A Comprehensive Guide to Travel and Expense Management Process

Do you know that over 36% of businesses spend more than AED 918,000 annually on travel, with 16% exceeding AED 18,00,000? Managing these expenses has become a top priority as corporate travel rebounds post-pandemic. 

A recent survey found that 58% of companies still operate with outdated or no travel and expense (T&E) policies, leading to inefficiencies and rising costs.

Effective travel and expense management is no longer optional; it's crucial for controlling spending, ensuring compliance, and improving overall financial health. 

This guide will walk you through what travel and expense management is, why it is essential for your business, the stages to optimising your travel expense management process, the paint points of ineffective travel management and solutions to overcome these challenges, the best practices of travel and expense management, and how T&E management software can help you meet the demands of today’s business environment.

What is Travel and Expense Management?

Travel and expense (T&E) management is the process businesses use to track, control, and report costs related to business travel. It covers everything from booking flights and accommodation to handling reimbursement claims, ensuring all expenses are documented and comply with company policies.

T&E management oversees the entire cycle of managing travel expenses. This includes arranging travel (flights, hotels, transport), documenting expenses, and processing claims for reimbursement. 

The core objectives are:

• Cost control: Ensuring spending aligns with budgets to avoid overspending.
• Compliance: Adhering to company policies and regulatory requirements, reducing risks like audits and penalties.
• Visibility: Offering clear insights into spending through centralised tracking.
• Efficiency: Simplifying the process to reduce the burden of manual reporting and approvals.

Why is a Travel and Expense Management System Important?

A 2023 HubSpot survey revealed that 44% of businesses still rely on outdated travel and expense management systems, believing their current methods are “good enough.” But can these companies afford to overlook the inefficiencies?

• Unpredictable expenses are a constant challenge.
• Time-consuming processes with frequent errors cause frustration for finance teams.
• Lack of visibility over company-wide spending adds to the complexity and lack of efficient management of these expenses.

Clearly, corporate travel and expense management is critical for maintaining financial control and operational efficiency.

5 Reasons Why Effective Travel Expense Management Matters

1. Cost Control and Budget Management

Business travel is typically the second-largest corporate expense after payroll. With some companies spending over AED 918,000 annually on travel, efficient travel and expense management help monitor and reduce unnecessary costs. By analysing spending patterns, organisations can optimise budgets and negotiate better rates with vendors.

2. Compliance and Fraud Prevention

A clear and effective travel and expense management policy ensures compliance with internal and external guidelines. It also mitigates fraud, such as employees submitting false or inflated claims. Automated T&E systems flag potential policy violations early, making it easier to maintain oversight.

3. Efficiency and Productivity

Manual expense reporting can be tedious and prone to errors. Automation simplifies the entire process, from submitting claims to approving and reimbursing them. This improves productivity for both employees and finance teams, allowing them to focus on more valuable tasks.

4. Data-Driven Decision Making

A proper automated business travel and expense management system provides comprehensive analytics on travel costs. This data is invaluable for making informed decisions, adjusting policies, and identifying areas for savings. By aligning travel strategies with business goals, organisations can gain greater control over their travel expenses.

5. Employee Satisfaction

A streamlined process makes it easier for employees to manage receipts and get reimbursed quickly instead of the typical 30-day month-end reimbursement process. This improves morale and productivity, contributing to a more positive work environment.

One of our customers, Quiqup, a logistics firm, faced challenges with its previous expense and travel management setup. They relied on a single company card, leading to issues like lost OTPs and tracking difficulties. This disorganisation made it hard to control spending and assign accountability.

To solve these issues, Quiqup adopted Alaan’s travel and expense management system, which streamlined its expense process. How?

By issuing multiple corporate cards and enabling real-time tracking, Quiqup regained control of their expenses, cutting down inefficiencies and improving overall financial management.

8 Stages in the Travel and Expense Management Process

The travel and expense (T&E) management process comprises several key stages that help organisations efficiently handle business travel expenses. 

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Below is a breakdown of each stage:

1. Developing an Expense Policy

Start by setting up a comprehensive expense policy. This policy should detail what expenses are allowed, the spending limits, and how to request funds, make transactions, submit reports, and get reimbursed. A clear policy helps keep everyone on the same page and ensures compliance across your organisation.

2. Pre-Travel Procedures

Before heading out on a business trip, you must submit a travel request through an automated platform. Your manager will review and approve this request. Once approved, you can book your travel arrangements—flights, hotels, and transportation—directly through the system. This keeps everything organised and on record.

3. Expense Incurrence

While travelling, you’ll incur various expenses like meals and transport. Depending on your company’s policy, you might receive a cash advance or pay out of pocket and submit a claim later. Just make sure to keep track of all your receipts!

Excellent Tip: Do you know about corporate credit cards? They are an excellent way to save time, track expenses, and reconcile corporate card accounts automatically (once they are integrated with your expense management system). 

