T&E Expense Optimisation: Employee Satisfaction vs Cost Control

Travel and entertainment expenses account for a large chunk of operational costs for many businesses. As companies try to stay competitive and financially healthy, T&E expense optimisation is a top priority.

However, the challenge is to find the right balance between cost control and employee satisfaction. This article looks at how to manage travel and entertainment expenses, including using automated expense management software to simplify the expense reporting process, save time, boost productivity and reduce labour costs while keeping your team happy and productive.

Before we get into optimisation strategies, let's first define T&E expenses. T&E stands for "Travel and Expense" or sometimes "Travel and Entertainment". It's the costs incurred by employees while working away from their usual workplace or when entertaining clients and partners.

Make sure to document expenses incurred for business purposes so you can get reimbursed properly and comply with company policies.

T&E expenses include:

Transportation (airfare, train tickets, car rentals, ride-sharing services)

Accommodation (hotels, short-term rentals)

Meals and dining

Client entertainment

Incidental expenses (parking fees, tolls, tips)

Conference and event registration fees

Entertainment expenses are costs such as event tickets, recreational activities and other forms of client entertainment.

These expenses add up quickly and can be 8-12% of an organisation's total budget, according to industry reports. No wonder businesses are looking to optimise their T&E spend.

While it may be tempting to go hard on cost-cutting to reduce T&E expenses, you need to consider the impact on employee satisfaction and productivity. Managing expenses during a business trip is key to keeping employees satisfied and productive. Business travel and client entertainment are often a part of relationship building, deal closing and innovation. Overly restrictive policies can lead to decreased employee morale and engagement, poor client interactions, missed business opportunities and top talent turnover.

But lack of control over T&E spend can lead to unnecessary financial burden on the company, inconsistent treatment of employees, compliance issues and potential fraud and difficulty in forecasting and budgeting.

The answer lies in finding the middle ground where business activities can happen while being financially prudent. Setting policies to control costs while keeping employees happy is key to avoiding overspending, compliance and visibility into financial resources. Let's get into that.

The foundation of good T&E expense management is a well-written policy. This document should outline the guidelines for allowed expenses, spending limits and procedures for submission and approval. When creating or updating your T&E policy, consider the following:

Clarity and Accessibility: Make sure the policy is written in simple language and is accessible to all employees.

Flexibility: Build in some flexibility to cater to different roles, departments or locations.

Employee Input: Involve employees in the policy-making process to get their input and buy-in.

Regular Updates: Review and update the policy periodically to keep it relevant and aligned with business needs.

Compliance and Ethics: Include guidelines on ethical considerations to ensure compliance with laws and industry standards.

Reporting T&E expenses accurately is important because these costs are tax-deductible, and proper documentation can avoid audits and tax headaches.

A structured expense management process is key to managing T&E expenses well. It ensures all expenses are managed through a workflow, from pre-approval to reporting and automates approvals, sets clear expectations for employees on business expenses.

By having a policy that's comprehensive and employee-friendly, you're setting the ground for good T&E expense management.

In this digital age, using technology is key to good T&E expense management. Modern expense management software, including automated expense management systems, can streamline submissions, speed up the approval process, increase compliance rates, improve accuracy and provide insights. Look for features like mobile accessibility, automated receipt capture, policy enforcement, integration, analytics and reporting and virtual credit card functionality.

By using the right technology solution, you can reduce the administrative burden of T&E management and have better visibility and control over expenses. Automated expense reporting can identify and flag non-compliant expenses, ensuring company policies are adhered to and the expense reporting process is more efficient. Choose a platform that allows employees to submit expenses on the go via smartphone apps, uses OCR to extract data from receipts and can flag expenses that breach company policy. Opt for a system that integrates with your existing accounting and ERP systems and has robust reporting capabilities to analyse spending patterns and identify areas for optimisation.

One way to control T&E costs without impacting employee satisfaction is to negotiate preferred vendor agreements. By partnering with specific airlines, hotel chains, car rental companies and other travel service providers, you can get discounted rates and extra perks for your employees.

To do this:

Analyse spending patterns to identify your most used vendors and highest spend categories.

Research potential partners that fit your company's needs in terms of geographical coverage, service quality and sustainability practices.

Negotiate contracts to get favourable rates, added benefits and flexible terms.

Communicate the benefits of using preferred vendors to employees.

Review booking data regularly to ensure employees are using preferred vendors when possible.

By getting good deals with preferred vendors, you can reduce overall T&E costs and potentially improve your employees' travel experience.

One of the best ways to optimise T&E spend is to create a culture of cost awareness among employees. This doesn't mean enforcing the lowest possible price options but being smart and value-focused. Conduct periodic training sessions on T&E policies and best practices, making them fun and interactive. Give employees easy access to tools that can help them make cost-effective travel decisions, like fare comparison websites or apps for tracking expenses.

Automating expense claims can speed up the approval process and increase efficiency so employees can submit their claims and the finance team can be more productive.

Recognise and reward employees who consistently show good T&E habits. Communicate company wide T&E trends and their impact on the business to employees so they can see the bigger picture and their role in managing costs. Create channels for employees to give feedback on T&E policies and processes which can lead to improvements and employee buy-in.

A smooth reimbursement process is key to employee satisfaction when it comes to T&E expenses. Long delays or complicated processes can lead to frustration and even financial stress for employees. To optimise your reimbursement process:

Set clear timelines for expense submission and reimbursement.

Use your expense management software to automate as much of the process as possible. Automating expense reporting can increase accuracy and compliance and lead to cost savings and employee productivity.

Offer multiple reimbursement methods to suit employee preferences.

Create a clear escalation process for employees to follow if they have issues.

Do regular audits to identify and fix bottlenecks and inefficiencies.

By simplifying the reimbursement process, you can increase employee satisfaction with T&E policies while maintaining controls.

In the age of big data, data on T&E spend can be gold. Modern expense management systems have robust reporting and analytics. Set up regular reports to track key T&E metrics like average trip cost, top expense categories and policy compliance rates. Compare your T&E spend to industry benchmarks to see where you're overspending or underspending.

Manual expense reports are time-consuming and error-prone, while automated processes mean faster approvals, better compliance, and less fraud.

Look for trends in spend over time and across different departments or individuals. Use historical data to forecast future T&E spend more accurately and budget and resource more effectively. Use your data insights to update your T&E policy. Share key insights with finance team, department heads and employees to drive better decision-making across the business.

In this connected world, there are often alternatives to traditional business travel that can save costs without sacrificing productivity or building relationships. Consider promoting virtual meetings, hybrid events, leisure travel (business trips with leisure time), alternative accommodation, and local talent for distant meetings or events.

By using these alternatives, you can reduce T&E costs and potentially increase employee satisfaction through flexibility and work-life balance.

T&E expense optimisation while keeping employees happy is a tough job, but it can really pay off for businesses. By using a complete strategy, companies can save big without hurting employee morale or business performance.

Good T&E management isn't about cutting out all spending, but making sure every pound spent helps the business. Create clear policies, use smart tech like expense management software, and help employees understand why responsible spending matters. Get good deals with travel vendors, make reimbursements quick and easy, and use your T&E data to make better decisions.

Modern financial platforms like Fyorin can be a game-changer here. With features for managing expenses across different currencies and automated reporting, they can make T&E management much simpler and more effective.

When you start improving your T&E management, remember it's an ongoing process. Keep checking and updating your approach as your business changes and you get feedback from employees. Stay persistent, keep things balanced, and you'll end up with a T&E strategy that works for both your business and your team. In the long run, this can turn T&E management from a headache into a real advantage for your company.