Getting Business Travel Expenses under Control with HCM
While business travel can seem tortuous, it's a piece of cake compared to managing employee travel expenses. Human capital management (HCM) software can help.
All of us complain about the travails of travel, particularly airline travel. Long lines at security, baggage fees, change fees and more recently, air traffic controller furloughs that caused massive delays, are a part of many travel experiences. But this kind of aggravation is nothing compared to the task accountants face in trying to bring order to employee travel expenses.
Employee travel casts the employer into an array of activities that can be a challenge to manage for any size company. From the initial planning of a trip to its actual execution, varying degrees of complexity can happen depending on when and where the travel is going to occur.
Business travel costs are rising and travel policies are becoming tighter, so the challenge is to cut costs and complexity while increasing compliance with tax and legal requirements, said Nita White-Ivy, chief people officer, SuccessFactors. "Companies have defined spending limits for expenses such as hotel rates or taxi fares and must adhere to country-specific rules for fees such as mileage and per diem reimbursements. Therefore, tracking and controlling expenses, complying with country-specific laws, and facilitating efficient approvals are top challenges for employers dealing with business travel."
Let's take per diem (the amount of money an organization gives an individual per day for activities such as meals) as an example. The trip's location -- whether in the United States, within the state where an employer is headquartered or even local -- can adjust policy for what is allowed and what is not, said Matthew Palmer, principal of iTK Technologies, a management consulting and technical services company that provides Infor Lawson ERP implementation and managed services. If the employee is an executive, she might have discretion for a higher amount. Additional factors could come into play if an employee works in one locality while lodging in another.
"The degrees of complexity for which you have to approve, account and report can quickly compound," said Palmer. "From there the compliance, approval, reimbursement and reconciliation process occurs, and this is where the level of risk for fraud, waste and abuse will most likely take place."
Keeping Business Travel Costs in Check
The Global Business Travelers Association reports that corporate travel buyers expect domestic economy airfares to rise to $492 a trip and $1,318 per trip for an international economy airfare. Unfortunately, budgets are not expected to keep pace with these increases.
One area to gain back some of the lost ground is via smart implementation of travel expense and travel management software. In some cases, this is bundled as a module inside human capital management (HCM) suites and in other cases it is a separate application.
HCM solutions automate and simplify travel processes and support planning and booking, expense receipt capture and the reimbursement of expenses, said White-Ivy. "Automated, standardized processes help improve visibility and efficiency while aiding compliance."
SAP Travel OnDemand, for example, has the goal of cutting business costs, decreasing complexity and increasing compliance, while also providing local country coverage, analytic and mobile capabilities, and support for new expense laws. It is available on mobile devices such as the iPhone, Android or BlackBerry. It also supports the new Physician Payment Sunshine Act, which requires companies to account for the benefits provided to physicians in the course of regular sales processes.
SAP Travel OnDemand integrates with the SAP ERP application and SAP Financials OnDemand as a way to accelerate the expense and reimbursement process.
"This makes it easier for companies to manage the entire trip cycle and collect insight into travel spending," said White-Ivy. "Connecting to the ERP application allows businesses to leverage all of their finance and HCM information -- including exchange rates, payment status and HR employee data -- for greater consistency and efficiency within the HR function."
Palmer added that expense management applications provide a framework to automate the expense processing that occurs during all phases of the trip while enforcing policy compliance along the way. This is an evolving process, so it is important to choose software that is easy to maintain post implementation.
"One of the most important areas to consider is ease of use for the traveler," said Palmer. "If the application is not fluid, does not have a mobile interface for point-of-use expense entry, does not self-reconcile to the credit card used, your organization will struggle with policy compliance and timely expense entry."
After expenses are entered, the application should automate the approval and backend processing all the way to reimbursement. That should also be supported by the ability to audit the entire process. This is crucial to ensure organization policies, controls and procedures are being executed.
Software Only Part of Solution
Software, though, is only one facet of gaining control of employee expenses. Rana Hobbs, senior director of Workforce Planning at Aasonn, a consulting firm implementing SAP SuccessFactors software, said organizations should be asking questions such as
- What’s our spend today?
- What are the patterns of spend across the various roles and groups?
- What correlations are there between spending patterns and the success of different groups/roles in achieving their goals?
- What does that tell you about what to restrict and what to allow?
She believes that a strategic view of the travel situation is required to back up any software implementation. Her view is that companies have to move from just having travel policies to developing a travel management strategy.
"Travel is typically prioritized to support the sales force/revenue generating work with non-revenue producing employees having a more restrictive approval process," said Hobbs. "Think in terms of adapting corporate culture to promote video Web conferences to connect teams so that travel restrictions do not become a culture of lone wolves and isolation."
Use Social Sense
Social technology is another tool which can be used to ease travel management troubles by harnessing social media as a cultural and productivity advocate. With decentralized global organizations becoming more of the norm, there is a need to communicate, interact and personalize the work experience daily outside of defined travel/onsite meetings. Instead of ramping up the travel budget or restricting travel in the face of a surge in expenses, social media can be used to reduce the need for travel.
"There is a democratization of the workplace by how employees exist as individuals and interact with each other and the work they do,” said Hobbs. "Technology and culture can support that without a dependency on travel budget/supportive policies."
Drew Robb is a freelance writer specializing in technology and engineering. Currently living in California, he is originally from Scotland, where he received a degree in geology and geography from the University of Strathclyde. He is the author of Server Disk Management in a Windows Environment (CRC Press).