Most importantly, finance teams will not have to cross-check expense claims between employees and approvers. 

4. Receipt Management

Managing receipts is a critical part of the process, but using mobile apps to capture and upload receipts digitally can save you a lot of time. This reduces the need for paper documentation and manual entry, making it easier for you and your finance team.

Also, Read How e-receipts streamline business spend

5. Expense Reporting

Once you return from your trip, you must compile your receipts and submit a detailed expense report. This report should categorise your expenses according to your company’s guidelines and include all necessary documentation. It’s your chance to get reimbursed for any out-of-pocket costs.

6. Approval Process

Your expense report will be reviewed by your manager or the finance team to ensure it complies with company policies. Many organisations use automated workflows to speed up this process and highlight any issues.

7. Reimbursement

Once approved, the company will reimburse you for any out-of-pocket expenses, typically through direct deposit into your bank account. 

8. Data Analysis and Reporting

Finally, your company will analyse the travel and expense data to identify spending patterns, potential savings, and compliance issues. This analysis helps refine travel policies and negotiate better rates with vendors.

By following these stages, organisations can efficiently manage their travel expenses, stay compliant with internal policies, and control costs.

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Pain Points and Challenges of Ineffective T&E Processes

Did you know that U.S. businesses report an estimated loss of $2.8 billion annually due to Expense report fraud? 

Managing travel and expenses can be tricky for many organisations. Several challenges exist that, if not addressed, can reduce efficiency and increase costs. Here are the main hurdles.

1. Lack of Visibility into Expenses

Do you ever need help keeping track of travel expenses in real-time? Without proper oversight, monitoring spending and ensuring everyone follows company policies becomes challenging. This often leads to overspending and financial discrepancies, making budget control much harder.

2. Manual Expense Reporting

Handling paper receipts and manual reconciliations can be time-consuming and frustrating. This traditional reporting method is prone to mistakes like duplicate submissions and incomplete reports, which delay reimbursements and lower productivity. Not to mention, it's a hassle for both employees and the finance team.

3. Complex Approval Processes

Getting approvals for expense reports can be a headache. Sometimes, the workflow is so complicated that it causes bottlenecks, leading to delays in submissions and approvals. Employees end up frustrated, waiting for approvals that drag on too long.

4. Unclear Travel Policies

If your travel policy isn’t crystal clear, you’ll likely see a rise in out-of-policy expenses and reporting errors. Vague guidelines add more work for finance teams and leave employees unsure about what they can claim, leading to unnecessary mistakes.

5. Delayed Reimbursement Cycles

Manual processes can slow down reimbursements significantly. Employees might delay submitting expenses because the reporting process is too cumbersome, further extending how long it takes to get reimbursed. This can affect their motivation and efficiency.

6. Inefficient Receipt Management

Managing physical receipts can be a nightmare. Receipts get lost, fade over time, or become unreadable, making expense reporting more difficult. This is why digital solutions are crucial to smooth out this part of T&E management.

A 2023 HubSpot survey revealed that in 53% of businesses, the biggest expense management pain point is “employees losing paper receipts/submitting without receipts.”

7. Currency Conversion Issues

If your business involves international travel, managing multiple currencies can become a hassle. Keeping track of currency conversions and ensuring accurate reimbursements adds another layer of complexity and increases the risk of mistakes.

8. High Risk of Errors

When you rely on manual data entry, the chances of errors rise significantly. These mistakes—whether they come from incorrect entries or lost receipts—can be costly and time-consuming to fix.

9. Lack of System Integration

Having disjointed systems that don’t talk to each other can lead to inefficiencies. Without integrated solutions, you’ll experience delays, higher costs, and confusion between departments trying to manage travel and expenses.

Solutions to Overcome T&E Challenges

The good news is that these challenges can be tackled with the right tools. Automating your T&E management process can help you track expenses in real-time, ensure policy compliance through automated rules, and make receipt management a breeze with digital tools. 

Simplifying your approval process and clearly communicating your travel policies can further reduce delays and help avoid the common pitfalls that come with managing travel expenses.

By addressing these challenges head-on, you can streamline your T&E management, making it more efficient and less stressful for everyone involved.

One of our customers, Clara, a legal operating system for startups, faced similar challenges in their T&E processes. Their expenses and reimbursements were handled ad-hoc, requiring significant administrative effort to track down receipts and invoices. This led to frequent delays in closing accounts each month.

After discovering Alaan and scheduling a demo, Clara quickly realised the benefits of our platform and  was able to resolve these issues quickly. The management team was impressed by how Alaan automated the entire process—from triggering expenses to documenting them in real time. With Alaan, Clara drastically improved their expense management process, saving time and ensuring greater financial control.

What is T&E Automation? 

T&E stands for travel and expense, which covers the costs employees incur when travelling for business. T&E automation refers to the use of technology to simplify how companies handle travel and expenses—from booking to tracking and reporting.

