How to make travel spend work harder

The technology driving expense management today could redefine the way travel is managed tomorrow 

The never-ending puzzle of how to improve compliance and the effectiveness of a travel programme, there is a growing feeling that the key to this conundrum may be found in the once humble (and humdrum) area of expense management.

While travel buyers have traditionally focused on the major areas of spending – air and hotel – expense systems have been seen largely as a bolt-on service and, in many cases, something that has been dealt with by finance or procurement departments rather than travel.

Silver bullet
Almost every aspect of corporate travel management is being impacted by technology and data analytics, and they are also driving major changes in expense. Expense management tools are rapidly getting more sophisticated and becoming a more compelling proposition for chief financial officers when they are combined with online travel booking platforms, such as those offered by SAP Concur and Expedia Group’s Traveldoo.

Consultant Chris Pouney, of Severnside Consulting, says: “Expense management is a tricky subject for many travel managers coming into a business, who typically start with what they know – air, hotel and TMC.

“They are traditionally not experts in expense. But I think payment and expense could be the silver bullet for managed travel. Expense offers such a rich source of data and can be very effective in controlling people’s behaviour because one of their constant drives is to get their money back.”

Most travel buyers seem reticent to talk about expense management as, in many cases, it’s not part of their remit. But there are already signs that expense is an area that can significantly affect the travel department’s options when it comes to working with other suppliers.

Dan Fitzgerald, Traveldoo’s chief product officer, says: “Travel and expense used to be completely different worlds – expense management was mostly dealt with by the chief procurement officer or chief financial officer. We spent time trying to convince clients of the advantages of marrying travel and expense but it largely fell on deaf ears.”

But the mindset has changed in recent years – mainly due to what Fitzgerald calls the “Concur effect”. “It has been incredibly successful at preaching the gospel of travel and expense, and how it makes sense for clients. Now, most of our bids are for T&E because clients understand the benefits.”

On the move
A major trend over the past few years has been the deployment of mobile expense apps, which travellers use to fill in their expense submissions “on the go”, instead of trawling through receipts when they get back to the office.

SAP Concur has been using these innovations to improve the expenses process. One of its latest products is Drive, which has been introduced within Concur’s expense app to track employee mileage through GPS technology.

Rachel van der Merwe, director, product marketing at SAP Concur, says: “We’re constantly innovating with all our products to offer greater value to the customer and anticipate their requirements. Drive is a great example of this – mileage is the largest unreceipted expense category. In the UK, £169 million was reimbursed in mileage in 2017.”

SAP Concur conducted research with 1,100 employees responsible for signing off mileage expenses across the UK, France, Finland, Germany and Sweden. Its research found 56 per cent of mileage claims were rarely or never being checked by managers.

SAP Concur is also continuing to work directly with big-name travel suppliers, such as ride-hailing giant Uber and major airlines, including British Airways, to capture transactions completed outside preferred booking channels.

In May, BA integrated its website with SAP Concur’s Triplink itinerary service allowing data from bookings made by business travellers through to be captured. The traveller making this direct booking automatically gets access to any negotiated corporate discounts when they link their BA Executive Club and Concur accounts.

Van der Merwe says: “The booking data is synced automatically to Concur, so it creates a line item and gives the client early visibility of spending as well as improving duty-of-care because they know the traveller has booked a flight outside the corporate booking tool.”

Waking up
The development of more sophisticated tools should make life easier for both travellers and buyers with the ability to pick up data from bookings made outside the preferred booking platforms. But where do TMCs fit into this evolving expenses landscape?

Consultant Raj Suchdave, managing partner of Black Box Partnerships, says TMCs have “woken up” to the importance of using expense data to create “a smarter picture of a journey”.

“The greater the data, the more collective view you can get of travel patterns and how that impacts the cost of travel,” he says. “You need to pull together all these data sources – travel, expense and profile data. It’s not just about looking at the cost of air tickets or train fares.

“You may have already squeezed out all the savings you can from a travel programme, but using expense data can open up a number of new opportunities by looking at the total cost of a trip.”

Ali Hussain, ATPI Group’s chief innovation and technology officer, agrees analysing total trip cost for clients is a crucial part of a TMC’s role.

“By analysing in one place under one trip, business owners, procurement and finance managers are able to get a full view,” he adds. “If a trip is attached to a sales conference they are then in a more qualified position to analyse the ROI of that conference based on the cost of travel.”

