Automation and standardization of travel booking and expense processing have helped slash the indirect costs of managing travel by 42 percent during the past decade to 4.6 percent of the travel and expense tab, down from 5.6 percent in 2003 and 8 percent in 1997. According to a recently released performance and best practices study of 66 European and Asian companies conducted by A.T. Kearney. The study also found opportunities to halve those indirect costs.

Adoption of T&E management best practices could help an average company reduce indirect costs to 2.1 percent of T&E spending according to the European-Asian Expense Management Study. Indirect costs were found to be as low as 1 percent of total T&E, and as high as 34 percent.

While the survey focused only on multinationals or large companies, findings indicated that they are "less about geography and more about savings afforded by automation". In the U.S., more companies have implemented such solutions, which streamline the reimbursement process and can dramatically reduce the associated administrative costs. The acceptance of these solutions has not been as fast or widespread in Europe or Asia.

Indirect costs were comprised of six core functions: expense claims representing 52 percent of the total indirect T&E costs, trip planning (23 percent), trip booking (17 percent), IT costs (6 percent), cash advances (2 percent) and central billing costs (1 percent).

The hidden nature of administrative travel costs--the indirect expense a company incurs every time an employee books a trip, receives a cash advance or submits an expense claim--can make cost savings difficult to target. The largest European and Asian companies were asked to complete an online survey of more than 100 questions. The companies were in eight industry sectors, led by manufacturing and financial/professional services. Collectively, those companies booked more than 3 million trips last year, processed more than 3.25 million expense claims and spent more than $4 billion (€2.6 billion) on T&E.

The study found six characteristics of the best-performing companies: clearly defined and frequently communicated travel policy and enforcement processes; maximization of supplier process optimization capabilities; investment in, and high adoption of, automation; centralized back-office activities through a shared services center and/or outsourced non-core activities; focus on user satisfaction and cost reduction; and leverage of management information "to continuously refine and improve processes, optimize spend visibility, control direct spend and use as a basis for supplier negotiation.


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