How To Automate Travel Expense Reporting in Enterprises

Travel expense reporting is one of the most important administrative functions in any organization, but since it does not directly generate revenues, you need to keep it as lean and efficient as possible. This article explains how to automate travel expense reporting. It discusses why travel and expense automation is so important and the steps to expect as you go along this digital maturity journey. 

Travel is probably one of the three major expenditures in any organization, along with salary and infrastructure, regardless of where the business is based. All of this investment makes it essential to monitor where and why money is being spent. 

That is what travel expense reporting aims to achieve. However, with a growing business and an ever-increasing number of expenses to track, travel and expense (T&E) management can put undue pressure on your HR and finance teams. As a result, more organizations are looking to automate travel expense reports, in order to reduce effort, minimize errors, and bring down the operating expense (OpEx) involved in this crucial administrative function. 

What is a Travel Expense Report? 

Travel expense reports are physical or electronic records that include all pertinent information on a travel-related expenditure, including the date, amount, and category. Original receipts are often included with T&E filings so that businesses may present evidence of reimbursable costs in the event a tax return is ever scrutinized. 

A travel expense report will typically have: 

• Name of employee and team that purchased the item 

• The date and time of purchase 
• Details of the vendor including name, tax details, etc.   
• Expense categories such as the client, project, account, etc. 
• The purchase subtotal, item-wise breakdown, and the grand total (including tax) 
• A PDF, JPG, or PNG image file of the original invoice 

There are several reasons why travel expense reports are essential: 

• Detecting fraud: Employee travel reimbursement is vulnerable to exploitation. With the proper processes (including the necessity to add receipts to reports), businesses may limit the risk of misuse or fraud within the organization. 
• Improving business outcomes: Understanding travel expenses is crucial for company growth. For instance, with real-time insights on traveling expenses, you can make budget-conscious decisions. And with quarterly and monthly reports, you will be able to discover wasteful projects or teams. 
• Complying with tax regulations: For a vast majority of countries throughout the globe, travel expenses are entirely deductible as long as there is a valid business reason. To legitimately deduct your costs with the IRS or another government agency, you must submit a travel expense report as evidence. 
• Enhancing employee experiences: A seamless travel expense reporting function lets employees incur business expenses with confidence and ease. It aids in productivity and indirectly has an impact on customer experience, innovation, and business agility. It also gives workers a sense of empowerment, thereby improving their employee experience. 

Unfortunately, travel and expense management is often a manual process in most organizations. This leads to reduced efficiency for finance teams and employees, as well as additional expenses for organizations. In addition to conducting research and organizing traveling itineraries, a significant amount of effort is devoted to obtaining permissions, data input and validation of claimed expenditures, providing timely-filing reminders, clarifying rules and procedures to employees, etc. 2021 research found that 68% of companies still use a manual method to enforce T&E policies! 

Completely automating this process may enhance its transparency, save money and time and improve compliance and accountability. 

Learn More: Travel and Expense Management: Definition, Significance, Benefits, Key Features & Best Practices

What Does it Mean to Automate Expense Reporting in Enterprises? 

Modern T&E technology lets you modernize and automate the  process of travel and expense management end-to-end.  Consider a portal in which, when an individual starts to arrange a tour, the T&E software instantly displays the spending limit so they understand how much can be spent. 

You can also automate the compilation of expenditures so that employees don’t have to compute their trip expenses. The program can determine it depending on the location, current market prices, per diem fees, if applicable, and other factors. 

Following this, we arrive at the next stage — travel expense reporting. By automating this portion of the travel and cost management system, you can save your finance teams and employees a substantial amount of time. 

With mobile integration, workers can easily submit images of their receipts and electronically transmit data while on the go. Using the technique of Optical Character Recognition (OCR), the T&E software will then extract receipt data and populate expenditure information. After submitting all receipts, an employee may produce a travel expense report in minutes. Due to the ease of processing, reports may be submitted on time. 

Also automated is the request for travel and cost authorization. As soon as the employee submits a request, the costs may be quickly authorized or denied. After receiving clearance from the accounts department, you may set up an automated data transfer procedure to notify the accounting department that a reimbursement is due. 

Automated travel expense reporting is central to this upgraded, digitally-enabled T&E function. 

Learn More: Make Your Business Go Places With Darwinbox’s Brand New Travel Module!  

When to Automate Travel Expense Reporting 

Here are five indicators that your systems for reporting travel expenses should be automated: 

• You are spending too much time on filing reports: Manual data input and verification consume valuable work hours from your financial teams and workforce. Since this function does not directly generate revenues, it should be kept as cost-efficient as possible. 
• There are frequent errors in the reports: It is possible for human errors to occur either while entering or verifying expense claim data. This might result in organizations losing substantial amounts of money without recognizing the source of the problem. 

