Business Appointments and Expenses: Where are you off to?

Table of contents:

• “Forced digitization” due to the corona pandemic has changed the way we travel
• A waste of time and effort? Surveys reveal a pent-up demand
• Time is money - both for employers and employees
• Sustainability and business travel

Corona pandemic, war in Ukraine, rising energy prices, climate change and so forth…

Global and national political, economic, and social challenges have taken their toll on business travel and all the related expenses in recent years. The corona pandemic put an end to business trips to customers virtually overnight. Outside appointments were almost non-existent, tended to be carried out digitally or were reduced to the bare minimum. However, the sector now seems to be gaining pace. The latest VDR business travel analysis shows that around 75 million business trips were made in 2022. But how has this important economic sector evolved?

In contrast, longer trips to more distant countries have become and will become less frequent in the future. Furthermore, the sustainability factor and the related sustainable travel options are becoming increasingly important, both for companies and business travelers. 

"This is certainly also related to the current ecological awareness in society, which is now rubbing off on the economy and the topic of business travel," explains Jörg Günther, member of the Executive Board at AFI Solutions, who oversees the in-house solution for travel expense management. "This reflects the insights and best practices that companies have gained over the last few years with challenges such as the pandemic as well as political and economic difficulties on a global scale - true to the motto: less is more, which is more beneficial for the company's budget and the environment. Nevertheless, people are traveling more again, which makes travel expense management more interesting - especially in the SAP environment." 

“Forced digitization” due to the corona pandemic has changed the way we travel

However, the situation has changed somewhat due to the forced digitization push during the pandemic. In an international Survey, employees from the finance departments of large companies were asked about the effects of hybrid working models and the current economic conditions on travel bookings and expenses (Travel and Expense, T&E). For over 90 percent, these have a direct impact on their work processes. In each case, 41 percent expect a more thorough control of travel expenses and faster processing and settlement of expenses as a direct consequence of the "new working world". The majority of finance departments (69 percent) also assume that the tense economic situation will lead to more cases of fraud in accounting.

According to the survey, travel expenses are still necessary for 57 percent and even crucial for company growth for two fifths of the companies surveyed. Around three quarters of those surveyed are aiming to reduce costs, e.g. by implementing appropriate expense policies.

“Business travel and the expenses incurred remain essential for most companies,” analyzes Mr Günther. “In addition to the cost savings that are mentioned almost every time, increased process transparency and efficiency as well as the all-embracing issue of sustainability are definitely of greater importance when it comes to travel expense planning and reimbursement. Despite the strong push towards digitalization in recent years, many processes are still performed manually, especially in the area of travel expenses and the related processes. Every business traveler knows how many travel documents, invoices and receipts can accumulate at the end of an outside appointment, which then have to be submitted and processed manually.” 

A waste of time and effort? Surveys reveal a pent-up demand

Digital travel expense management is therefore still lagging behind in many companies. An international Survey on travel management revealed that only 15 percent of those surveyed stated that they provide their staff with cloud-based T&E solutions. Between 21 and 30 percent of the participating IT and controlling decision-makers responded that various T&E management tasks are still handled completely manually in their company. Despite a comparably high use of cloud solutions in this area (85 percent), almost a third of those responsible responded that their company only uses partially integrated solutions, and 8 percent even mentioned two completely heterogeneous solutions without integration into other systems.

In times of digitalization and the like, this still sounds like a lot of potential for optimization and savings. Those surveyed stated that they estimate an average of 13.6 working hours are spent on planning and processing a business trip in their company. The invoicing process and expense reimbursement are the most time-consuming.

Time is money – both for employers and employees

The results of an international Survey of decision-makers from the finance and business travel departments also match these figures: a digital travel expense management system could save as many as two hours in each accounting process, which equates to around 39,000 full-time employees and 2.3 billion euros in gross value added. According to the survey, large German companies could save 2.2 billion euros or 6.8 percent in direct travel expenses through more efficient processing. The reasons for this include a reduction in fraud, a decrease of errors due to manual work steps and a stricter application of travel policies.

“It's amazing how much optimization potential still lies dormant in this corporate sector,” says Mr Günther. “Employees, who already work with their smartphones every day and are usually used to simple applications for all areas of life and work, now expect to be able to record and manage their business trips, including travel expenses, effortlessly and quickly using an intuitive IT solution and/or app - from anywhere and at any time.”

In line with this trend, the topic of digitization of travel expense accounting is extremely popular in a 2022 Survey. This includes, for example, the uploading of receipts and the creation of expense reports during the trip. Almost half of the business travelers surveyed would definitely take up the offer of digital travel expense recording via a smartphone application, for example, while 35 percent would probably accept such a solution. These digital options are particularly interesting for frequent travelers.

A somewhat older Survey, which sheds light on the topic of advance payments, i.e. expenses that business travelers initially have to pay out of their own pocket, strikes a different chord. One in three employees complained that it takes over two weeks for the employer to reimburse the interest-free loan after submitting the travel expenses. Just a quarter are reimbursed for their expenses within two days.

Sustainability and business travel

These surveys ultimately show that there are enough incentives on both the employer and employee side to invest in new technologies for planning, recording, and processing of travel expenses. In addition, the hype surrounding artificial intelligence will also influence future T&E solutions: according to the Survey mentioned above, almost nine out of ten decision-makers from finance departments are confident that AI processes can assist with and speed up travel booking and expense management. This result should motivate software providers to launch IT solutions which reflect both the current requirements of companies and business travelers, and which can be constantly adjusted to changing circumstances.

“There is a demand for suitable products,” confirms Mr Günther and adds: “With AFI Xpense, we have developed a solution in the SAP environment that meets both current and future requirements. It is fully integrated into the respective SAP system and can be used for fast travel and expense recording via a cloud connection using an intuitive web application and a modern smartphone app from anywhere and at any time.”

The AMEX-GBT Survey also confirms another increasingly important development in travel cost management: almost two thirds of those who participated confirm that they consider the expected carbon dioxide emissions of a business trip to be more important than the related expenses.

Mr Günther agrees that “the topic of sustainability is becoming increasingly important in many IT projects. In the future, the AFI Xpense app will include the CO2 values saved during travel planning and display them in a central location. This will allow companies to use an internal ranking and reward system, for example, to encourage - and if necessary demand - a more ecological approach to low-emission means of transportation.” 

Using gamification to achieve more sustainable travel may still somewhat sound like a pie in the sky. However, both the technical options and the social and economic framework conditions are already in place to ensure that business travelers will (want to) take the train rather than a flight in the near future.