Small business leaders have a lot on their plates – from securing
financing and building a strong team to attracting customers and streamlining
operations. But amid all the competing big-picture goals, the most successful
businesses never stop laying the groundwork for growth. Opportunities abound,
even in a challenging and rapidly changing business environment – though the
tools and insights needed to fuel expansion are not always obvious.
Case in point: Travel and entertainment (T&E) is not typically
a company’s largest category of expense. But it is the one finance leaders are
most likely to have difficulty managing, according to a spring 2022 survey from TripActions. Those
difficulties often eat up time and money that could be put toward more
strategic initiatives.
In the era of hybrid work and high turnover, many companies are
navigating new costs and challenges, making it more important than ever to gain
clarity and control over expenses. Fortunately, monitoring some key data points
can help travel and finance managers streamline their programs and optimize
overall company spend.
The travel and expense data points below provide the insights
high-growth companies need in the current business environment to maximize
efficiency, reduce costs and accelerate growth.
Hybrid workforce
analysis
Why it matters: To streamline T&E spend, companies must
understand the number and location of remote, hybrid and on-site employees.
The challenge:
- Roughly half of U.S. full-time jobs
can be done remotely, according to a recent Gallup poll. Among
remote-capable employees, 24% plan to remain exclusively remote, while 53% will
have a hybrid work model, splitting time between the office and a remote
location. That leaves just 23% who plan to remain in the office full
time.
- Work-from-home arrangements can
reduce employee office expenses in some areas, but the new environments also
come with new expenses, including home office setup and costs for travel to the
corporate base or offsite events. The share of employees charging work expenses
on personal cards may increase, making it harder to monitor and optimize
expenditures.
Over the past two years, many companies have completely altered
their remote work policies. Major players like Facebook, Twitter, Shopify and
Dropbox have extended the option to work remotely, and, to remain competitive,
many small-to-medium-sized businesses (SMEs) have followed suit.
Flexible work options can help to retain employees and, done
right, support a company’s innovation and productivity. But in-person
opportunities for brainstorming and team-building are key. Companies should
analyze their workforce by number and location and, ultimately, assess both
cost savings and spend on home office setups as well as travel. The right
modern travel management solution can help to gain control over T&E
expenditures and facilitate group travel, making offsites and workshops both
more cost-effective and easier to organize.
Those managing the company’s finances should be able to monitor
how much employees are spending and have a system in place that makes that
information easy to find and analyze in real time. This data is essential for
assessing the savings – in both time and money – the company could realize by
implementing a corporate card solution, which can be a powerful tool to get
control of excessive spending.
A corporate card solution enables management to set policy at a
granular level for both physical and virtual cards, while empowering employees
to buy what they need. With all expenses automatically flowing to the same
place, it’s much easier to get the data necessary to make smart decisions – and
implement the ideal balance between team travel and employee flexibility.
Employee turnover
cost
Why it matters: Many factors – including T&E policies –
can affect employee morale. Assessing turnover costs can help companies figure
out ways to optimize their workforce.
The challenge:
- More Americans quit their jobs each
month in 2021 than in any other year on record, according to the Bureau of Labor
Statistics. An average of nearly four million people resigned monthly in 2021,
compared to 3.5 million in 2019, and resignations
remain elevated in 2022.
- In March 2022, over 40% of small
businesses reported that they struggled to find new employees, up from 23% in
August 2020, according to the U.S. Small Business Administration. More time and money may be needed to attract new talent in the
current environment, making it crucial to balance recruitment against employee
retention.
In the era of The Great Resignation, retaining employees – and
hiring new ones – can be a challenge. Management teams should calculate the
cost of employee turnover and compare it to the cost of employee retention
initiatives. Companies should understand the overall turnover rate and costs
incurred to attract, hire and train new employees. Depending on this analysis,
companies may find it makes sense to invest more in keeping existing employees
happy. For high-growth companies seeking to expand their workforce, investing
in employee retention has the added benefit of making the company a more
competitive prospective employer.
