Travel and entertainment expenses are necessary for doing business, but that doesn’t mean that these expenses should be left unchecked.
As the person in charge of managing your organization's finances, you should be obsessed with making all expense management as efficient as possible in order to save money.
But how can you simplify the T&E management process when there are so many moving parts and people involved? By using the right tools for the job.
In this guide, you’ll learn the importance of having a good travel and expense management policy, how to make your T&E management more efficient, and what to look for in travel and expense management software.
Why Is Travel Expense Management Important?
As a finance professional, you know that cost management and expense reduction are crucial aspects of financial management work. One of the ways you can do this is by tracking all deductible expenses for tax reduction purposes.
And when it comes to the hierarchy of expenses you need to keep track of, those related to corporate travel and entertainment are of particular importance.
According to Mastercard, corporate travel and entertainment expenses have become the second-highest expense category.
But not only does T&E account for a large portion of the business expenses that companies have to deal with, but it’s also been identified as the second most difficult operating cost to control.
That’s why it’s so important that your organization develops and maintains effective T&E management policies, and uses the tools available to simplify T&E management.
The Challenges of Travel and Expense Management
If you don't have clear policies and infrastructure in place, reporting and reconciling expenses can be a tedious task for both you and your employees. But your policies and structure can only go so far when you are limited by outdated technologies and manual input. And that’s just the tip of the iceberg.
Some of the most common challenges related to T&E management you’ll have to deal with include:
- Limited fund access
- Security risks
- Outdated policies
- Lost reports
- Inefficient bookkeeping
- Lack of spending visibility
- Slow reimbursement process
Luckily for you, all these pain points can be handled through a combination of digitization, automation, and of course use of Pluto.
How To Make Travel Expense Management Process Efficient
While there are more than a few challenges associated with travel and expense management, there are also more than a few ways to tackle these issues in order to make your expense management more efficient.
For instance, digitizing and automating your processes will go a long way toward simplifying your expense management, but reviewing your existing policies and ensuring they are simple and clear is also important.
Here’s a list of tips to follow if you are trying to simplify your expense management:
Review Your Travel Expenses and Reimbursements
One of the first things you should do is take a look at your current travel expenses to see if there are any changes to be made.
Business travelers will always need to take trips, but perhaps there are some interactions that could be handled via videoconferencing.
You can also look for ways to minimize the expenses that need to be reimbursed. For instance, by using Pluto corporate cards, you could help eliminate, or at least reduce, the need to reimburse food expenses while giving you better control over them.
Examine Your Travel Policy and Keep It Simple
If you are having trouble with your T&E management, you should take a look at your current travel policies (and if you don’t have one already, you should make that your top priority).
Your T&E policies need to strike a balance between flexibility and strictness. Too flexible and you create waste; too rigid and you limit the ability for people to do their jobs.
A good T&E policy should include the following:
- How travel will be booked
- The process to follow for reimbursement (including what type of supporting documentation is necessary, due dates, and other stipulations).
- Any budget or spending limits, including the specific transportation methods or hotels that can be used.
- Meal allowances.
And you want to keep your policy simple and easy to read. Minimize the jargon, use short paragraphs, and a simple format with bullet points, tables, and clear headings.
You should continuously review your expense policy, particularly as your business expands, to ensure that it’s aligned with any changes in your organization.
Go Paperless
Your team should be able to access your expense policy from anywhere and at any time. But more than that, you should aim to digitize the expense report process as much as possible.
For instance, implement the ability to submit digital expense reports and capture receipts digitally. Not only will this allow you to get a clearer view of your operations at all times, but it will help simplify your bookkeeping and easily manage receipts.
Pluto has this function!
Use Travel Expense Management Software
Through effective use of travel and expense management systems, you can consolidate the different scaffolds in your expense process, automate them, and eliminate time-consuming approvals while minimizing, or outright eliminating, human error.
Using Pluto allows you to cut a lot of the fat out of the reimbursement process. Automate reports, data gathering, and approvals for expenses that meet your policies, leaving only those that don’t meet your policies for manual approval.
Furthermore, it can help you detect fraud by auditing your reports for duplicate expenses and any other anomalies.
And through software integration, you can use these different tools to create a unified T&E management process.
Look Into Other Software Solutions
There are many tools you can use to make your T&E management more efficient, for instance:
- Pluto Card allows you to issue unlimited virtual cards, create travel specific card limits monitor spending in real-time and most importantly, it allows your employees to reimburse quickly!
- A travel expense tracker can provide you with automated expense reporting and expense tracking.
