Survey Shows Sluggish Card Mandate for T&E

There are many cons to not mandating card usage for employees’ travel and entertainment (T&E) expenses. Yet, new survey results from AP Now reveal only 43% of card-using organizations have such a mandate. In 2016, it was 41%, so the needle has hardly moved in the right direction. What does your travel policy say on this topic? If you are among those that make Commercial Card usage optional, or if you require employees to use their own cards, you should reconsider. Take a look at the list of cons below and share with your internal decision makers. Some of them might be resistant to a policy change because they want to earn rewards associated with their personal cards. However, lack of a mandate could be costing your organization.

Source of above statistics: AP Now’s Accounts Payable in 2020 Survey, www.ap-now.com


Cons to Not Mandating Card Use for T&E

Fraud Risk

I have previously written about the types of games employees can play for their own financial gain when requesting reimbursement for out-of-pocket travel expenses. Two examples are:

  • Submitting the same expense more than once; for example, after making an airfare reservation and again after the trip is complete

  • Altering a receipt to receive more back than what is truly owed

In addition, while not outright fraud, an employee may take more business trips than what is necessary in order to earn more rewards through their personal cards.

All of the above amount to financial hits to your organization.

Lack of Visibility into Expenses

When employees use their own cards, you cannot view or verify their expenses. This hampers fraud prevention and detection efforts. Further, lack of visibility means your organization cannot easily identify expenses ideal for strategic sourcing initiatives.

Tedious Expense Reimbursement Process

Instead of making one monthly payment to the card issuer, accounts payable (AP) has to make separate payments to each employee. Depending on your organization size and the number of business travelers/trips, this could amount to hundreds of payments each month. A card mandate could save your organization time and money.

Losing Out on Potential Rebate 

Commercial Card programs of all types are often eligible to earn revenue sharing incentives (i.e., rebates). When there is not a mandate to use the cards, spend is not maximized. If you have a card program today, work with your card issuer to estimate what your rebate could be if all travel expenses shifted to the cards.

Employee Hardship

Finally, when a company card is not available at all, it can be a real problem for any employees who do not have the means to pay for their travel expenses up front. It creates an embarrassing situation for them and more work for your organization to find a solution.

Related Resources

Lack of a mandate for Commercial Card usage for travel expenses can cause numerous headaches for your organization, including financial hits.

Lack of a mandate for Commercial Card usage for travel expenses can cause numerous headaches for your organization, including financial hits.



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About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With 20 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

3 travel policy recommendations to boost employee peace

Two things are clear about business travel. First, based on the results of the travel policy survey by AP Now and PDG, it can be challenging for organizations to manage the related expenses and applicable policies. As the lead researcher for the survey project, I am seeing firsthand the pain that reimbursement teams often encounter. Besides regular battles over missing receipts and other infractions, there are, at times, outrageous expenses to address. More on this below. The second thing about business travel emerged during a lively weekend dinner party with friends. In short, travel is not pleasant (my friends used stronger language) and employers’ policies can make things more difficult on travelers. What can organizations do to help alleviate everyone’s sore spots? Keep reading to learn more, including some insights into the survey results.

Characteristics of a Strong Travel Policy

Consistent enforcement should be a given. Beyond that, here are three elements that appear to be lacking in some organizations, based on the survey results I’m currently analyzing.

Regular Reviews and Updates

Your policy should keep pace with the changing travel landscape. Reviewing it at least annually and making updates as necessary can prevent headaches. The survey results reveal there is room for improvement; for example:

  • Only 56% of organizations have reviewed their policy within the past 12 months
  • 72% have not updated their policy to reflect employees’ use of Uber, Lyft, and similar

Unfortunately, even the diligent organizations can overlook things. Among those who have done a review within the past 12 months, 60% said the policy does not address Uber, Lyft, and similar. 

Clarity and Specificity

It is not possible or recommended to try and address every potential situation within a travel policy. There are too many variables. However, many survey respondents—from the perspective of someone on a reimbursement team—expressed a desire for more details in their policies to minimize conflicts and debates with travelers. I completely agree.

While reviewing outrageous expenses described by respondents, I took the liberty of compiling a list of what an organization could specify in a “prohibited expenses” section of the policy.

