Simplify travel expense management with corporate cards

Efficiently managing business travel expenses remains a constant struggle for companies. Employees travelling for meetings, conferences, and client engagements incur a wide array of costs, ranging from airfare and accommodation to meals and local transportation. Traditionally, employees manually record each expense, submit them for approval, and wait for reimbursement.

The manual approach often leads to errors and inefficiencies, posing a challenge to streamline the expense management process. That is where corporate cards come into play as a reliable payment solution for your employees. They offer real-time expense tracking, automate approval workflows, and eliminate the need for reimbursements. This translates to transparency and control that traditional methods simply can't match.

In this blog, we will explore the common hurdles in corporate travel expense management and understand how corporate cards can optimise these processes.

What is travel and expense management?

Travel and expense management, also known as T&E management, is the process of organising, tracking and controlling travel-related expenses. The process directly impacts your company's financial health, as it ensures that all travel expenses are accurately recorded for purposes of VAT reporting and tax deductions.

Travel and expense management includes tracking and controlling costs like airfare, lodging, meals, and client hospitality. The goal is to ensure these expenses are necessary and reasonable and follow your company's policies and objectives. This process is crucial because travel costs can quickly add up and significantly impact your company's finances.

Standard travel expense management process

The traditional travel expense management process is a multi-step procedure that companies follow to manage their travel-related expenses. This process usually involves the following steps:

• Book travel: Employees get approval on their travel itineraries from their managers and arrange their booking, including flights, accommodation, car rentals, and other necessary services. However, this can be a time-consuming process when managed without travel management software and requires strict expense policy compliance. 
• Collect receipts: During the trip, employees must collect and keep physical receipts for all their expenses, which can be overwhelming, especially when tracking multiple receipts over several days. Physical receipts can fade, get lost, or be misplaced, leading to inaccurate expense reports. 
• Submit expense reports: After the trip, employees compile all their receipts and submit an expense report detailing all the expense claims. In the absence of a digital solution, this often involves manually entering expense data into spreadsheets or expense forms. 
• Expense reimbursement process: Once the expense report is approved, the finance department processes reimbursements to repay employees for their out-of-pocket expenses. This traditional method delays payments, causing financial stress for employees and lowering morale while also adding administrative work and the risk of errors for the finance team.

Why is travel and expense management important?

Without dedicated spend management software, managing expenses for a few business trips might seem manageable. However, as your business grows and more employees undertake business trips, the need for a systematic process to track travel expenses becomes crucial.

Without a structured process for managing and reporting travel expenses, gaining insight into how your funds are utilised can be challenging. This lack of visibility makes budgeting for future expenses complex. In the UAE, travel and entertainment expenses constitute a significant portion of business expenditures, with total annual spending estimated at over $8.6 billion. These expenses are also among the most challenging operating costs to control.

Therefore, a well-rounded expense management system is a necessity for companies that aim for financial efficiency and transparency. 

A well-implemented process, supported by an expense management system, brings about the following benefits:

• Cost savings: By being vigilant of travel expenses, you can recognise patterns, identify irregularities, and implement strategies to curtail wasteful spending. This approach can lead to significant savings, which can be channelled towards other strategic areas of your business.
• Enhanced compliance: With an expense management solution, your business can ensure that all travel expenses align with company policies and tax regulations. This can mitigate the risk of non-compliance, which might lead to penalties and reputational damage.
• Increased employee satisfaction: By streamlining the expense management process, your business can reduce the financial stress faced by employees, and improve their job satisfaction and productivity. 

Common hurdles in travel expense management

Managing travel expenses is a complex task, and businesses often face several challenges in this area, such as: 

• Lost receipts or delayed expense reports: Misplaced receipts and delayed submission of expense reports can lead to inaccuracies in financial records. This lack of accurate data can impede your ability to make informed decisions about business spend and might even lead to non-compliance with tax regulations.
• Manual processes prone to errors: Manual processes are time-consuming and prone to human errors ranging from simple data entry mistakes to more significant errors like misclassifying expenses. Such mistakes can distort the understanding of your travel expenses and lead to inefficient resource allocation.
• Possibility of delayed reimbursements: Reimbursements can often result in delayed payments. This can cause financial stress for your employees and can affect their morale and trust in the company. As a business, you will find it beneficial to eliminate reimbursements and look for more efficient alternatives, like using corporate cards for employee expenses.
• Limited access to funds for employees: When employees have to pay out of pocket for travel expenses, it can restrict their ability to make necessary purchases or book accommodations promptly. This can lead to unnecessary delays and trouble for employees. 
• Chances of fraud: Manual expense management systems are susceptible to fraud. Without proper checks and balances, employees might submit false claims or inflate expenses, taking advantage of the lack of oversight in manual processes, leading to financial losses for your company.

How can corporate cards simplify travel expense management?

Corporate cards offer a range of features that can streamline the travel and expense management process, making it more efficient and user-friendly for your finance team and employees. Let's understand how:

Ensure compliance with the expense policy

Corporate cards can be configured with predefined spending limits, category restrictions, and merchant controls. This means you can set parameters on how much an employee can spend, what they can spend on, and where they can make purchases.

• Predefined spending limits: Set caps on daily, weekly, or monthly spending to ensure that expenses remain within the company’s budget.
• Category restrictions: Specify which types of expenses are permissible, such as accommodation or transportation, to prevent misuse.
• Merchant controls: Limit purchases to approved vendors to avoid unauthorised spending.

This can significantly reduce the risk of overspending or non-compliance with company policies. It also eliminates the need for employees to pay out-of-pocket and wait for reimbursements, a process that can often lead to delays and dissatisfaction.

