Accounting for business travel expenses can be a huge headache for procurement managers and financial directors. Not only is it time consuming, but also one of the biggest cost factors for businesses, says, managing director of HRS* UK and Ireland, Jon West.
With a key responsibility of procurement and financial teams being to identify opportunities for companies to make savings on travel and hotel bookings, it always surprises me how many businesses are manually logging expense reports, rather than implementing an automated and digitalised process. It seems that corporates are looking at direct costs, such as the price of a train ticket or hotel room rate, but not considering indirect costs.
How to reclaim VAT
Many businesses are also overlooking the importance of reclaiming VAT on all hotel stays, which is particularly relevant in the UK where it amounts to 20% on hotel accommodation. It really is vital that businesses get the right invoice information and VAT reimbursement from the hotel. Relying on traditional billback and travellers bringing back the correct invoice for VAT reclaim or for processing through expenses is not the most efficient and reliable system. With virtual credit cards, this process is automated and all of the data reconciled in one statement.
In addition, businesses are missing a trick and losing out on potential savings of up to 50% by not investing in a simple online expense solution that would streamline all of these processes. A recent study we commissioned in partnership with Global Business Travel Association Foundation revealed that each travel expense report takes an average 20 minutes to complete and costs €53 (£41) to process for a night’s stay at a hotel.
The true cost of expense reporting
The report surveyed more than 500 travel managers from corporates around the world with the aim of uncovering the true cost of expense reporting. For the majority, the process was costly and time-intensive, not to mention error prone. With approximately one in five claims being incorrect, each correction took a further 18 minutes and cost an extra €48 (£37) to process again.
Three main pain points present the greatest challenges for businesses:
- processing the expense reports
- missing and incorrect information
- reimbursements and arching data
The holistic approach
More than ever, we recommend looking at business trips holistically, from booking to check-in, through to billing and archiving in order to get a much clearer picture on expenditure and potential savings.
With the rise of the millennial business traveller over the past couple of years, priorities have changed and programmes have had to become much more traveller-centric. This has been heavily influenced by the prevalence of mobile devices, empowering the individual business traveller to incorporate their leisure travelling habits into the business sphere. In response, businesses need to ensure they are equally as savvy when it comes to business travel by meeting the needs of their employees to avoid leakage, as well as having a thorough overview of expenditure.
The virtual credit card solution
A virtual credit card solution is an effective way for businesses to manage expense reporting for hotel stays while improving the travel experience for employees. As payments are made virtually, the business traveller doesn’t need a physical card to check in or out, making payments safer and more convenient. Also, the amount allocated to each virtual credit card can be capped to cover the hotel stay and incidental costs, giving businesses complete control over the traveller’s spend. Virtual credit cards can also be integrated with booking systems that will automatically reconcile all costs and data into one statement to produce a single VAT invoice replacing the manually cumbersome billback procedure.
Businesses are seriously lagging behind when it comes to using a centralised payment method for hotel accommodation and secondary subsistence costs in comparison to say, flight bookings. Payment methods that operate directly through the company, such as company credit cards, are used twice as frequently for flights as for making hotel bookings. Considering the range of digital payment solutions that offer detailed information and high-quality data, businesses really need to wake up to the opportunity they provide in identifying significant savings in their expenditure.
HRS offers end-to-end hotel solutions for more than 3,000 businesses globally