4 critical T&E data points for high-growth companies to monitor

Small business leaders have a lot on their plates – from securing financing and building a strong team to attracting customers and streamlining operations. But amid all the competing big-picture goals, the most successful businesses never stop laying the groundwork for growth. Opportunities abound, even in a challenging and rapidly changing business environment – though the tools and insights needed to fuel expansion are not always obvious.

Case in point: Travel and entertainment (T&E) is not typically a company’s largest category of expense. But it is the one finance leaders are most likely to have difficulty managing, according to a spring 2022 survey from TripActions . Those difficulties often eat up time and money that could be put toward more strategic initiatives.

In the era of hybrid work and high turnover, many companies are navigating new costs and challenges, making it more important than ever to gain clarity and control over expenses. Fortunately, monitoring some key data points can help travel and finance managers streamline their programs and optimize overall company spend.

The travel and expense data points below provide the insights high-growth companies need in the current business environment to maximize efficiency, reduce costs and accelerate growth.

Hybrid workforce analysis

Why it matters : To streamline T&E spend, companies must understand the number and location of remote, hybrid and on-site employees.

The challenge :

• Roughly half of U.S. full-time jobs can be done remotely, according to a recent Gallup poll . Among remote-capable employees, 24% plan to remain exclusively remote, while 53% will have a hybrid work model, splitting time between the office and a remote location. That leaves just 23% who plan to remain in the office full time.
• Work-from-home arrangements can reduce employee office expenses in some areas, but the new environments also come with new expenses, including home office setup and costs for travel to the corporate base or offsite events. The share of employees charging work expenses on personal cards may increase, making it harder to monitor and optimize expenditures.

Over the past two years, many companies have completely altered their remote work policies. Major players like Facebook, Twitter, Shopify and Dropbox have extended the option to work remotely, and, to remain competitive, many small-to-medium-sized businesses (SMEs) have followed suit.

Flexible work options can help to retain employees and, done right, support a company’s innovation and productivity. But in-person opportunities for brainstorming and team-building are key. Companies should analyze their workforce by number and location and, ultimately, assess both cost savings and spend on home office setups as well as travel. The right modern travel management solution can help to gain control over T&E expenditures and facilitate group travel, making offsites and workshops both more cost-effective and easier to organize.

Those managing the company’s finances should be able to monitor how much employees are spending and have a system in place that makes that information easy to find and analyze in real time. This data is essential for assessing the savings – in both time and money – the company could realize by implementing a corporate card solution, which can be a powerful tool to get control of excessive spending.

A corporate card solution enables management to set policy at a granular level for both physical and virtual cards, while empowering employees to buy what they need. With all expenses automatically flowing to the same place, it’s much easier to get the data necessary to make smart decisions – and implement the ideal balance between team travel and employee flexibility.

Employee turnover cost

Why it matters : Many factors – including T&E policies – can affect employee morale. Assessing turnover costs can help companies figure out ways to optimize their workforce.

The challenge :

• More Americans quit their jobs each month in 2021 than in any other year on record, according to the Bureau of Labor Statistics. An average of nearly four million people resigned monthly in 2021, compared to 3.5 million in 2019, and resignations remain elevated in 2022.
• In March 2022, over 40% of small businesses reported that they struggled to find new employees, up from 23% in August 2020, according to the U.S. Small Business Administration . More time and money may be needed to attract new talent in the current environment, making it crucial to balance recruitment against employee retention.

In the era of The Great Resignation, retaining employees – and hiring new ones – can be a challenge. Management teams should calculate the cost of employee turnover and compare it to the cost of employee retention initiatives. Companies should understand the overall turnover rate and costs incurred to attract, hire and train new employees. Depending on this analysis, companies may find it makes sense to invest more in keeping existing employees happy. For high-growth companies seeking to expand their workforce, investing in employee retention has the added benefit of making the company a more competitive prospective employer.

