3 Ways to Reduce Travel and Expense Spending

3 Ways to Reduce Travel and Expense Spending

The back office is arguably the most outdated department of the modern enterprise. Many companies have large accounting teams in place to control spending, but these processes can be tedious, time-consuming and wasteful. A huge source of leakage is travel and expense (T&E), which is the second-largest controllable business expense after salaries and benefits. Unfortunately, it’s also one of the most complex and difficult to control. Over a third of T&E spend is wasted on out-of-policy expenses, mistakes and even outright employee fraud, according to proprietary data published in AppZen’s latest report, "The State of AI in Business Spend."

While juggling so many other priorities, how do modern finance teams tackle the issue of T&E spend? It’s illogical, and likely not even feasible, to check every line of every receipt attached to an employee’s expense report. Below are three recommendations to reduce T&E spend based on real-world insights from aggregated, anonymized enterprise data from close to 1,000 enterprises.

Editor's note: Looking for accounting software for your business? Fill out the below questionnaire to have our vendor partners contact you with free information.

1. Outline what employees can and cannot reimburse  

First, setting clear expectations and guidelines around travel and expense is crucial. If you don’t already have one, it’s imperative to create a well-defined policy and clearly communicate to your employees what can and cannot be reimbursed. To create some useful benchmarks, we dug into our data to understand reimbursement trends. What do other companies allow? What thresholds do companies set without having to do approvals on a case-by-case basis?

Here’s what we found.

Expenses that increase connectivity and collaboration are very likely to be reimbursed: 41 percent of companies reimburse cell phone services and 37 percent reimburse internet services. Additionally, the majority of business travel expenses are reimbursed – air travel upgrades, which used to be considered a luxury, are increasingly being approved. Twenty-eight percent of companies will approve a flight upgrade within reason –under $50. However, less essential travel perks like room service (16 percent of companies reimburse) and minibars (15 percent reimburse) are still scrutinized. Non-essential items such as clothing (19 percent reimburse) and coffee card reloads (9 percent reimburse) are also less likely to be approved. We recommend you keep these spend averages in mind as benchmarks for a new or more thorough policy.

Another consideration for your expense policy is items for recognition and perks, which are increasingly being reimbursed. Health club visits (11 percent reimburse) and gifts for employees and customers (46 percent reimburse) are becoming more common and might be worth including in your standard policy. Although it may seem counterintuitive to recommend approving more of these seemingly frivolous expenses, in the long run, it will save your accounting team valuable time they would otherwise waste getting additional approvals back and forth in an endless chain of emails.

2. Stop manual audits and start using artificial intelligence

The next step is to gain visibility into your expenses without manually reviewing each report. On average, accounting departments at large enterprises processed 4,374 expense reports last quarter alone. With such a high volume, accounting departments just don’t have the resources or time to manually research the legitimacy of each expense report – and even if they did, finding an out-of-policy item can seem like finding a needle in a haystack. Today, most companies only review about 15-20 percent of their expense reports, and in an attempt to reach 100 percent audit, many organizations resort to offshoring their expense audit to outsourced teams. However, this process is usually after-the-fact when the money is already unrecoverable and is still tedious and costly.

What’s the solution? If you randomly sample expense reports, as many companies currently do, it’s mathematically impossible to catch every fraudulent expense. However, catching them is crucial. These items add up to over one third of total reimbursed dollars. We recommend companies implement artificial intelligence (AI) into their spend audit process, which over time will help identify spending trends, stop leakage, and influence T&E policy changes as needed. AI allows companies to reduce their expense costs up to 5 percent and cut down processes by over 80 percent – a win-win.  

3. Catch unnecessary spend before reimbursement

Submitting business expenses may seem like a straightforward process. You go on a trip, expense the flight, hotel and meals and get reimbursed in two weeks – simple, right? However, for some unscrupulous employees, it’s not so straightforward. We’ve seen it all – strip clubs, dog kennels, jewelry, cigarettes and gambling losses being among the most notable expenses submitted and caught by AppZen. Although these charges may seem like obvious violations that a human auditor could find, they often fly under the radar with generic names on their receipts, such as “K-Kel, Inc.,” which is actually a strip club, submitted under the guise of a business meal. AI systems can cross-reference online systems and learn over time which organizations fall into which categories, flagging fraudulent spend that human auditors would likely miss.