Nick Ludlow, general manager, EMEA, at Chrome River Technologies, adds expense management is not just about “finding ways to keep cutting business travel spend”.

“Forward-thinking companies are more often looking at how they can make travel spend work harder to drive value,” he says. “We’re focused on helping companies analyse and easily visualise data by linking Chrome River with their own CRM system.

“This allows travellers to allocate their spend to specific prospects or accounts, so sales and finance teams can then analyse them to determine which types of spend have the greatest impact on revenue generation.”

The next steps
With so much talk about new technology – particularly around subjects such as artificial intelligence and machine learning – what’s the next development for the expense management industry?

Expense apps are constantly learning to scan and read paper-based receipts more accurately, thus reducing the number of corrections business travellers have to make manually.

Lydie Charpin, global head of corporation solutions at Amadeus, says its T&E platform uses optical character recognition (OCR) to read receipts while machine learning currently enables it to recognise receipts in English, German and French, with more languages due  to be added to the system.

“As more countries change their fiscal rules to allow businesses to use digital copies of receipts, the move to a paperless expense process is on  the horizon,” predicts Charpin.

“We will be introducing enhanced digitalisation capabilities which will push expenses further towards becoming completely paperless and make the process more efficient for both employees and corporations.”

Elsewhere, Traveldoo has introduced a chatbot function within its mobile expense app, which can perform a few basic tasks as part of a “test and learn” strategy designed to build more functionality based on users’ interaction and feedback.

For SAP Concur, one of the biggest trends is the increasing adoption of expense management by small and medium-sized enterprises – currently the company’s fastest growing business segment.

“We find a lot of these SMEs come to us and don’t have a T&E policy,” says van der Merwe. “They are mostly moving from a manual paper or spreadsheet process and we’re helping them to automate it for the first time.”

Buyer Beware
With expense becoming a more crucial part of the travel management equation, what should buyers do to make sure they are involved in the conversation within their organisation? Severnside Consulting’s Pouney says: “When buyers don’t engage with expense management, there’s a risk the CFO will make their own decision about the expense tool, and the supplier will offer them a booking tool as well.

“Taking a booking tool can potentially drive the choice of TMC, as some expense companies partner more strongly with certain TMCs than others. Travel people need to put themselves at the table for this decision, otherwise decisions will be made without them and they could become a lot more irrelevant.”

But Pouney also sees this as an “opportunity” for buyers to “upskill themselves” and use better understanding of expense management “to elevate their role” within their organisations.

There’s clearly work to be done in this area – Traveldoo’s Fitzgerald says: “The travel manager is still a highly influential person in the process when you are looking at a T&E bid. But normally they are not going to make the final decision – that’s more likely to be made by procurement and the CFO.”

Allowing expense management to take a critical leading role in travel management may seem like a case of the tail wagging the dog. But there are signs this is the direction we’re heading in and getting on top of expenses may soon become a paramount issue for travel buyers.

Tackling fraud
One of the biggest selling points of expense management systems is in their supposed ability to reduce fraudulent claims.

Research by payments specialist Soldo shows UK firms lose around £1.9 billion per year on “unauthorised and inflated” purchases. The most common fraudulent claims involve “exaggerating” mileage, followed by putting through taxi receipts for personal travel or claiming for meals with friends and family.

Expense management systems are becoming better at flagging “out of the ordinary” transactions and spending patterns, as well as examining third-party vendors for types of expenses which are outside policy, such as bills from “gentleman’s clubs”.

Drawing the line
Rachel van der Merwe, director, product marketing at SAP Concur, says: “The majority of fraud is unintentional with travellers not understanding the policies or where the lines are.

“The solution to fraud is data – capturing the right data creates the visibility to make sense of it. Then you can go about educating travellers and changing behaviour.”

Mandating the use of corporate cards for travel expenses also helps to reduce fraud, according to Nick Ludlow, general manager, EMEA, at Chrome River Technologies.

“Using a company card reduces the ability of travellers to perpetrate schemes such as reimbursement fraud. This is where a traveller buys a full-fare ticket and a regular ticket for the same flight on a personal card. They will travel on the regular ticket, but they submit the more expensive ticket for reimbursement. They also cancel that ticket for a full refund, and have the refund paid back on their card,” he explains.

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