The case for automating expense reports.

• Author: Tangredi, John
• Position: PRIVATE COMPANIES

In the past few years, many companies have cut their travel and entertainment costs. Executives who used to fly business class are flying coach, staying at three-star hotels instead of pricier venues and eating at less expensive restaurants-But despite the greater scrutiny of T&E, many companies are overlooking significant savings on expenses for reasons that have little to do with budget and everything to do with processing.

More specifically, they are missing the benefits of automated expense report systems

Quantitative Benefits

Automation not only reduces costs, it also saves valuable time and makes it harder for employees to inflate expenses. The statistics are revealing: The 2009 T&E Expense Management Adoption Survey from Advisors.com revealed that expense processing through automated systems costs 78 percent less than manual processing systems.

These savings can add up. Considering that 7 percent of an average company's annual budget is allocated to corporate travel, according to analyst firm Aberdeen Group, it's clear there is a solid financial case to be made for automating expenses. The financial case grows stronger when the costs of fraud are factored into the equation. A 2008 study by the Association of Certified Fraud Examiners found that expense reimbursement accounts for approximately 13 percent of company fraud, equating to a median annual loss of $25,000.

Automated expense management systems make it much easier to help identify and prevent fraud. For example, they uncover patterns that might be red flags. Is one employee spending a lot more than another in a similar position, or spending more in one quarter than in a previous quarter for no obvious reason, and at a time when everyone else's T&E spending is staying flat?

Automated systems allow for comparing the claims of employees across an organization so that patterns are immediately evident, in contrast to the typical 24 months the ACFE says it takes before expense reporting fraud is detected.

Qualitative Benefits

Few traveling employees enjoy the task of collecting and transporting easily misplaced paper receipts from place to place so that they can submit their expenses. Nor do employees appreciate the lag time that often exists between submitting an expense report and receiving reimbursement, especially if they are experiencing financial difficulties.

In addition, employees who travel internationally might not want to convert their onsite expenses into U.S. dollars...