- You can use a travel management platform that allows your employees to book flights, trains, and hotels and even rent cars from one place.
- Pluto mobile app makes the expense reporting process much simpler for your employees.
- You could take data from Pluto and travel management system directly into your accounting platform to further automate and simplify the T&E management process.
Important Travel Expense Management Software Features
One of the best ways to simplify your travel and expense management is by making use of the right T&E management software. However, with the increasing amount of options available, knowing which one fits your company best can be difficult.
Since no two businesses are exactly the same, there won’t be a one-size-fits-all solution. Having said that, you’ll have an easier time choosing between the different options by focusing on the specific features that you need, or at least should consider, in a T&E management platform.
Here’s a list of some of the features we believe you should look for in your T&E management software:
Virtual Cards
Pluto gives you the ability to create virtual cards for online purchases. These cards can be generated as single-use or recurring, giving you complete control in terms of how you set up your spending limits.
Virtual cards offer you similar benefits to corporate cards, in the sense that you get full visibility of your expenses and your employees don’t have to pay upfront, but they have the added benefit of being more customizable.
Flexible Spending Limits
Our expense management software can also give you a lot of control and flexibility over the spending limits that you set. Pluto allows you to set specific spending-limits for vendor and change them in real-time online.
This allows you to track expenses for specific countries or cities, while removing the need to manually configure spending limits each time someone makes a trip request.
Expense Reports and Analytics
If you want to make your expense management more efficient, you’ll need accurate data and insights into the spending habits of your employees.
Pluto gives you real-time reporting and analytics, to give your finance teams an easier time combing through all the expense data. For instance, a system with robust reporting capabilities should:
- Categorize expenses and organize reports by expense type
- Reconcile your reports
- Give you spending insights across all your departments
- Keep track of violations of your expense policies
- Provide you with real time spend visibility
By getting a clear picture of your expenses, you’ll have an easier time ensuring policy compliance, preventing fraud, and reducing travel costs.
No FX Fees and Multi-Currency Functionality
If your employees travel internationally frequently, you’ll want a product that comes with a card that doesn’t have additional fees or surcharges for international purchases.
At Pluto we have 0 FX fees. Furthermore, you’ll have an easier time managing these expenses due to multi-currency functionality automatically converting all transaction information to your country’s currency.
Mobile Functionality
If you are trying to simplify your expense reporting process for travel expenses, then you need a way to work on those expenses on the go. Pluto’s mobile app would allow your employees to report their expenses right away from any location, while also giving them the ability to submit receipts digitally.
Integrated Card Management
If you opt for a software provider that also offers corporate credit card services, you’ll be able to automatically reconcile expense report entries with your card statements, detect any expense bottlenecks, and generally reduce the chances of fraud or misuse.
Pluto card management software will also give you more control over your corporate spending. Plus, you’ll be able to set and control your spending limits with much more ease.
Compatibility with Other Tools
When it comes to the use of technology in expense management, the more, the merrier.
Pluto can be integrated with your accounting software so that it can automatically populate expense reports and simplify your reimbursement through the use of your organization's accounting data.
Furthermore, by integrating your TEM system with your travel management system you can instantly take the travel booking information and add it to your expense reports.
Automated Workflows, Expense Categorization, and Tax Calculation
The entire point of using travel expense management software is to automate as many processes as possible.
This includes the ability to customize your travel policies and approval workflows, categorize expenses for more straightforward tax calculation, and determine whether they are tax deductible or not.
Furthermore, by categorizing your expenses, you’ll have an easier time complying with the tax regulations of your country.
Scalability
One feature that is sometimes overlooked in software platforms is the ability to scale your operations as your company grows. You don’t want to choose a system now only to realize it no longer meets your needs further down the line.
In this regard, Pluto is a great pick as we have the backend to support any business sidez from small teams to enterprise level accounts.
Key Takeaways
Effective expense management is all about visibility, flexibility, control, and automation. The most common pain points from T&E management come from outdated policies and manual inputs, which you should seek to update and simplify via means of a robust expense management platform.
When it comes to making your travel and expense management more efficient, the key things to remember are:
- Review and update your policy continuously to ensure it meets the needs of your business and employees.
- Examine your current expenses to look for opportunities to reduce reimbursements and consolidate expenses.
- Use Pluto to automate approval workflows and simplify the expense reporting process.
- Pluto also offers strong reporting capabilities, gives you a lot of flexibility for spending limits, and can be integrated with other tools for maximum effectiveness.
