Amid the digital transformation of the enterprise, data is now considered the most valuable currency for corporates looking to transform via technology. The ability for technology to digitize data, analyze it, share it between systems and provide actionable insights to business leaders is now a major catalyst for this transformation across all areas of the enterprise.
It’s certainly the case for expense management, said Karim Jouini, CEO of France-based Expensya. Add legislation like PSD2 into the mix, which promotes data sharing and security, and there is an opportunity for T&E processes to be truly transformed, Jouini recently told PYMNTS.
Indeed, one of the biggest mistakes a company can make in its expense management strategy is “underestimating the importance of these three success factors in a process: data, data, data,” he said.
Failing to digitize the expense management process means companies are not able to automate processes, opening up the enterprise to risks like fraud and errors (and lost money). Employees can become “frustrated” over the burden of manual expense reporting, Jouini noted, and a lack of automation can have an array of knock-on effects, from missing recovered VAT to losing valuable time.
At present, research suggests that companies have significant room for improvement in expense management.
The Economist Intelligence Unit surveyed chief financial officers and other financial managers across the U.S., U.K., France and Germany earlier this year, and found that more than 60 percent lack complete visibility into company expenses. According to Coupa, which commissioned the report, the data revealed the importance of migrating T&E processes to the cloud, enabling digitization of expense data and allowing managers to gain visibility into that data.
In separate research released in June by Chrome River, a survey of business travelers across the U.S., U.K. and Australia found businesses that continue to rely on physical, paper receipts are twice as likely to be impacted by expense fraud than companies that have adopted digital, automated tools. Jouini agreed that expense fraud can often be linked back to “inefficient expense claims management and a lack of control.”
“Some of the worst examples are the manual and paper management of expense reports,” he said, adding that technology can automate adherence to company spend policy, detect duplicate expense items and beyond.
As both reports showed, data is at the heart of making improvements like heightened visibility and control over employee spend. According to Jouini, there is a range of technologies that are ready to transform corporate T&E — if the data is digitized.
While artificial intelligence (AI) has only just begun to infiltrate the travel and expense (T&E) process, Jouini said it will be most impactful in the areas of approvals and auditing. Instant payments and, more broadly, virtual payments technology are “also ready to disrupt that space,” he added.
AI and ePayments reveal the dual-sidedness of digital data: Artificial intelligence can only be integrated if data is already digitized, allowing for machines to automatically analyze and make decisions. Virtual payments, meanwhile, are at the other end of enterprise digitization, allowing companies to obtain electronic data about their payments — which can be then used by AI-powered solutions and other technologies for analysis.
With data becoming a critical part of improving T&E, European companies have another factor at play driving their digital transformations: PSD2.
The data protection regulation aims to make it easier for data to flow seamlessly across platforms, and companies see its biggest potential in the area of corporate banking. Yet, analysts noted that it could have a profound effect on all areas of business finance, including expense management — enabling data to move between expense platforms and accounting portals, for example, or move between payment portals and expense reporting solutions.
“This EU directive, beyond making [the] banking industry more transparent to the bank account owner, is going to seriously impact expense management, and T&E as a whole,” Jouini said, adding that expense processes can now be “directly linked” to other components like payments and bank accounts, enabling service providers to enhance their automation capabilities.
In expense management, data emerges as the currency of control.
The legislation will also be essential to service providers looking to promote automation by integrating with each other. For instance, Expensya recently announced its integration with Uber for Business, enabling business travelers to automatically add the necessary data form their Uber trip into the Expensya platform.
While service providers may be eager for PSD2 to make its mark on corporate expense management, the enterprise itself may not necessarily be convinced of the legislation’s potential. A survey conducted at EuroFinance’s International Treasury Management conference this year found that about 60 percent of corporate treasurers feel PSD2 and Open Banking regulations are not relevant to them — and some treasurers had never even heard of PSD2.
However, like the adoption of artificial intelligence, PSD2 may need to be patient before it can have a significant effect on corporate T&E. First, companies must embrace automation, ePayments and other initiatives that will digitize their expense data. Only then can initiatives like PSD2, or technologies like AI, take advantage of the digital data to have a meaningful impact on corporate expense management.