When it comes to corporate finance parlance and CFO-talk, T&E is an acronym that is commonly thrown around. And most people assume it is something that is commonly understood; which might not be the case. Well, what does it stand for anyway?
The term T&E can mean either ‘Travel & Expense’ or ‘Travel & Entertainment’ Expenses. These definitions which are both valid and frequently interchanged are used to address the second largest operational cost for a business, after payroll. Except this cost is controllable through automation and careful analysis of a business’s expense reporting process.
So the next time you hear a CFO say ‘Our T&E is out of control’ or ‘When was the last review of our T&E plan’ you know exactly what is being discussed. And voila!
(Friendly tip – Just don’t expense that speeding ticket)
Here is a frequently heard request from Accounts Payable departments (AP) in companies around the world –
‘Can we integrate T&E with our Payroll system to issue reimbursements faster and error-free?’ And a very pertinent request at that – considering that AP is largely responsible for issuing T&E reimbursements.
A recently conducted survey, with results displayed below, showed that at least 74% of T&E reimbursements fall largely within the domain of AP. This becomes an additional burden to handle for AP among other important tasks. Plus, the ripple effects of delayed reimbursements or wrong reimbursements affects the heart of the business: the morale of the workforce. So it really is a no-brainer to automate this process through integration.
And this fits into the overall theme for companies in the 21st century which is – religiously examining ways towards becoming more efficient and effective at what they do. And on that list is frustration and delays with T&E reimbursements for employees after a trip. This is especially true after an international trip where the employee could have sizable out of pocket expenses with imminent due dates on their credit cards. Therefore integration of T&E and Payroll systems is paramount and companies are investigating in more detail on how to maintain a seamless integration between these two systems which are essentially two sides of the same coin.
Payroll systems look at an employee at one point in time, chiefly, what is that employee’s salary or hourly wage today. They automatically calculate net pay for a given pay period, federal, state and local taxes, deductions for such items as health care copays and contributions to charities etc. These systems also automatically cut checks to employees or have their pay automatically deposited into their bank account.
T&E Expense Reporting systems, on the other hand, help manage the employees expenses from a trip. If the company utilizes a corporate card, then the employee submits those expenses are part of the same system. The key pieces of the expense transaction includes details about the trip, expense type, vendor and mainly the receipt of the transaction.
The benefits of integration between these two systems are:
– Reduce reimbursement time
– No more manual keying of data in multiple places
– Utilize the existing flow and scheduling for T&E reimbursements
– Real-time visibility of reimbursement status for all parties
– And most importantly, the emotional aspect – employees expect the company to reimburse them for out-of-pocket expenses ASAP. And by automating the process as much as possible (which in turn reduces errors, delays and frustrations), it shows the employees that the company cares!
So how does this typically work?
The natural next step for T&E data after it has been reconciled in the expense reporting & ERP systems is sending it to the Payroll system. Think of it as ‘Passing the expense report data baton’!
Expense-Reporting-Payroll-Integration
Here is how it works in steps –
– Once the expense reports are approved within the Gorilla Expense web application, Gorilla Expense can automatically generate 2 files 1) Payroll file precisely in the same format as expected by your payroll provider 2) GL File precisely in the same format as expected by ERP System
– The payroll file can be imported into the Payroll system to issue reimbursement
– The GL file can be imported into the ERP system for GL entries
– If the Payroll system setup for T&E reimbursements is the same as payroll, then the employee will be reimbursed for T&E expenses during the next payroll cycle
Contact us at info@gorillaexpense.com if you have any questions or if we can help you manage this process more efficiently for your company.
When you think of expense reports, you also think about its vulnerability to fraud. While there are tools and systems to better tackle fraud, consistent auditing still plays a vital role.
Last year, the Association of Certified Fraud Examiners (ACFE) reported that nearly 15% of all fraud in the workplace was related to T&E expense reporting. According to the same report, the median financial loss to an organization for a single instance of expense fraud is $26,000, and the median duration of the fraudulent activity is two years. That is a lot of money and a long duration.
Earlier this year, AirPlus International fielded a survey to corporate travel managers to explore how they manage expense fraud in the travel category. 35% of the respondents reported that they manage both travel and T&E within their organizations. Another 15% of the respondents identified their official role as a travel manager but were closely involved in creating T&E expense policy as it relates to travel. On the other side, only 30% of travel managers said their company’s travel policy had any guidelines for T&E expenses. 7% of the respondents said they were not involved at all with T&E expenses.
