This is part 2 of our 4-part series on Travel & Expense (T&E) at a real U.S.-based multinational company with locations in 60+ countries. This blog explores the move to paperless expense reporting through the lens of two company leaders, Regional Accounting Manager Jay Iglesias,* and Account Support Specialist Mary Church.* Jay leads the company’s U.S. accounting operations. Mary, who works in Accounts Payable and reports to Jay, has the task of reviewing compliance of expense reports before approving and submitting for reimbursement. She is also the primary contact for the company’s in-house expense management solution (EMS).
How did you handle the expense management process before your EMS was put in place?
[Jay] Previously we used an old version of SAP. Travelers had to sign in to SAP to register expenses, attach paper receipts, and physically send them to Accounting. Our department verified each receipt to ensure it matched what was reported. We also checked for compliance with company travel policy. Once everything matched, we digitally scanned and uploaded the receipts to SAP.
If Mary found a discrepancy, she had to call the traveler – and in some cases, return receipts and expense reports to be fixed and re-submitted. Upon clarification, we proceeded with reimbursement, and shipped receipts to an offsite warehouse for safekeeping, per International Financial Reporting Standards (IFRS) and tax guidelines.
What were some key pain points with paper-based expense reporting?
[Jay and Mary] Each receipt had to be taped on all four corners to a white sheet of paper. If this wasn’t done properly, the scanner jammed. Up to half of all receipts weren’t taped correctly, so we spent an inordinate amount of time taping receipts. If too many weren’t taped, we returned them to the traveler. In cases where travelers worked offsite, this was done via U.S. Mail or FedEx, which added costs.
Receipts were rarely taped in chronological order, requiring us to sort by dates – a real time waster. We had to confirm that each receipt corresponded with the date, and complied with daily meal allowance policy. We physically housed receipts and reports in drawers marked “On hold,” or “To be processed.” We also made copy upon copy! Our workspace overflowed with stacks of paper piled two and three feet high for processing.
December was the worst. Some travelers would procrastinate and send all their reports in the final month of the year. January through November wasn’t so bad; we processed around 300 reports per month. In December, the number grew to almost 300 per week. As you can imagine, this got very messy!
How much time was required to process a report from traveler to reimbursement?
[Jay] Travelers required anywhere from 30 minutes to a few hours to create and submit monthly expense reports. Their managers needed 15 to 30 minutes to review and approve the report in SAP. And many times, travelers would submit without having management approval, this was the biggest bottleneck to expense reimbursement!
Finally, Accounting would carry out the final approval, requiring approximately one minute per receipt to verify compliance and accuracy. Assuming there were no problems (which was rarely the case), this took anywhere from ten to 30+ minutes. Every error delayed expense report processing by one or two days.
Your company has a Financial Controlling department. What is the difference between this department and Accounting?
[Jay] Accounting makes sure transactions are recorded and classified per IFRS and tax guidelines. Financial Controlling** oversees performance analysis and reporting. It also conducts “spot checks” on expenses and accounting processes to ensure internal efficiencies. In some companies, this function is part of the Accounting department. At our company, we split the function for checks and balances.
So what propelled you to select a new expense management system (EMS)?
[Jay & Mary] Finance needed to move into the 21st century with mobile technology and automated compliance rules that provide efficiency and enable the system to perform some of the heavy lifting of T&E compliance reviews. So we launched the RFP for an EMS. To offer some added perspective, the U.S. government’s Internal Revenue Service (IRS) moved to paperless and started accepting digital receipts. This advancement enabled us to embark on this project. “Paperless” systems are used in many countries, but not all.
Who spearheaded your review process?
[Joe & Mary] The RFP was driven by our company’s VP for the Americas. We compiled a group that included both of us, plus our Americas Group Travel Manager, Strategic Business Development Manager and Business Finance Solutions Manager. These last two leaders helped us vet the various EMS providers, establish criteria for selection, and understand the IT requirements that would impact T&E and our SAP system. Together, we ranked the providers based on our criteria. We submitted our recommendation to the VP, who made the final decision based on our input.
What factors led to the selection of your current EMS?
[Joe & Mary] From the very beginning, the provider’s EMS interface resonated with us. It featured more attractive and beneficial tools than the others. On the reporting and analytics side, we liked the integrated report writing module, which allows us to write our own report templates.
As for integration with SAP, our new provider’s EMS had a well-organized framework and API that made it easy to structure the output of the EMS file to our SAP system. While other providers seemed more regionally focused, ours had a global scope, making them we feel more apt at supporting our needs as a global corporation.
Finally, their mobile element was more advanced. It definitely delivered a more robust mobile experience that our road warriors were looking for!
This concludes our review of how Travel & Expense is managed within a large multinational company that moved away from paper-based systems. In part 3, we will explore the advantages of choosing a digital Expense Management Solution.
*Not their real names.
**The fourth and final blog in this series will explore the role of Financial Controlling in Travel & Expense.