ABC Company will not reimburse/pay for: 

  • tickets for driving violations or parking infractions
  • personal car repairs
  • gifts for family and/or friends
  • personal services (e.g., spa services)
  • personal items (e.g., clothing, medicine)
  • personal entertainment (e.g., concert tickets, gambling)
  • pet care or child care
  • expenses incurred by non-employee guests of the traveler
  • expenses occurring during non-travel days

Based on this list, you can imagine what respondents shared!

Help bring some peace to both your reimbursement team and travelers. Make your travel policy current and clear, but also flexible.

Help bring some peace to both your reimbursement team and travelers. Make your travel policy current and clear, but also flexible.

Flexibility

This third piece may sound like a contradiction to consistent enforcement. What I mean by “flexibility” is to allow reasonable exceptions when approved by an appropriate management member, especially when the traveler saves the organization money overall. For example, a traveler taking a red-eye flight when it is the cheapest option, but then purchasing a seat upgrade to be more comfortable. It also saves the cost of another night of lodging. 

I know “reasonable” can be subject to interpretation, which is why it is important to be clear about prohibited expenses (things for which exceptions are not allowed), as well as train your management-level travel approvers in order to convey your expectations. Having the flexibility within your policy to make things a little better for travelers can ease their stress and increase job satisfaction. 

Webinar Opportunity

If you are not a survey respondent, but want to hear more about the survey results, AP Now is offering the related webinar for a fee. Please visit http://www.ap-now.com/products/item126.cfm

See also travel-related resources offered by Recharged Education.  

 


About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

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A travel expense headache.

Does your travel policy invite issues by leaving too much room for employee interpretation? A big headache for those who manage travel and entertainment (T&E) expenses—often accounts payable—is employees who incur unreasonable or out-of-policy expenses. Keep reading to see one such example (it involves alcohol) plus what your organization can do to minimize these headaches. Finally, if you’re wondering whether your organization is typical when it comes to what is and is not allowed related to T&E expenses, you can take an easy survey to find out; see link below.

They Did What?

The Travel & Entertainment Policy Survey going on now, sponsored by AP Now and PDG, includes a question about the most outrageous expense report situation encountered. One respondent shared that two employees purchased a $350 bottle of wine at dinner (no customers were involved) and requested reimbursement. The employees thought it was completely reasonable. 

Speaking of alcohol, early survey results show a notable percentage of organizations don’t reimburse for liquor. It is too soon to tell if this will remain the most common answer.

What Your Organization Can Do

Regardless of which scenario below applies to your organization, travelers and approvers alike should receive related training and be held accountable for their respective role. If there are no consequences for outrageous expenses, then nothing will deter them from being a repeat offender. In the case of the $350 bottle of wine, I have to wonder about the manager who approved it. 

Scenario 1: Employees Submit Reimbursement Requests

When employees pay for T&E and submit reimbursement requests, the way to prevent issues is by using per diems. Employees can spend what they want, but your organization only reimburses “X” amount, based on your per diem rates. Personally, I am a fan of this approach, as it eliminates battles about what constitutes a “reasonable” expense. However, travelers may feel too restricted by per diems, even when they are adjusted to accommodate higher costs in large markets. 

Scenario 2: Organization Pays for T&E Directly 

When employees use Commercial Cards (e.g., Corporate Travel Cards) for which the bill is paid directly by your organization, it is even more critical to specify, within your policy, what is and is not acceptable. For out-of-policy expenses on a card, the traveler should be required to reimburse the organization.  

With both scenarios, the caveat is AP must spot an out-of-policy expense first in order to take action against the traveler and/or approver. The use of some type of auditing technology can really help. 

Take the Survey

As the lead researcher for the T&E Policy Survey, I’m eager to see what organizations are doing. Survey respondents will receive an executive summary of the results and be invited to a complimentary webinar to see more results, including some best practices. Click here to take the survey.

No need for pain reliever when your organization has a comprehensive travel policy that it consistently enforces.

No need for pain reliever when your organization has a comprehensive travel policy that it consistently enforces.

How Comprehensive is Your Travel Policy?

Does your current policy prevent outrageous expenses? While “comprehensive” is subjective, AP Now’s 2016 T&E survey (www.ap-now.com) revealed that the majority (44%) of respondents rated their policy as comprehensive. Others were more negative; 37% said it is somewhat comprehensive and 11% said not at all. Does your policy overlook certain topics? Take the current survey to help you begin to evaluate your policy status.

See also travel-related resources offered by Recharged Education.


About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

Subscribe to the Blog

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