Easy bookings in multiple currencies

Another advantage of corporate cards is the convenience they offer for travel bookings in various currencies. For employees travelling internationally, this feature simplifies the booking process by eliminating the need for currency conversion.

Your employees can use the card for various travel-related costs, including flights, hotels, meals, and local transportation. This eliminates the need to carry cash or use personal cards, simplifying expense tracking and reconciliation for both employees and the company.

Efficient expense tracking

One of the standout benefits of corporate cards is their ability to enable centralised expense tracking through integrated platforms.

• Automatic logging and categorisation: All expenses made on corporate cards are automatically recorded and categorised in real-time, providing immediate spending visibility.
• Proactive budget management: Your finance team can monitor spending as it happens, allowing for more effective and timely budget adjustments.
• Employee expense management: Employees can see their spending in real-time, helping them manage their expenses more efficiently.

Integration of corporate cards with your accounting system can simplify the auditing processes. With all expenses automatically logged and categorised, verifying spending becomes easier. There’s no need to go through piles of receipts or manually enter data, which reduces errors and saves valuable time.

Improved fraud protection

Corporate cards feature fraud protection features like transaction monitoring, real-time alerts, and predefined spending limits. Transaction monitoring allows for suspicious activity to be detected quickly, while real-time fraud alerts notify you immediately if any unusual transactions are made.

Spending limits can be set on corporate cards, providing an additional layer of control. You can adjust the limits based on each employee's role and requirements, ensuring that spending stays within the allocated budget. These fraud protection mechanisms reduce the risk of financial losses due to fraudulent activity and ensure that company funds are used appropriately.

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Ease of issuing virtual cards

Many corporate card companies now offer virtual cards as part of their solution. These cards are a digital version of physical bank cards stored on a device and can be used to make contactless payments for in-store purchases and online transactions. Virtual cards provide an excellent solution for managing travel expenses, especially for remote employees. These cards can be issued instantly, allowing you to provide employees with immediate access to funds. This can be useful in situations where travel plans change rapidly or there is an urgent need for travel.

• Clear visibility into spending: Virtual cards also allow for real-time monitoring of expenses. You can easily track how much is being spent, on what, and by whom. This can help you manage budgets more effectively and ensure compliance with company policies.
• Flexibility and security: Unlike physical cards, virtual cards can be issued for specific transactions or periods, reducing the risk of misuse. They offer essential security features, such as setting spending limits and restricting use to particular vendors.

Integration with accounting systems

Corporate cards are accompanied by expense management software that integrates seamlessly with accounting systems. This integration eliminates the need for manual data entry, reducing the potential for errors and saving valuable time.

With the integration, all transactions made on the corporate card are automatically logged and categorised in your accounting system. This helps ensure that your financial records are accurate and up-to-date, simplifying the auditing process.

Many corporate cards can be integrated with popular accounting software like QuickBooks, Xero, and Sage. You can choose a solution that fits your existing systems, making the transition as smooth as possible.

Instant receipt uploads using a mobile app

Mobile apps paired with corporate cards offer the convenience of instant receipt uploads. This eliminates the time-consuming and error-prone process of manually saving and submitting receipts for employees.

Here is how this feature simplifies expense reporting:

• Effortless Uploads: Employees simply capture a photo of the receipt with their phone's camera and upload it directly within the app.
• Automatic Matching: The app intelligently matches the receipt to the corresponding corporate card transaction, ensuring accurate expense reporting.
• Reduced Errors: No more lost or misplaced receipts, as everything is captured and stored electronically.
• Real-Time Visibility: Uploads trigger immediate expense logging, providing clear insights into spending patterns for better budgeting decisions.

Best practices for travel expense management

Managing travel expenses effectively is crucial for businesses, especially those with frequent travel. Here are some essential tips and suggestions to help streamline your travel and expense management:

• Develop a business travel policy: This policy should outline the guidelines and rules for employee travel arrangements, including what expenses are covered, daily spending limits, preferred vendors, approval process, and the method for submitting expense reports. A well-defined policy ensures consistency and compliance, making it easier for employees to understand what is expected of them.
• Communicate the policy to all employees: Once you have a travel policy, the next step is to communicate it to all employees. You can do this through training sessions, written communications, or the company intranet. Ensuring that all employees know the travel policy helps prevent misunderstandings and non-compliance.

• Categorise all expenses: Breaking down expenses into categories can greatly simplify tracking spending and identifying cost-saving opportunities. Categories might include airfare, accommodation, meals, transportation, and entertainment. By categorising expenses, you can gain a better understanding of where your money is going and identify areas for savings.
• Budget for future travel expenses: Planning and allocating funds for upcoming business trips is another important aspect of travel expense management. By forecasting travel expenses, you can maintain financial control and avoid unexpected costs. This involves estimating the cost of different expenses for each trip and setting aside funds accordingly.

Streamline your travel expense management with Alaan

At Alaan, we understand the challenges of travel expense management and have designed our corporate cards to provide a complete solution for your needs. Our cards offer centralised expense tracking through an integrated expense management platform, providing real-time spending visibility for your employees and finance teams. 

The accompanying mobile app allows for instant digitisation of paper receipts and invoices, reducing the burden on employees to save and submit receipts manually and ensuring real-time expense reporting.

In addition to efficient expense tracking, our corporate cards feature robust fraud protection mechanisms. These include transaction monitoring, real-time fraud alerts, and spending limits, providing you peace of mind and reducing the risk of financial losses due to policy violations.

Our corporate cards come with advanced expense management software that integrates seamlessly with most accounting systems. This integration eliminates the need for manual data entry, ensuring accurate financial records. 

Get in touch with our experts to learn more about our corporate card solutions.

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