of avoiding the hassle of creating and filing an expense report.
A survey conducted by the cloud-based T&E management firm found that 53 percent of business travelers have covered the cost of a business trip expense. Of those travelers, 36 percent added that they had done so multiple times.
“I’d say for the average, honest employee, they’re losing money on their expense reports,” said TriNet Cloud division chief technology officer Dan Fritcher, according to reports in USA Today.
The research found a number of reasons why employees would prefer to spend their own money on a business trip rather than generate an expense report. Sixty percent of survey respondents said they have experienced some sort of issue related to the fact that they have had to wait to be reimbursed by their companies for their travel expenses.
According to Fritcher, one example of this type of problem can occur if an employee is still waiting to be reimbursed from one trip after placing a charge on his or her personal credit card. “Maybe I can’t pay a utility bill or something along those lines because my card is already maxed out with work expenses,” the executive explained.
Employees also had to wait an average of five weeks to get reimbursed from their employers for trip expenses – longer than the traditional credit card cycle, TriNet pointed out.
The Cost To Businesses
Researchers are largely in agreement as to the cost benefits of adopting T&E management software and cloud-based solutions. PayStream Advisors’ research from earlier this year estimated that switching from manual to automated travel and expense management report tools could save companies across the globe billions of dollars a year, and reduce the cost of generating an expense report from $26.63 to just $6.85. T&E software boosts spend visibility, and the ability for a company to eliminate rogue spending or expense report errors.
But there are other ways poor T&E tools burden businesses.
TriNet found, for example, that 53 percent of business travelers have avoided going to an off-site meeting or event for improving their professional skills, just because the cost burden of such a trip would be too much. It’s a missed opportunity for businesses to benefit from a stronger workforce.
Remedies To T&E Woes
It may not be easy or cheap to update a business’s T&E management methods, but with so many unexpected burdens to a corporation, T&E software just may pay for itself in the long run.
Industry experts point to an array of tactics SMEs can use to improve their expense management practices and affordably adopt sophisticated software. For instance, TechNavio researchers found that many cloud-based T&E management software providers can help reduce the cost burden on businesses, especially SMEs, from implementing these tools, with many software firms offering payment plans for business customers and flexible services to fix the specific needs of a business.
TriNet pointed out that businesses that issue corporate cards to their employees allow business travelers to pay for what they need without taking on the payment burden themselves. With the emergence of new solutions that connect a corporate card to an automated expense report service, it’s easier than ever for SMEs to avoid forcing their employees to take on the cost of a business trip.
Mobile apps and cloud-based expense reporting tools also make it far easier for employees to file expense reports, and for businesses to reimburse their employees faster. These solutions, Fritcher said, can let travelers essentially fill out an expense report as the trip and its purchases happen, and many offer automated data input and report generation, negating the need for employees to file paper receipts and reports.
Small businesses often struggle to manage their finances, and it can be the nail in the coffin for a new firm. While many SMEs are understandably cautious about implementing what can be an expensive T&E management software tool, the latest research suggests that – in more ways than one – SMEs simply cannot afford not to adopt these solutions.