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Closing the Loop: Corporate Card & Expense Management Integration
May 2006

Anthony L. Grey, the Director of Process & Technology Solutions for American Express Consulting and an experienced Information Technology, Finance and Business Management professional, described the four components of a managed corporate travel program. Comparing the Colorado River after the construction of the Hoover Dam, which harnessed the river's enormous strength and power, to a well managed and controlled business travel program, Grey shared insights about the ways in which an integrated expense reporting strategy provides opportunities for greater control, efficiency, and savings.

The Fundamental Components of Managed Corporate Travel Program

The core components of a managed corporate travel program are:

1. implementation of a benchmarked "best-in-class" travel policy
2. use of a mandated/preferred travel agency
3. use of a mandated/preferred corporate card
4. implementation of automated expense reporting software or an automated expense management (AME) solution

Implementing a corporate-wide travel policy is the foundation of an effective T&E program. An enterprise-wide policy can reduce or eliminate distinct interpretations of rules and guidelines, helping to save costs, provide standards for corporate accountability, and to bring employees across the company into compliance. Grey described a company with which he has worked that had a $300 million travel program and as many as 52 distinct versions of the corporate travel policy. Travel managers lacked consolidated information, had no ability to leverage volume discounts with suppliers, and were unable to track spend habits and patterns. Developing and implementing a single company-wide policy ultimately helped the organization achieve a 3½ percent reduction in the organization's overall T&E budget.

Mandating use of a single travel agency is another important way to achieve control, consistency, and savings. The travel agency is the first point of contact in a managed travel program. Use of a single agency helps guarantee that travel arrangements will be booked in accordance with corporate policy; provides travel management reporting and analysis; assists in managing corporate risk related to business travel; and can help provide emergency assistance to travelers in transit. Organizations that use multiple agencies are unable to track spend patterns easily; do not have access to aggregate data; and may find it difficult to locate and contact travelers during emergency situations.

A mandated or preferred corporate card program is an essential component of a managed corporate travel program. Corporate cards provide travelers with a tool to leverage corporate resources to pay for legitimate expenses. This can be especially important for expensive international travel, which can represent a real financial burden for travelers. Use of a mandated corporate card provides consistency of data capture and consistent reporting. Consolidated information is vital for planning, as well as strategic sourcing (leveraging volume discounts with suppliers).  In the last few years, Grey has worked with clients who benefited significantly from mandated corporate card programs during times of emergency. For example, travelers who were stranded during Hurricane Katrina were able to leverage corporate resources for lodging and food when personal resources would have been insufficient.

Finally, an automated expense reporting solution is critical. Automated expense reporting ensures the objective and consistent application of the corporate travel policy to every expense transaction. The benefits are substantial and far reaching, including the ability to analyze travel patterns and spend profiles (tracking sales cycles as they compare to T&E spend, for example); significant reductions in total travel costs; improved SOX compliance in the United States and with Bill 198 in Canada; and increased traveler satisfaction. Grey noted that Gelco has been a fantastic business partner, providing a best-in-class automated expense reporting solution.

Grey concluded that the objective application of the business rules for each and every transaction creates transparency that will result in consistency, predictability, and, ultimately, in cost savings. Together these four fundamental components make it difficult to exploit weaknesses in corporate travel programs and virtually close the loopholes.

Joan Schatz, Vice President for Payments and Settlements Services at Gelco Expense Management, followed up Grey's remarks by summarizing the benefits of an automated expense management solution (AEM) in this way: an effective AEM solution reduces the burden on accounting and administrative resources while bringing together standardized processes and improved controls, which results in improved compliance with corporate travel policy, global consistency with localization, substantial cost savings, and greater employee satisfaction. Schatz stressed the benefits of objective outsourced audits to simplify and improve SOX compliance.

SmartTalks participants had a number of excellent questions for Grey and Schatz. Several travel managers asked how to benchmark corporate travel policies. Grey recommended peer networking and employing consulting services. A company such as American Express has a large repository of information about corporate T&E policies. Gelco Expense Management also maintains a clearinghouse of information about T&E best practices to help companies create and implement policies appropriate for their needs and consistent with others in their industry.

Another questioner wanted to know if it is typical for companies to create separate travel policies for executives. Both Grey and Schatz agreed that this is a common practice. Gelco's ExpenseLink can be configured to segment distinct employee groups, such as executives, and can incorporate special rules directly into the automated solution.

Finally, Grey and Schatz were asked how travel managers can convince company leaders to implement a mandated corporate card policy. Grey explained that recent research has shown that use of a mandated corporate card is critical for a truly successful managed corporate travel program. "It's a no-brainer," he concluded. Gelco has produced a number of white papers on the subject of mandated corporate card programs, as well as on related topics. You can access these white papers by contacting your Gelco Account Manager.