Of the 119 surveyed, 8% of the respondents reported that their companies had uncovered significant fraud in T&E expense reporting over the last two years while 19% said that they didn’t know of any significant fraud. For the 8% of respondents, the most common behavior was falsifying or altering receipts to inflate reimbursements. Additional common fraudulent behaviors include submitting too many “below-the-line” expenses (expenses below a certain $ value that do not require receipts per a corporation’s T&E policy), exchanging premium-class tickets and reclaiming receipts.
The survey respondents utilized safeguards in place at their organizations for preventing and detecting fraud. The most common prevention tactic, cited by 81% of the respondents, was to include direct manager approval for all T&E expenses. 67% of respondents said their companies required receipts for all expenses incurred during travel, while 59% required the use of a corporate card for T&E expenses.
To read the full report by AirPlus International click here
Maintaining compliance and increasing visibility are the key factors in prevention of T&E fraud. Surprisingly, the ACFE reports that most workplace fraud is initially discovered from a tip provided by a co-worker. However, to take action, the tip must be backed up by facts and data.
Here is a video on T&E expense fraud which you may find useful –
Contact us for more information or if you have any specific questions we can help with at info@gorillaexpense.com
Our expense reporting customers love our credit card integration module and find it to be a huge time-saver and hassle-minimizer for their users. The main purpose of this post is to quickly explain how the credit card integration works with our system. So here goes….
Two Words – Very Easy!
In our application, users can automatically download transactions from their corporate and personal credit cards with the click of a button. This uses the standard OFX format, supported by most banks and credit card companies. As a 1st step, the user must setup the credit card profile in the system. Each user can setup multiple profiles and they can be a mix of corporate and personal cards. Each credit card profile can be allocated to different pay methods, as defined by the Accounting person in the company. Once this is done, the user can toggle between the various cards from a list and select one, as shown here
Expense-Report-Credit-Card-Integration
After a card is selected, the user would enter the login credentials as they would if they were logging into their online account, pick a start and end date and Voila! – all the transactions within that date range are imported into the transactions bucket of the application and ready to be pulled into a report, as shown below. This process can be automated a 100%
Expense-Report-Credit-Card-Integration
Allocating Transactions
Once this is done, the user can then assign these transactions to different expense types or GL codes. All information supplied by the credit card merchant is available within the transaction, including the meta-data. So each transaction will include the date, amount, vendor, city and additional fields depending on what is supplied by the bank/CC company. The user can also choose to break down transactions in more detail if needed. For example, a hotel transaction imported from a credit card will typically show the total amount. But the user can break it down into Room rate, Tax, Room Service and Laundry by using the sub-amount fields within the application. Remember, ‘More visibility = More Compliance’
Reconciliation of Credit Card Data
Once all the credit card data is available in the system, reconciliation, which normally takes hours or even days becomes very quick & simple too. Within the Gorilla Expense system, the accounting / AP person can quickly run a report by a pay method and filter by specific employees as well. This report can be exported in multiple formats (PDF, Word, Excel) and compared to the credit card data supplied by the bank for a quick analysis. This will quickly tell if the transactions are valid or if any transactions have been missed by the employee. Since reports can be created for specific date ranges, there is no need to wait till month end (when there are typically 15 other bigger issues to take care of!) to do this. The Accounting person can reconcile every day, week or 2 weeks to make it easier to manage.
Other Credit Card File Formats
Besides the standard OFX format discussed above, we support numerous other corporate card file formats as well. A few examples of key formats are – GL1025 from American Express, CDF3 from MasterCard, VCF from VISA, among many others.
The operating mechanism for these is slightly different from the one described above. These files supplied by the credit card merchant typically include credit card data for ALL users within the company. So unlike the mechanism above where users can import transactions themselves, here the Accounting person (or Admin) will use our proprietary utility called ‘Gorilla Integration Manager’ (GIM) to import the data into the system. Once the merchant’s daily credit card feed for the company is available and imported into GIM, it will automatically correlate specific transactions to specific users and push them to the respective user accounts. So the Admin can, for example, push 5000 transactions to the various user accounts in the system with the click of a button!! From there on, the user has to simply pull these transactions into a report and submit!
Hope you find this information to be useful. Contact us for more information or any specific questions we can help with at info@gorillaexpense.com.
Expense report padding may seem like a harmless offense and a common thing. But it still constitutes as fraud. Here are 8 cases where employees and public officials got caught cheating big.
