CFOs Focusing On Expense Mgmt To Cut Travel Costs
After revenue growth, expense management is the next focus area for finance leaders in India, according to a recent research undertaken by American Express that found that expense management is the priority focus area for businesses in India after revenue growth. The research titled: ‘Travel Expense Management: Rising Focus’, conducted by IMA for American Express, reveals that about 89% of companies are prioritising on expense management in line with their aspirations of revenue growth, ensuring efficient cost management of controllable expenses like travel. Moreover, with amalgamation of automated expense management solutions and corporate cards, business travel is expected to evolve, bringing greatest ROI and business advancement in the long run. In line with business and revenue growth, 64% of CFOs interviewed expressed a growth in business expenses by up to 10%, and hence the need to control these expenses.
Commenting on the findings of the survey, Saru Kaushal, Vice President and General Manager, Global Corporate Payments, American Express India said, “In a competitive business environment, it is vital for companies to combine the levers of policy, process and vendor negotiations while doing bulk purchasing in-order to maximize the ROI on controllable expenses incurred. The country’s leading corporations are ensuring optimal deployment of all expenses related to Travel by creating robust cost-efficient expense management systems.”
She further added saying, “American Express helps companies seamlessly integrate their expense management policies and payments on our Corporate cards program. This helps in creating transparency and allows the finance team to drive compliance to Travel policy. The expense management solution is delivered along with sophisticated data analytics to help companies identify abnormal & out of pattern expenditure and also peer benchmarking.
Travel and Expense (T&E) management is the second most controllable expense for services, and third most for manufacturing sector, says the study. As corporate India enters a radical change, companies will focus on travel and expense management, identified as one of the most controllable expense. With total spends of US $7.4 billion and an average per company spend of US $0.4 million on travel, lodging and entertainment (based on 2015-2016 IMA data available for 10,000 companies), there is huge scope for companies to generate savings.
According to the report, with focus on business expansion in 2017, expenditure on travel, lodging and entertainment is expected to continue to increase in FY 2018 at about 10% for the services sector and 5% for manufacturing firms. Business travel has become fundamental for business growth, exploring new markets and maintaining existing client relationships. Establishing an effective and accountable travel expense management policy, will thus ensure that companies are able to keep a tab on the travel expense, further avoiding any fraud or overspend.
The report recommends that to drive the full benefits of automation, companies should move towards fully automated and integrated expense management systems from the predominant partially automated systems. As per the report, about 21% of CFOs feel they have fully automated and integrated systems, while about 47% of them have partially adopted automation. Another 13% companies are ready to institute automated systems by the end of 2017.
To analyze travel behavior and patterns, companies can use data analytics technology to gain a better understanding of possible areas of savings. This will help businesses gain the competitive advantage of analysing expenditure trends and take steps to ensure greater ROI.
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