For any organisation that depends on travel and entertainment (T&E) to generate new business and manage its operations, one truth is evident - managing these expenses can be a monumental challenge.

1. SMARTPROCUREMENT
EXPENSE MANAGEMENT AUTOMATION (EMA): THE "SILVER BULLET" IN COST CONTAINMENT
AND PROCESS EFFICIENCY.
According to a recent Aberdeen Group survey, companies that don’t use an
automated travel and entertainment (T&E) expense management service are falling
behind in almost every measure of financial management.
Aberdeen refers to these companies as “laggards” and presents figures showing that
they pay 37 percent more to process their expense reports, they take three times longer
to reimburse employees, and they’re essentially working in the dark when it comes to
controlling travel expenditures.
Plus, Aberdeen estimates that almost one of every five T&E expenses submitted at these
companies is in direct violation of corporate policy.
For any organisation that depends on travel and entertainment (T&E) to generate new
business and manage its operations, one truth is evident - managing these expenses can
be a monumental challenge. According to Aberdeen research these challenges
include:
Figure1: Top Challenges in Managing T&E Spend
Lack of access to sufficient T&E data 54%
Enforcement of compliance to T&E Policies 54%
Controlling cost of T&E programs 38%
operations/admin
Travel booking process disconnected from 37%
expense management process
Insufficient accuracy of T&E data 35%
Source: Aberdeen Group 2008
This situation is generally the result of business risk managers’ tendency to sacrifice
efficiency for control. This has led to the prevalence of reimbursive T&E policies, these
policies typically directing that the employee utilise their own funds and claim back from
the organisation. This delivers the following benefits to the organisation:
1) This policy ensures that the organisation only reimburses expenses it deems
appropriate and as such ensures the employee is more circumspect about their
spend. This assists with Control and Compliance.
2) The employees ensure timely and speedy return of documents to the
organisation. This assists with Control.
Despite these benefits however reimbursive, manual policies actually create and
contribute the challenges mentioned by Aberdeen.
1) Lack of access to sufficient T&E data. In all cases, these policies result in the
manual processing of the data through the organisation. The irony is that at the
point of origin, i.e. the transaction, the data is electronic. From that point on it is
handled manually right up to the point it is captured into the General Ledger (GL)
by some overworked and underpaid accounts payable/finance clerk. Due to the
volume of data, this data is usually captured at a low level of detail and hence
analysis of the data, beyond GL account level reporting, is almost impossible.
© 2009 TRANSACTION TECHNOLOGY SOLUTIONS -1- 19 February 2009

2. SMARTPROCUREMENT
2) Enforcement of compliance to T&E policies.
i. Most manual expense management processes rely heavily on the
authorising manager to check the employee’s claim to ensure policy has
been adhered to. Most authorising managers will be aware of the obvious
non-compliant spend such as Hotel valet services, mini-bar use and in-
room dining and movies and will check for these. Generally though
approval of these is also left to the discretion of the authorising manager
as there may be circumstances where these can be allowed. As a result,
once the claim makes it passed the authorising manager there is often
very little secondary checking done, and this leaves the policy open to
abuse and fraud.
ii. Further, whilst authorising mangers are generally kept up to date with the
organisation’s T&E policies, they may not be kept up to date with the
organisation’s sourcing policies. As result authorising managers may often
sign off on non-compliant spend without being aware of it. A common
example is where an organisation’s travel office books the employee into
a contracted hotel where-upon the employee cancels this booking and
changes it to a property of their own choice, at the same or lesser rate.
The employee and the authorising manager are unaware that this may
impact on the rebate the organisation is hoping to receive from the
contracted hotel group. In an actual case study conducted by
Transaction Technology Solutions, an organisation was “leaking” 82% of its
hotel spend. Furthermore, this information was only discovered following
an extensive and costly manual analysis of thousands of expense claims.
Figure 2: Lodging Spend Spread at Case Study Organisation
R87
Contracted Group 1
R130
Contracted Group 2
Lodging Spend R1’040
“Out of” Contract
200 400 600 800 1000 1200
Thousands (R)
Source: Transaction Technology Solutions 2008
3) Cost of administration. Few organisations realise the overall process cost of
manual expense reports. Studies done by the Aberdeen Group in 2003 showed
that on average it costs R420* and can take up to 14 days to process an expense
report manually. More importantly it takes on average 35 minutes of an
employee’s time to complete a manual expense claim. Given that most of these
employees are at the higher end of the pay-scales, this contributes greatly to the
overall process cost. What the Aberdeen report fails to highlight is that the 14
days taken from “submission to reimbursement” do not take into account the
time from “origination to submission”. All manual expense reporting processes
generally kick-off with the receipt by the employee of their bank/card statement,
which is often one of the documents required by the employer to ensure “proof
of payment”. This can add an additional 30 days to this cycle and can result
therefore in the GL being, on average, 45 days out of date.
© 2009 TRANSACTION TECHNOLOGY SOLUTIONS -2- 19 February 2009