An interesting survey by the Travel Leaders Group has found that company policy has almost as much influence as cost in whether or not business travelers fly in first or business class.
In analyzing year-over-year business travel bookings, 80.3% of the surveyed indicated that their bookings are on par with, or better than, last year. In 2011, this figure was 83.5%. From these figures, it may appear that corporate travel bookings have slowed since last year. But they are still strong, considering that the number is still >80%.
The data is based on responses from 269 US based travel agency owners, managers and travel agents who indicated that 50% or more of their portfolio consists of business travelers.
By popular demand, Gorilla Expense has released a new feature where Multi-Levels Approvals of expense reports can be setup. The approvers can be designated as different types of users, viz. ‘Manager’, ‘Admin’, ‘Accounting’ etc. This feature adapts to a company’s existing work-flow. And similar to other areas, this feature can be customized by us to meet your specific needs.
Note that the Multi-Level Approval is different from the Redirect Expense Report feature. In Redirect Expense Report, the approver can redirect an expense report to someone else is he/she is unavailable. The Multi-Level approval is disparate but works in conjunction with expense report redirection.
With this feature, different departments within a company will have visibility into T&E spend. There is also enhanced accountability because people who need to sign off on expenses are now fully involved. Hope you enjoy this functionality!
(In Finance Speak our T&E experts discuss questions & concerns from our customers and solutions to the problems. If you’d like to contribute or ask a question, send a message to info@gorillaexpense.com with ‘Finance Speak’ in the subject line.)
Executive (Anonymous) – We are in a bit of pain with the way our T&E policies are managed. We are dealing with a high level of non-compliance in several areas such as travel booking, alcohol related expenses, delayed reports etc. The breach is not just from employees but also Sr. Management. I have been tasked with cleaning this up but need some guiding points. I am interested in hearing how you have tackled this for other companies.
Gorilla – T&E Policies is one of the touchiest and broadest areas of business travel. Unfortunately there is no magic bullet fix. What works for one company might not work for another. But there are certain fundamental guiding notes. Of course, the first step starts with a clear identification of the problem followed by an actionable plan with defined metrics to compare against.
Here are some of the broad ideas we discussed complied for easy reading:
Make sure the T&E policies are part of a business travel manual or ‘guide’. Make sure they are up to date. If you don’t have a T&E guide, then create one. Without this, you are running open-loop that cannot be controlled. We can help with guidance in this area
In this manual clearly note what is allowed and what is not. No ambiguity here. Don’t leave anything to interpretation
Make sure the manual is easily available to everyone including employees, approvers, travel agents, assistants and executives
Make the manual concise, yet comprehensive. Break it down in several distinct areas so that readers know where to look instead of having to scan a 100 page document
The manual must be signed by the highest authority – CFO or CEO or both
Once generally accepted policies have been agreed upon, there must be zero-tolerance for anyone not adhering to the policies. Make sure this is clearly noted in the manual
Delegate responsibility. The approvers must check the report to ensure that no policies were broken by employees. The travel agent must compare flight requests to policies before booking etc. Also the approvers must also be given the authority to question any area of the expense report
The policies in the manual must apply to everybody – including executives
Look into a corporate card program. It is best to sign up for a program where the employee must apply. This way, the card’s responsibility becomes the employee’s. This ensures lesser delays with card payments leading to lower late payment fines for the company
Mandate the inclusion of receipts for every transaction – electronic or paper. While this won’t prevent fraud, it can act as a deterrent
Make a note in the manual that says the company will not reimburse unauthorized expenses. Create a list of such expenses
If the company is struggling with delays in submission, create a clause for timely submission. If this clause is broken, note the penalties. For example, penalties could be as simple as delaying reimbursement to the more complex withholding a certain percentage of reimbursement after multiple warnings
As you can see, there are many ways to skin this cat. Usually, it is a good idea to kick-start a process and fine-tune it along the way. For most companies, getting up to speed will take some time and there is no way around it.
Executive – How does your automated solution help manage this process?
Gorilla – Using our solution, you can set spending limits for various expense types. Questionable transactions get flagged in the application. You can create multi-level report approval that acts as a deterrent against policy infringement. With e-receipts, all transactions have supporting information. Our mobile app and credit card import module make it easy to submit expenses immediately after incurred thus reducing delays. We have other features that enhance T&E compliance.
After our conversation, our customer left with several ideas to implement and a better understanding of the challenges.