Key features of T&E automation:

• Automated Travel Bookings: Easily find flights, hotels, and transportation that fit within your company’s budget, removing the need for manual searches.
• Expense Capture: Employees can upload receipts instantly through mobile apps, making it easy to document expenses on the go.
• Policy Enforcement: The system automatically checks whether expenses comply with company policies, flagging any violations or missing details.
• Digital Expense Reporting: The entire process is digitised, which cuts down on the time it takes for employees to submit reports and for managers to approve them.
• Approval Status Visibility: Employees can track their approval status in real time, reducing the need for constant follow-ups.

• Integration with Accounting Systems: T&E automation syncs with your accounting software, ensuring all expenses are accurately recorded in real time.

By embracing T&E automation, you not only streamline your processes but also gain greater control over expenses, reduce errors, and enhance overall efficiency. It allows your company to focus on more strategic initiatives while providing employees with a seamless expense management experience

7 Best Practices to Improve the Travel and Expense Process

To streamline your travel and expense (T&E) process, adopting certain best practices can significantly boost efficiency, compliance, and employee satisfaction. 

Here are some key strategies to implement:

1. Develop a Clear Expense Policy

Start by creating a well-defined expense policy that outlines allowable expenses, spending limits, and submission procedures. Make sure the policy is easy to understand and readily accessible to employees. A clear policy reduces confusion and ensures everyone knows what’s covered and how to get reimbursed.

2. Focus on Employee Experience

Majority of millennials expect their employers to provide mobile apps for managing expenses, showing a clear preference for modern tools. Simplifying the booking and reporting process with user-friendly platforms ensures employees can easily comply with policies. By offering digital solutions, you reduce friction, increase satisfaction, and improve overall efficiency.

3. Offer Flexible Payment Solutions

Issuing corporate cards or partnering with a travel management company (TMC) can simplify the payment process. This reduces the burden on employees to use personal funds and speeds up the reimbursement cycle, making the process more convenient for everyone.

4. Go Paperless

Shift to a digital expense reporting system to reduce paperwork, minimize errors, and make the process more efficient. Encourage employees to use mobile apps to capture and submit receipts while travelling, cutting down on manual paperwork.

5. Streamline Approval Workflows

Create efficient approval processes to avoid bottlenecks. Consider auto-approving smaller, routine expenses while still ensuring necessary oversight for larger claims. This saves time for both employees and approvers while keeping the process on track.

6. Encourage Timely Submissions

Set clear deadlines for expense report submissions to avoid delays. Timely submissions help maintain accurate records and ensure employees are reimbursed quickly, which, in turn, keeps your financial processes running smoothly.

7. Conduct Regular Audits

Periodic audits of expense reports help you spot inconsistencies, catch errors, and ensure compliance with company policies. These reviews enable you to fine-tune your expense policies based on real data and evolving business needs.

By applying these best practices, your organisation can optimise its travel and expense processes and ensure a more positive employee experience while maintaining control over business travel costs.

How Travel and Expense Management Software Simplifies the T&E Process

According to a 2023 HubSpot survey, implementing expense management software resulted in a 57% ROI within the first year and 70% after two years.

Travel and expense (T&E) management software plays a vital role in streamlining the T&E process by automating various tasks. This technology can make things simpler for your organisation by: 

1. Cost Savings: Automation reduces administrative costs and prevents overspending through real-time expense tracking.
2. Increased Efficiency: Speeds up expense reporting and approvals, allowing employees and finance teams to focus on strategic tasks.
3. Policy Compliance: Automatically enforces travel policies, flagging non-compliant expenses.
4. Enhanced Accuracy: Minimises errors using OCR technology, ensuring accurate, policy-compliant reports.
5. Real-time Visibility: Provides instant insights into expenses, enabling better financial planning and cost control.
6. Mobile Accessibility: Allows employees to capture receipts and submit expenses on the go, speeding up reimbursements.
7. Improved Employee Experience: Faster reimbursements and easier reporting enhance transparency and employee satisfaction.

Travel and expense management software makes life easier by automating time-consuming tasks, ensuring compliance, boosting accuracy, and improving transparency. 

It not only enhances operational efficiency but also creates a smoother, more positive experience for your employees while saving your organisation money.

Conclusion 

In today's business landscape, efficient travel expense management is more important than ever. With fraudulent spending potentially costing organisations up to 5% of their annual revenues, the need for strong oversight cannot be overstated. Automated travel and expense systems not only streamline processes but also safeguard your bottom line by reducing risks such as fraud and non-compliance.

As businesses continue to see rising fraud cases, with over 71% anticipating further increases post-pandemic, adopting a sophisticated solution is no longer optional—it’s necessary. By integrating automated travel and expense management tools, you can ensure better compliance, cut costs, and ultimately enhance productivity.

Alaan can help you streamline your travel and expense management process. Schedule a demo with Alaan today to see how we can help transform your travel and expense management!