Travel & Expense Automation: In-Depth Guide to Benefits 
Travel and expense (T&E) management costs can exceed 10% of a company’s budget, which is a significant operational expense.1 While nearly 80% of companies say that they have a formal travel and expense policy, around 70% use manual methods to enforce it.2
In this article, we’ll explore what travel and expense automation is, how manually managing this process can lead to high costs to organizations and the benefits of automation.
What is travel & expense (T&E) automation?
Travel and expense automation is the use of technology to streamline the process of booking, tracking, and reporting on travel and related expenses for tax deduction purposes. Travel-related expenses include:
- Accommodation: hotels, lodging
- Transportation: Plane, bus, train tickets, taxi fares, gas fees
- Other: Food, baggage fees, events, tips, and equipment rental related to the travel
Automation makes it easier for employees to book travel, submit expenses, and monitor spending while providing employers with insights into their employees’ travel and expense activities. Automation also reduces the time and resources associated with manual processing, saving businesses time and money.
What are the challenges of manual travel & expense management?
The travel and expense management process consists of:
- Travel request: Employees place a request for a business trip with details of the travel
- Travel approval: The travel request is reviewed according to the company’s travel and expense policy and approved by the employee’s manager and finance department.
- Submitting expense report: To request reimbursement, the traveling employee creates a report with information about the travel-related expenses such as:
- Date of purchase
- Expense category
- Tax associated with the purchase
- Expense approval: Managers and the finance team review the expense reports to approve or reject them before paying employees reimbursement. In cases of rejection, employees are expected to review and resubmit the report.
- Reimbursement: Upon approval of the expense report, employees can receive reimbursement.
The disadvantages of manual travel and expense management are:
Time-consuming and error-prone reporting
The top pain points of travel and expense management are:
- Employees losing paper receipts and submitting reports without receipts
- Employees fail to submit reports on time
- Errors on the reports, such as incorrect payment amounts3
Collecting and entering all travel-related information into the expense report manually is daunting and prone to errors. According to a recent study, around 20% of expense reports contain errors and missing information.4
Risk of expense fraud
Expense fraud costs the U.S. economy $2.8 billion per year5, and nearly half (42%) of public sector decision-makers in the UK admit to having submitted a fraudulent expense claim.6 Manual expense reporting and review is susceptible to fraud like with any other claim, as expense fraud is often in the form of:
- Submitting a single expense multiple time
- Overstating expense claims
- Using fake receipts
These fraudulent behaviors can easily go unnoticed if they are subtle.
Delays in reimbursements
Manual expense reporting and approval can be complicated and involve a back-and-forth between employees, managers, and HR and finance departments. It can take over a month between employees submitting expense reports and receiving their reimbursement amount (called the reimbursement turnaround time).7
Delayed travel expense reimbursements can harm employee satisfaction as it can:
- Force employees to cover costs incurred on behalf of the company out of their personal funds if reimbursement occurs too late and if they had made a large purchase.
- Create distrust among employees and damage employee morale.
What are the benefits of travel & expense automation?
An automated travel and expense management system enables:
- Reporting expenses on the go from any device by capturing receipts through NLP and OCR technologies. This saves employees from manual data entry to create expense reports.
- Checking expense claims against the company’s expense policy automatically to ensure policy compliance.
- Preventing fraudulent expense claims through fraud detection methods.
- Reconciling expense data from receipt scans and credit card purchases and making necessary reimbursement automatically.
- Having real-time visibility into travel-related expenses for finance teams. This allows more accurate forecasting and better control of the company’s cash flow.
- Centralizing travel and expense management data and connecting it with other enterprise systems such as ERP or HRMS.
For more on finance and HR automation
- HR Automation: Top 8 Processes to Automate
- Finance Automation: What It Is &Top 6 Processes to Automate
If you have other questions about travel and expense automation, we can help:
Cem has been the principal analyst at AIMultiple since 2017. AIMultiple informs hundreds of thousands of businesses (as per similarWeb) including 60% of Fortune 500 every month.
Cem's work has been cited by leading global publications including Business Insider, Forbes, Washington Post, global firms like Deloitte, HPE, NGOs like World Economic Forum and supranational organizations like European Commission. You can see more reputable companies and media that referenced AIMultiple.
Throughout his career, Cem served as a tech consultant, tech buyer and tech entrepreneur. He advised businesses on their enterprise software, automation, cloud, AI / ML and other technology related decisions at McKinsey & Company and Altman Solon for more than a decade. He also published a McKinsey report on digitalization.
He led technology strategy and procurement of a telco while reporting to the CEO. He has also led commercial growth of deep tech company Hypatos that reached a 7 digit annual recurring revenue and a 9 digit valuation from 0 within 2 years. Cem's work in Hypatos was covered by leading technology publications like TechCrunch and Business Insider.
Cem regularly speaks at international technology conferences. He graduated from Bogazici University as a computer engineer and holds an MBA from Columbia Business School.
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