• Fraud incidents have increased: Because of tight deadlines, missing receipts, and a tinge of avarice, employees may decide to acquire a few dollars hastily. This might be done by false or inflated claims, duplicate invoices, and other methods that exploit reporting loopholes. 
• You have no visibility into expense trends: This may cause employers or administrators to make uninformed judgments, which could have negative impacts on the organization (such as exceeding project costs). 
• Productivity and profitability margins are thinning: Your workforce and finance teams waste time and resources completing tasks that could be automated. This cuts into business profitability and revenue margins. 

Learn More: Rethinking Your Travel & Expense Management With Smarter Technology  

4 Ways to Automate Travel Expense Reporting 

There are four aspects of the reporting experience that you can automate. These reduce efforts for both the employees submitting reports, as well as accountants processing them. 

1. Set up automated controls to regulate expenses

Automated controls will guarantee that travel expense reports always adhere to the organization's policies. The T&E management software can be programmed to issue travel policy notifications to workers making reservations. You will be able to send notifications for policy violations when individuals attempt to book flights or accommodations that exceed the permissible amount. Inversely, you may send out missed savings notifications when they choose a more expensive option while a comparable, more affordable alternative is available. 

2. Automate the process of capturing expense data

An automated T&E system enables your workers to record costs in real time. With OCR technologies, they can automatically scan their bills as well as avoid retaining multiple receipts and bills. Some solutions even support prepaid cards that convey the details of the expense incurred back to the organization in real time. 

Using automation, employees may record costs while on the go, and the HRMS, ERP, etc., is immediately updated. Typically, T&E systems will integrate with Gmail and Outlook so that expenses may be generated immediately from the inbox as opposed to an app. 

3. Automate report generation

By automating the process of managing travel expenses, individuals may provide digital information while traveling and upload images of their receipts. The automated T&E system subsequently pulls details from the receipts  and populates expenditure data into structured fields. After entering all receipts, an employee may create a report of expenses promptly. Further, if any data field is missing, the employee will be alerted immediately. 

4. Partially automate the travel expense report approval process

Approving travel and expense claims is usually a long-drawn process because managers need  need to examine expense reports for overspending. However, the process can be accelerated when they arequickly notified of reports, including improper expenditures and overspending. With systems to automate this process, you  can  set up multi-level approvals by automatically notifying all the approvers immediately and following up on time. This helps prevent fraud, without adding more complexity. 

Learn More: 3 Pillars Of Digitising Your Travel & Expense Management Strategy  

The Journey Toward Travel Expense Reporting Automation 

Most companies begin with a manual, paper-based travel and expense management practice, and then gradually evolve into a digitized and automated reporting process. This transformation does not take place overnight – if you are undertaking the automation journey, your organization will go through the following stages of maturity: 

• Manual and partially digitized workflows: Your employees request travel-related authorization via email or postal mail. Using spreadsheets, businesses can keep track of company expenditures. Your employees save all receipts and expenses incurred while traveling and submit them with their travel expense reports. 
• Basic HR digitization: At this stage, the organization acknowledges that its T&E procedures require automation in order to operate effectively. To aid accountants, it has adopted a rudimentary HRMS or accounts management system. However, individuals must still endure the arduous expense reporting process. 
• Several digital tools: By now, you have digitized T&E systems and accounting systems or a payables management system. You may even have a tool that enables workers to submit business expenses while on the road. However, these technologies are disconnected, and manual data transmission continues to be the norm. 
• Integration with automated data flows: This is the final phase of automating travel expense reporting. The integrated T&E software optimizes travel communications, expenditure management, reimbursement procedures, payables, and much more. Data flows automatically from the employees’ end through approvers to finance for efficient reporting and reimbursement. 

The first stage in the complete automation of travel expense reporting is the formulation of a comprehensive expense guideline and policy framework. The policy should contain information about air travel, transportation, lodging, per diem, cash transactions, and business credit card expenses. In addition, it must contain approval structures, reimbursement process workflows, approved and unapproved expenditure catalogs, and so forth. 

Next, you need to choose the right automation software. This can be a standalone script that only applies to the reporting process (data capture and data transfer to finance). But typically, the tool is embedded into a T&E management software that automates repetitive tasks for employees, managers, accountants, and auditors alike.Prioritize the few solutions that are best suited to your demands; ideally, create a shortlist and choose the one that works best for your workforce, preferably a cloud-based enterprise software. 

Once the T&E management tool has been installed, it is time to configure the technology to automate your expenditure reimbursement processes. Set up connections between different systems, configure automated alerts, and create event triggers and schedules.  

Learn More: SAP Concur vs. Darwinbox T&E: Detailed Feature and ROI Comparison  

Conclusion  

The benefits of automated travel expense reporting are many. It eliminates the underlying losses associated with reduced productivity and fraudulent data entry. Employees have more time to concentrate on crucial functions. They feel more appreciated when performing project-related activities as opposed to tedious administrative duties. 

Explore the benefits of T&E automation for your company. Ask for a Darwinbox demo today!