In the 1999 film Office Space, several characters steal the
often-malfunctioning printer from their former employer, drag it into a field
and destroy it with a baseball bat. The scene is iconic for a reason: “Minor”
inefficiencies can add up to major frustrations for employees. And small
changes can make a big difference in boosting employee happiness. If employees
are paying for travel and other expenses out of pocket, cobbling together
receipts and waiting to be reimbursed, an end-to-end travel, corporate card and
expense management solution can virtually eliminate the pain points – for both
employees and those responsible for managing travel and finance.
Some travel management solutions even come equipped with an option
to book personal travel – giving employees access to the same rates and
inventory for leisure trips that they get when traveling for business. Showing
employees that you value their time – and their time off – can boost employee
retention and make your company more appealing to job candidates.
T&E compliance
rate
Why it matters: The first step to keeping costs under
control is to know where company money is going – and what share is being spent
outside of policy.
The challenge:
- Roughly half of SMEs indicated
controlling budgets and ongoing expenses is one of their top expense management
challenges, according to a 2022 TripActions survey.
- The survey also found that only a
small percentage of SMEs automatically flag out-of-policy transactions.
Small businesses have a lot of expenses, including travel and
entertainment, office supplies and software. Controlling these costs is
impossible without a clear T&E policy, as well as the tools to implement
it. Once a budget and spend policy is in place, companies should calculate the
compliance rate to determine what share of spend is out of policy.
A corporate card can provide improved visibility into
expenditures, but it can also prevent out-of-policy purchases in the first
place. Managers can set spend controls at a detailed level, so instead of
having to track down employees to ask questions about unexpected costs,
out-of-policy purchases won’t even go through.
Additionally, an integrated travel management solution can
dramatically improve compliance. A solution with a broad selection of preferred
rates gives travelers plenty of options to choose from, and some companies have
further cut costs by incentivizing travelers to choose discounted rates in
exchange for receiving a portion of the savings in gift cards.
Time to
reimbursement and reconciliation
Why it matters: Understanding how long it takes for
employees to receive reimbursements for incurred expenses, as well as the time
required for finance teams to complete monthly reconciliations, is essential.
Both metrics can help companies assess how efficient their T&E operation is
– and provide a benchmark for the operational improvements needed to support growth.
The challenge:
Corporate travel managers’ top
technology priority was to automate trip-related expense capture, according to Phocuswright’s U.S. Corporate Travel Report 2020-2024.
But few small business leaders have
implemented an automated system, according to a TripActions survey. Just 12% automate reimbursements within policy, only
6% flag misuse of corporate cards — and a full 25% don’t automate anything
in their spend management process.
While various metrics can help to assess a company’s spend
management system, two calculations – the average time it takes for employees
to receive a reimbursement and for finance teams to complete the monthly
reconciliation process – can provide a benchmark for assessing efficiency. In turn,
travel and finance managers can use this information to identify bottlenecks.
If travelers are juggling receipts and submitting expenses manually, there may
be a delay in expense submission. It may take extra time for the accounting
team to manually review expense reports, or there could be a long approval
chain, requiring multiple layers of approval before an expense is reimbursed.
The bottom line: High-growth companies should take stock of
internal technology and processes to identify opportunities to streamline. A
modern, integrated expense management system can eliminate manual expense
reports and enable automatic approvals based on established policy controls. As
a result, the time it takes for monthly reconciliation can be dramatically
reduced.
If excessive time is required for either of these tasks, a
company’s expense management process is in need of improvement. The mistake
many companies make is waiting until systems become strained before they
upgrade, often tacking on additional tools from multiple vendors as stopgap
solutions. This approach puts a drag on growth and prevents companies from
fully capitalizing on opportunities.
Instead, small businesses should focus on future-proofing their
tech stack and building for the growth they want, not necessarily the growth
they have. Particularly in a time of rapid expansion, internal operations need
to function as efficiently as possible, so employees are freed up to focus on
more strategic activities. An end-to-end solution that combines travel,
corporate cards and expense management can enable a business to scale on demand
– and be fully prepared for future growth.