What are T&E expenses?
T&E (Travel & Expense OR Travel & Entertainment) expenses are expenses incurred by company employees during business trips or when entertaining clients, prospects and partners to dinners and events. These T&E expenses usually include accommodation, air travel, meals etc. In general, salespeople & business development managers tend to incur the majority of T&E expenses, but not always. Some other profiles that tend to have significant T&E expenses are consultants, partners and analysts. In truth, as evidenced by the fact that T&E can stand for one of two things, T&E as a classification of expenses does differ from company to company.
According to a JP Morgan’s report, Fortune 500 companies spend more than one-third of their T&E budgets on air travel and merely 7% of it on non-travel spends.
In contrast, large and mid-sized companies spend an average of 17% of their T&E budgets on non-travel spend, indicating that they are more expansive in defining what’s expensed in their T&E budget.
A solution like Zento helps you properly track and identify different types of T&E expenses, and set policies against which claims can be processed or flagged for review.
T&E Expense Report
A T&E expense report contains particulars of all expenses incurred during business travel or when entertaining a business contact. In order to receive timely reimbursement of such expenses, employees have to submit the receipts (or other supporting documents) of these expenses to their respective approving authorities – managers/HR/Accounts based on the company’s policy – within a fixed time limit.
Usually, companies have T&E expense policies in place. There are specific do’s and don’ts in force with respect to business expenses. These policies define spend limits based on a variety of factors:
- employee designation
- area of operation
- length of trip
- quality and value of prospect/customer
Exceptions may also be built into policies allowing for going over set limits based on certain conditions/approvals.
Importance of T&E Expense Reporting
One of the CFOs primary concerns is to control and optimize company costs. How much of the expenditure is actually attributable to T&E, however, might not be as easy to gauge without a full expense management solution like Zento.
Nearly 80% of all organizations still rely on manual processes to manage T&E expenses, which leaves a lot of room for human error. You never really know how much or how often the expense policy is being violated. If your system is not capturing all the expenses incurred anywhere & everywhere, you cannot control your spending. This is why you need robust, centralized travel and entertainment expense accounting.
Employees will pay for impromptu T&E expenses from their own pocket without any fear or hesitation when they are assured that their prompt reporting will merit prompt reimbursement from the company.
In turn, with a system like Zento, the company can keep an account of every expense, reference it against the initial budget, and can fulfill compliance obligations during audits considering T&E expenses are tax deductible.
Cost Savings with T&E Expense Reporting
When you have drilled down insights into spends with specific service providers and contractors, you can go back to them and negotiate deals, which is much harder when trying to reconcile manual recording of direct payments made to these providers by individual employees.
Zento has cash-leak protection features built in as well. It flags and brings to your notice violations of expense policies, the degrees of it and the frequency. It flags submission of duplicate receipts and invoices as supporting documents against expenses as well. On average, roughly 20% of a company’s T&E expenses fall outside policy. Whether they’re detected or not depends on the mechanisms in place to catch them.
T&E Expense Management In The Light of Company’s Financial & Digital Transformation Strategy
Reducing human input will reduce errors – whether deliberate or not – in a company’s financial processes. Automated processes with checks and balances in place increase transparency and the robustness in expense claim management, which is really what digital transformation is all about. Taking a process that’s suboptimal and trying to improve it constantly, striving towards perfection.
Timely reporting of T&E expenses and promptly reimbursing genuine claims made by employees increases trust between the employer and employee.
Zento greatly reduces the burden of finance teams & helps sales teams focus more on their core deliverables, thereby increasing productivity.