Technology continues to be seen as the most effective means that travel managers have to enforce compliance with travel rules, although cross-organization integration remains challenging, according to a recent report.
The report, compiled by CFO Research in association with SAP, looked at a combination of two surveys. One had a sample size of 173 CFOs, and the other received 200 responses from finance professionals at US-based enterprises as part of the PayStream 2013 Travel and Expense Survey.
While the sample size appears small, the surveyed respondents worked at large to very large companies - thus the small sample size reflects the focus on companies with significant scale:
US$500 million – US$1 billion: 29%
US$1 billion – US$5 billion: 31%
US$5 billion – US$10 billion: 13%
US$10 billion – US$20 billion: 15%
US$20 billion or more: 13%
Titles of respondents were also primarily C-suite:
Director of finance: 24%
Chief financial officer: 20%
VP of finance: 15%
Controller: 13%
EVP or SVP of finance: 9%
Treasurer: 5%
Other senior finance executive: 8%
Other: 7%
For companies with large travel budgets, the quest for increased revenues often led to out-of-control travel budgets.
On the flip side, the desire to reduce costs in a turbulent economic time led many companies to layer additional restrictions to their travel policies - without the ability to necessarily follow-up and ensure cross-organization compliance.
Control was the primary concern of surveyed financial managers - the ability to ensure compliance while also maximizing value and minimizing administration expenses would be the ideal combination addressing the financial challenges of effective travel spending.
A key aspect of control is improving compliance with travel spending policies and reducing the number of exceptions that have to be processed. Although few finance executives view employee compliance with travel-related spending policies as disastrous, only about one in ten (12%) go so far as to say it is excellent.
As far as compliance, the report highlighted two realities facing some financial managers: the difficulty of managing the myriad new layers, and also the increased pushback of these restrictions as the economy rebounds in some sectors:
One CFO at a financial services firm explains, “In order to better control costs, we have significantly increased the restrictions we place on employee travel including mandating the use of certain carriers, lowest fares, specific hotels, etc. The volume of restrictions makes it more difficult for us to police exceptions as there are so many.”
Yet a director of finance at a large business/professional services firm notes that employees who seek a policy exception, after all, aren’t always in the wrong. “As the economy and our business become increasingly stable,” offers this executive, “the restrictive [travel-spending] policies are becoming challenged more frequently in context.”
Other barriers to effective compliance:
The main thread here is that many corporate road warriors feel as if the policies "don't apply to them" or that their travel is somehow the one exception that should be made. Writ large, these sorts of behaviors result in dozens of policy exceptions that not only affect the bottom line, but are even next-to-impossible to pinpoint exactly.
For firms with both full automation and tight integration between enterprise-wide and travel-specific systems, there is much more agreement from respondents about the success in meeting travel-expense management targets.
The following infographic breaks down this in-depth C-suite research, and what lessons can be gleaned in pursuit of effective travel management that fuels, rather than drains, the bottom line.
Clearly, the sponsor organization has an interest in pimping travel expense automation. Despite the source, the costs of manually calculating and processing expense reports are very real - both in time and money. How can automation impact the compliance and effectiveness of your company's travel structure? How do existing travel startups and larger companies make this process easier for travel managers?
NB: Compliance paperwork image via Shutterstock.