After nearly coming to a standstill in 2020, business travel is bouncing back. As companies return to or even surpass their pre-COVID-19 levels of travel and entertainment (T&E) spending, they will see a corresponding increase in the volume of employee expense reports to be processed. 

Perry D. Wiggins

This month, we examine the cycle time in days to approve and schedule T&E reimbursements and highlight some strategies leading organizations use to accelerate the process. Companies that can process travel reports and reimburse employees more quickly will save time and money while reducing frustration both for traveling employees and for finance teams.

APQC finds that organizations at the 25th percentile can approve and schedule T&E reimbursements in three days or less. That’s more than twice as fast as organizations at the 75th percentile, which take a week or longer to complete the same set of activities. 

Taking too long to approve and schedule T&E reimbursements will certainly annoy your employees and it may also lead to frustration for your finance team down the road. For example, the faster your team can approve T&E reports after submission, the easier reconciliations will be for those responsible. Conversely, it becomes increasingly difficult to track payments and reconcile accounts the further you move from the date when the employee incurred T&E expenses. Any delays in your process will only compound as your volume of expense reports increases. 

Accelerate the T&E Reimbursement Process

An optimized T&E reimbursement process will guide employees through important policies, seamlessly collect the necessary documentation, automatically analyze and process requests, reveal cost-saving opportunities, and ultimately reimburse employees faster. Leading organizations follow at least three key practices to achieve these benefits. 

1. Create a Clear and Enforceable Reimbursement Policy

T&E is a significant organizational cost but is often treated like the Wild West, with a few flexible rules and little meaningful oversight. An effective reimbursement policy is developed with input from multiple stakeholders, including procurement, compliance/legal, finance, human resources, and employees.

Policy should cover areas including: 

• Requirements for reimbursement approval, auditing, fraud monitoring, risk management, and security and health risk monitoring 

• Spending thresholds above which pre-approval will be required 

• How-to guidance for booking travel and making purchases 

• Expense report specifications for when receipts are required and reports must be submitted

• Processes for exceptions and disputes

You should be training all of your travelers on your T&E policies and procedures at least once a year, not only during their onboarding when they will likely forget it. Leading organizations also have a formal (at least annual) review process to make sure that policies are still meaningful and relevant. 

2. Invest in T&E Technology 

Nearly a third of respondents to a recent Banyan survey on business travel (32%) said they would rather go to the dentist than file an expense report. T&E reimbursement does not need to be this painful. Solutions available on the market today use emergent technologies like AI to guide employees through each step of the process and upload their documentation seamlessly — even from their mobile devices while they’re on the go.

These tools also make life much easier for the teams that manage T&E expenses. In many cases, you can program your travel policies directly into the tool, which will then automatically reject any charges that fall outside of those policies. More broadly, they can help your team to optimize workflows within the process, enhance your analytics capabilities to better manage costs, increase visibility into travel booking and authorized options, and more.

3. Benchmark to Monitor Process Performance  

Benchmarking will help you to track your T&E spend over time, compare your process to peers and competitors, and discover opportunities for improvement. APQC recommends tracking a balanced set of measures that include productivity, cycle time, and efficiency measures. Along with the measure above, relevant measures for T&E expense reimbursement include: 

• Number of T&E disbursements per T&E FTE. A productivity KPI that measures the total number of T&E payments processed annually by each Full-time Equivalent (FTE) working on the process. APQC finds that at the median, each T&E FTE processes about 7,700 disbursements per year.

• Number of FTEs that process expense reimbursements per $1 billion revenue. This KPI tracks how efficient T&E process workers are. Broadly speaking, a lower number of FTEs performing the process indicates a more efficient process. At the median, APQC finds that organizations have 1.8 FTEs per $1 billion revenue performing the process.

• Total cost to process T&E disbursements per T&E disbursement measures the entire cost of the process. Normalizing this measure per T&E disbursement allows you to compare yourself to organizations of any size or revenue. APQC finds that the median cost per T&E disbursement is $7.88. 

As business travel continues to ramp back up, it is increasingly important to optimize your T&E process. Leading organizations use a combination of policy, technology, and benchmarking to accelerate T&E approval and spending. A robust T&E process not only makes life easier for your finance team but also enables your employees to finish their reports more quickly and spend more time adding value to your company.  

Perry D. Wiggins, CPA, is CFO, secretary, and treasurer for APQC, a nonprofit benchmarking and best practices research organization based in Houston, Texas.