With a clearly-defined policy, visibility into expenses and a method for identifying fraud, your company will be well-equipped to innovate its back-office processes and reduce spending.

How to Take Advantage of Word of Mouth Recommendations (And Get More of Them)

It can be easy to become hyper-focused on digital marketing and sponsored advertising when promoting your business. However, few messages are as powerful as a word of mouth recommendation from a satisfied customer.

This form of spreading the word can be hard to track and optimize, since it is largely up to a customer whether to share their satisfaction with friends and family in private conversations. However, there are ways to encourage and capitalize on word of mouth referrals.

While an overall marketing strategy and budget are critical, trusted recommendations from satisfied customers can help build brand loyalty and bring new customers into the fold. Here are some ways to make word of mouth recommendations work for you.

1. Give away branded items

Branded items serve two major purposes: they are a subtle way of putting your brand in physical spaces and building recognition, of course, but they are also effective reminders. Everybody loves free stuff, and the regular presence of your branding increases the likelihood that your satisfied customer brings your business up in conversation.

"We give customers nice branded items that they are likely to carry around like a Yeti tumbler, which is a great conversation starter and/or reminder," said Shawn Breyer, owner of Breyer Home Buyers.

At the very least, circulating branded items starts to build general recognition of your business in public and, at best, starts a conversation that leads to more sales.

2. Implement a referral rewards programs

Naturally, people are more likely to offer recommendations if they're getting something in return. Offering a reward, whether it's cash, a discount or even something as simple as a raffle entry, can incentivize satisfied customers to recommend your business when they might have otherwise forgotten.

"[We] offer people a $1,000 referral fee if they recommend someone to us and we buy their house from them," Breyer said. "We have a follow-up campaign to keep this in their mind in case they happen to come across a friend or relative that needs to sell."

Of course, your reward doesn't have to be cold, hard cash. Consider offering a discount to the referrer and the person they referred, thereby encouraging word of mouth recommendations as well as follow-through on the referred individual's part.

3. Capture customer recommendations digitally

Although word of mouth recommendations aren't digital, that doesn't mean you can't capture them and turn them into a pillar of your digital marketing strategy. If a customer offers positive feedback or refers new business your way, ask them if they would write an online review.

"Whether it be broad ratings and review sites like Facebook or Google, … industry-centric sites like Yelp or Angie's List, or … a service like TrustPilot, the goal is to build word-of-mouth into public, accessible proof-points," said Eric Quanstrom, CMO at Cience. "There are few elements of trust so powerful as seeing plenty of reviews for an SMB."

Once you've captured some reviews, Quanstrom added, consider tying them into your referral rewards and customer loyalty programs for an added impact.

4. Send personalized follow-ups

As a small business, one of your greatest advantages is being personal and relatable. Large companies can simply not interact with customers the same way a small business can, even in the day and age of live chats and automated email marketing. Leveraging your close connection to the customer to personally thank them for their patronage or send a small gift could go a long way to starting a conversation.

"Remember, [small businesses] can do things that larger enterprises rarely can scale … like sending hand-written thank you [letters] or small tokens of appreciation, and incorporating individual customer's feedback," said Zach Messler, a small business messaging and positioning advisor.

5. Simply ask

Satisfied customers are often willing to spread the word if you just ask. Consider requesting a testimonial that you can use on your website and social media or send follow ups to customers asking for feedback and, if they're satisfied, to spread the word or write a short review.

"[S]end an email from the president or CEO thanking them for their patronage and requesting that if they were satisfied, they leave a review on a particular site," said Laura Troyani, founder and principal of B2B marketing company PlanBeyond. "The key to making this work is repetition. The entire process is a numbers game, meaning you have to cast a wide net and ask a lot of customers to get just one review."

It all comes down to customer engagement

At the core of encouraging word of mouth recommendations is engaging meaningfully with your customers. Offering incentives is great, but you want to speak to your customers on the personal level that only a small business can. If you do so, you might find that people are more enthusiastic about spreading positive information about your business.


New types of investments are tied to ESG goals.

No comments