3. SMARTPROCUREMENT
Figure 3: Analysis of Manual Expense Report Management Process
35 minutes
Time to complete expense report
10 minutes
Time to review expense report
Time for accounts payable to 22 minutes
process expense report
14 days
Time to process report from
submission to reimbursement
Average cost of processing an R 420
expense report
Source: Aberdeen Group 2003
* Original US$ values converted to ZAR at Price Parity
4) Accuracy of T&E data. Most organisations insist on the employee utilising their own
funds or credit cards because the organisation does not trust the employee to be
responsible with a company credit card.
Figure 4: Top 3 Reasons Why Organisations Resist Implementing Corporate Card
Programs
86%
Concerns about fraud and misuse (Lack of
trust in the employee)
Encouraging of compliance to T&E Policies 72%
Ensuring the timely submission of expense 64%
reports
Source: Transaction Technology Solutions 2008
The irony is that the organisation relies on the data originating from the
employees’ “systems” to manage its own expense information. The challenge this
presents is that individual bank and credit card statements are notoriously short of
“description” and therefore the organisation must now trust the employee to be
truthful about what the item relates to. This, when 86% of the organisation polled
effectively stated they did not trust their employees.
It should be clear from what has been covered so far that those organisations that
depend on reimbursive, manual T&E policies are operating under an illusion of control. It
is an illusion because the systems that are put in place to deliver this control actually
contribute to its absence. The only way to gain control over T&E expenditure is the
implementation of data and workflow systems that deliver detailed reporting information
back to the organisation for management and analysis. Studies done by the Aberdeen
Group in 2008 show that 79% of organisations believe Corporate Card programs are
essential to the competent management of T&E expenses. Furthermore, 73% believed
that a formal expense management solution was essential and 68% believed a travel
data reporting system was essential.
© 2009 TRANSACTION TECHNOLOGY SOLUTIONS -3- 19 February 2009

4. SMARTPROCUREMENT
Figure 5: Organisations’ Use of T&E Management Technology
70%
62%
52%
47%
43%
26%
18%
25%
9% 9%
Corporate Card Online Booking/Self Travel Management Expense Management Travel Data Matching
Program Booking Tool Company Solution Application
Currently Use
Source: Aberdeen Group 2008
Others that plan to use within 12 months
Apart from directly addressing the challenges raised in Figure 1, expense management
automation contributes directly to enabling the elimination of fruitless and wasteful
expenditure and contributes to increased efficiency in the expense management
process. Organisations polled by Transaction Technology Solutions reported savings of
between 15% and 32% in T&E spend through the implementation of expense
management automation and increases in compliance of between 4% and 78%.
Figure 6: Savings Delivered by EMA Figure 7: Decrease in Non-Compliant Spend
15% 4%
Air Air
17% 5%
Car Rental Car Rental
23% 78%
Hotel Hotel
Entertainment & Entertainment & 75%
32%
Subsistence Subsistence
Source: Transaction Technology Solutions 2008 Source: Transaction Technology Solutions 2008
The relatively low 4% and 5% increase in compliance in Air and Car Rental respectively is
a result of the already high compliance to policy as a result of the use of Travel
Management Companies at the respondents. The massive 78% increase was as a result
of the increased capability of the respondent organisations to police and drive
© 2009 TRANSACTION TECHNOLOGY SOLUTIONS -4- 19 February 2009

5. SMARTPROCUREMENT
compliance due to increased availability of management information. Offending
employees are identified within 48hrs of the execution of unauthorised or non-compliant
spend. Thereafter “soft” controls come into effect with offending employees “spreading
the word” and causing a “wave of compliance” among other employees. This results in
rapid changes in behaviour and thus rapid delivery of benefit.
Aberdeen research, corroborated by Transaction Technology Solutions, also illustrates a
significant improvement in expense reporting cycle times and costs.
Figure 8: Comparison of Manual vs. Automated Expense Management
35 minutes
Time to complete expense report 20 minutes
10 minutes
Time to review expense report 5 minutes
22 minutes
Time for accounts payable to 5 minutes
process expense report
Time to process report from 14 days
7 days
submission to reimbursement
R 420
Average cost of processing an
R 102
expense report
Manual
Automated
Source: Aberdeen Group 2003
* Original US$ values converted to ZAR at Price Parity
Significantly, with web-based automated expense management the employee can
address items within 48hrs of origination, wherever they happen to be, thereby reducing
the “origination to GL update” cycle time from an average of 45 days to 72 hrs. This
results in dramatic changes to the accuracy of the organisation’s General Ledger which
informs not only financial reporting but Treasury efficiency as well. Expense claims no
longer “ambush” the Treasury, thus improving fund management.
The benefits of expense management automation can be summarised as follows:
1. Improves access to T&E data;
2. Improves compliance to T&E policies;
3. Reduces the cost of processing T&E expense reports;
4. Improves reconciliation between travel booking and expense management
5. Increases the accuracy of T&E data; and
6. Improves Treasury efficiency.
There can be no doubt that a corporate card program, combined with a web-based
data management solution, provides the quickest, most cost-effective means to achieve
control, cost savings and transparency for the organisation’s T&E expenditure. In the
current economic climate implementing an automated expense management solution
should be a priority for every organisation.
© 2009 TRANSACTION TECHNOLOGY SOLUTIONS -5- 19 February 2009

6. SMARTPROCUREMENT
References:
1. Best Practices in Expense Management Automation – Aberdeen Group 2003
2. Travel and Entertainment Expense Management Report – Aberdeen Group 2006
3. T&E Expense Management Report – Aberdeen Group - 2008
About the Author:
Julian Curtiss is Managing Director of Transaction Technology
Solutions, specialists in Expense Management Automation. He has consulted to some of
South Africa’s largest corporations on the benefits of process enabling technologies.
Julian has been involved in the business end of IT projects for over 12 years, incorporating
work in the UAE, United Kingdom, Zimbabwe, Kenya, Uganda and South Africa. This has
included the implementation of Business Management Systems such as Sage Software,
ERP systems such as JDEdwards (Softline), E-Procurement systems such as SAP Enterprise
Buyer, and card management systems such as VISA’s Information Source ™ and
MasterCard’s SmartData Online ™.
Contact Details: +27.83.413.5737
Julian@curtiss.co.za
© 2009 TRANSACTION TECHNOLOGY SOLUTIONS -6- 19 February 2009