In the 1999 film Office Space , several characters steal the often-malfunctioning printer from their former employer, drag it into a field and destroy it with a baseball bat. The scene is iconic for a reason: “Minor” inefficiencies can add up to major frustrations for employees. And small changes can make a big difference in boosting employee happiness. If employees are paying for travel and other expenses out of pocket, cobbling together receipts and waiting to be reimbursed, an end-to-end travel, corporate card and expense management solution can virtually eliminate the pain points – for both employees and those responsible for managing travel and finance.

Some travel management solutions even come equipped with an option to book personal travel – giving employees access to the same rates and inventory for leisure trips that they get when traveling for business. Showing employees that you value their time – and their time off – can boost employee retention and make your company more appealing to job candidates.

T&E compliance rate

Why it matters : The first step to keeping costs under control is to know where company money is going – and what share is being spent outside of policy.

The challenge :

• Roughly half of SMEs indicated controlling budgets and ongoing expenses is one of their top expense management challenges, according to a 2022 TripActions survey .
• The survey also found that only a small percentage of SMEs automatically flag out-of-policy transactions.

Small businesses have a lot of expenses, including travel and entertainment, office supplies and software. Controlling these costs is impossible without a clear T&E policy, as well as the tools to implement it. Once a budget and spend policy is in place, companies should calculate the compliance rate to determine what share of spend is out of policy.

A corporate card can provide improved visibility into expenditures, but it can also prevent out-of-policy purchases in the first place. Managers can set spend controls at a detailed level, so instead of having to track down employees to ask questions about unexpected costs, out-of-policy purchases won’t even go through.

Additionally, an integrated travel management solution can dramatically improve compliance. A solution with a broad selection of preferred rates gives travelers plenty of options to choose from, and some companies have further cut costs by incentivizing travelers to choose discounted rates in exchange for receiving a portion of the savings in gift cards.

Time to reimbursement and reconciliation

Why it matters : Understanding how long it takes for employees to receive reimbursements for incurred expenses, as well as the time required for finance teams to complete monthly reconciliations, is essential. Both metrics can help companies assess how efficient their T&E operation is – and provide a benchmark for the operational improvements needed to support growth.

The challenge :

Corporate travel managers’ top technology priority was to automate trip-related expense capture, according to Phocuswright’s U.S. Corporate Travel Report 2020-2024 .

But few small business leaders have implemented an automated system, according to a TripActions survey . Just 12% automate reimbursements within policy, only 6% flag misuse of corporate cards — and a full 25% don’t automate anything in their spend management process.

While various metrics can help to assess a company’s spend management system, two calculations – the average time it takes for employees to receive a reimbursement and for finance teams to complete the monthly reconciliation process – can provide a benchmark for assessing efficiency. In turn, travel and finance managers can use this information to identify bottlenecks. If travelers are juggling receipts and submitting expenses manually, there may be a delay in expense submission. It may take extra time for the accounting team to manually review expense reports, or there could be a long approval chain, requiring multiple layers of approval before an expense is reimbursed.

The bottom line: High-growth companies should take stock of internal technology and processes to identify opportunities to streamline. A modern, integrated expense management system can eliminate manual expense reports and enable automatic approvals based on established policy controls. As a result, the time it takes for monthly reconciliation can be dramatically reduced.

If excessive time is required for either of these tasks, a company’s expense management process is in need of improvement. The mistake many companies make is waiting until systems become strained before they upgrade, often tacking on additional tools from multiple vendors as stopgap solutions. This approach puts a drag on growth and prevents companies from fully capitalizing on opportunities.

Instead, small businesses should focus on future-proofing their tech stack and building for the growth they want, not necessarily the growth they have. Particularly in a time of rapid expansion, internal operations need to function as efficiently as possible, so employees are freed up to focus on more strategic activities. An end-to-end solution that combines travel, corporate cards and expense management can enable a business to scale on demand – and be fully prepared for future growth.