Nearly every industry undergoes major evolutions as technology evolves. Television shifted from scheduled viewing, to time-delayed, then on-demand. Automobiles have changed from internal combustion, to hybrid, and are now facing their most dramatic paradigm shift with driverless technology.
Employee expense management solutions have realized similar evolutions. The first “era” of expense management was receipts stapled to forms (which many companies still use). They were a pain for busy business travelers to create and equally cumbersome moving through the approval and reimbursement processes. The second era was the introduction of expense report software, which “automated” the paper process. It was easier to use both for expense submitters and approvers, and enabled the introductions of workflows, but provided few improvements in employee productivity.
The third, current, era is focused on simplifying the expense management process: mobile-optimized expense apps with receipt scanning using automated OCR data extraction and expense item creation. Integration with credit card and travel providers provides real productivity gains. Automated enforcement of expense policies and business rules provides risk and cost reduction. ACH payments to employees and card providers streamline business processes.
The one feature each iteration of expense management technology had in common was the focus on cost control and compliance. By automating processes and reducing the amount of time needed for expenses to be submitted and approved, the cost of the expense management process has been minimized. By enforcing corporate expense policies and monitoring for fraudulent spend, compliance has been maximized and wasteful spend nearly eliminated. However, we have now reached a point where the returns from efforts to improve upon either of these areas is diminishing.
The next, fourth, era is the fortunate confluence of technologies in the enterprise: it is the focus on actionable spend intelligence. The emphasis will be less on reducing spend and more on making it more impactful. This doesn’t just mean leveraging spend data to negotiate vendor discounts; rather it is about obtaining information on the outcome of travel and expense spend to optimize future spend.
Further reading: Do You Know the True Cost of Sales?
This may sound far-fetched at first, but in reality, all of the pieces are in place to achieve this. Sales and account management teams, which are typically responsible for 50 percent or more of many organizations’ T&E spend, are meant to log every prospect and customer interaction – such as a meeting or a meal – in their CRM solution. The CRM system will also contain data on the outcome of these interactions – whether an opportunity was won or lost and how much revenue was generated. In parallel, an expense system will also contain details of all spend incurred by the sales and account teams. The traditional problem is that these are two application silos – often owned by different parts of the organization. This disconnect made it very difficult to provide any context on the outcome of travel and entertainment spend. It was almost impossible to analyze how sales teams’ T&E spend has an impact on revenue generation. The advent of cloud-based CRM solutions, integration between applications via API’s, mobile capture of spend information and geographic encoding of spend data are some of the underlying technology and environment changes that make this new era possible.
As we move into 2018 and beyond, I see expense solutions that can successfully integrate CRM sales data along with spend data and deliver clear, actionable intelligence to be the next big evolution in expense management. This will have a major impact on how organizations create and distribute T&E budgets. By allocating each spend item to a specific sales opportunity or account within the expense solution, and combining this with revenue data, sales and finance leadership can obtain granular detail on specific opportunities and activities. They will have visibility into larger trends for both teams and individuals’ activities and be armed with answers to questions such as: what is an optimum amount of T&E spend to deliver a dollar of revenue? which activities are more or less likely to deliver a successful sales outcome? what spend is least efficient in generating new revenue?
As forward-thinking organizations start to adopt expense management solutions less as a spend reduction solution and more as a spend optimization solution, we’ll witness a real impact in the way that finance teams view T&E budgets.
This article first appeared in Business Travel News on January 31, 2018.
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Our choice of Chrome River EXPENSE was made in part due to the very user-friendly interface, easy configurability, and the clear commitment to impactful customer service – all aspects in which Chrome River was the clear winner. While Chrome River is not as large as some of the other vendors we considered, we found that to be a benefit and our due diligence showed that it could support us as well as any large players in the space, along with a personalized level of customer care.
We are excited to be able to enforce much more stringent compliance to our expense guidelines and significantly enhance our expense reporting and analytics. By automating these processes, we will be able to free up AP time formerly spent on manual administrative tasks, and enhance the role by being much more strategic.