Expense Report

The cost of sales is on the rise. Field expenses now average nearly $20,000 a year per experienced sales rep. For larger companies, that figure can climb to about $25,000. No matter what the economy, when sales expenses go unchecked profits can tumble. But sales managers who find ways to cut costs and get the most benefit from selling expenses will show better overall results even in periods where sales are flat.

While air travel alone accounts for almost half of total travel expenses, air fares can vary by 30 to 60 percent according to seating class, booking date and company policy. Hotels and car rental companies are beginning to moderate prices according to season and time of week. And expense management experts can point to a variety of ways to save on the overall cost of sales.

Such expense management services are not new. Gelco Information Network was providing expense management in the old paper and paperclip world of a century ago. But the Internet and better software and hardware are creating a revolution in this field. “It’s exploding,” says one expert. New techniques and new companies are improving the tools, competing vigorously for business and offering sales managers new hope for getting selling expenses under control.Here is a look at some leaders, from the veteran Gelco to the sexy software start-ups.

Full service
Gelco Information Network does not make, sell or integrate software packages for its expense management clients. Rather, the 100-year-old Gelco takes over the function of managing expenses with its own staff and computer programs. The client tells Gelco the rules, and Gelco tells users how to submit expense reports and provides managers with reports. All the other work – and headaches – belong to Gelco. “We handle the whole back end of expense management,” summarizes Gelco marketing director Pat Becker.

“There are at least six or seven basic steps in any expense system,” Senior VP of Sales Chuck Buckner notes. “We can provide the best-in-class solution for each of these steps.” Gelco’s advantages are scale and experience. “We can do it better, faster and cheaper because we have thousands of clients and 100 years of experience,” Buckner says.

“One of the key issues for salespeople is prompt reimbursement,” Buckner says. “With Gelco, the company can pay more quickly than with any other process.” Unless Gelco’s edit program finds that an expense report falls outside certain company-defined limits, the reporting traveler can be paid, with money in the bank, in three days. “It is the fastest reimbursement process in the industry.”

And it can catch violations of company policy. “Say you have a $25 limit on meals, and someone submits a $26 bill,” says Becker. “It will pop up.”

There are four ways to submit an expense in Gelco’s system: traditional paper, telephone, a PC interface or through a web browser. “We are the only company that offers four different vehicles,” notes Becker.

Scale and specialization are the real advantages of Gelco’s approach, adaptable to new as well as old technologies. Buckner gives just one example: “When we process paper receipts, we hit the transmit button to record them. But we also can send the receipts to central facilities where Gelco can scan them to IRS-compliant compact discs.

You can save a whole year’s receipts on one CD.” He contrasts that economy to the “whole drawers” and awkward filing and retrieval of storing paper receipts. Most companies simply to do not have the volume of paper to warrant their own CD-scanning facility.

Gelco charges an account fee and per-report fees. The account fee varies according to how many of the expense management steps Gelco manages. Although Gelco can do all the steps, a client may prefer to keep some of them in-house. The fee per expense report declines with volume.

This flexible system allows Gelco to tailor its services for a wide spectrum of clients. “We tend to favor at least a certain volume of revenue or travelers, but we can go lower,” Buckner explains. Expense reporting can be a very heavy administrative burden for smaller companies, and small firms may not be able to buy or develop in-house software to streamline the process. “The middle market is our best market,” Buckner says. “Often, they are too small to take on enterprise applications. That can be a very big project for mid-sized companies.”

Flexible solution
Concur Technologies sells a high-end expense management software. Xpense Management Solution (XMS) is a robust system for filing, controlling, paying and managing expenses. It can be integrated with current and future web, email and operating systems.

According to Concur CEO Steve Singh, a veteran developer of contact management software who helped develop and market ACT!, clients consistently emphasize XMS’s flexibility and the solid support they get in working with the tool.

And XMS has recently received some very impressive endorsements from travel industry giants. American Airlines, the second largest airline in the world, recently selected XMS to automate expense management for its own 17,000 staff travelers. American Express has joined Concur to create XMS/AX, which combines online booking through Amex with Concur’s expense management tools.

Past relationships have been highly satisfactory to XMS users. Case Corporation, which has 4,000 travelers in its manufacturing business, began automating with XMS in 1994. Speed of reimbursement and ability to analyze the data were the big improvements, according to Case’s Chief Financial Officer Al Derga. Travel is now reimbursed in biweekly paychecks. “We’ve been happy with the whole relationship,” Derga says.

Rather than paying charge cards off individually, Guardian Industries’ 1,000 business travelers now pay them automatically with XMS. Curt Castillo, a Guardian executive who led the automation effort, says most of his expense processing staff have been moved to other critical responsibilities. And Guardian is now saving “six figures a year” in airfare cost, after XMS revealed that one-third of airline travel had been booked outside company policy.

S.C. Johnson Wax chose XMS to handle its 500 sales travelers and 700 other business travelers. According to Marty Sturino, manager of accounts payable, “They weren’t part of an airline, so we knew their only interest was selling us a good product.”

Chemical maker Solutia put its 3,000 business travelers on XMS largely because the system is so flexible, says Accounts Payable Director Elliot Grissom. “XMS could interact with our email system, corporate charge card and multiple A/P systems,” Grissom says. Solutia scans its receipts for electronic storage and pairs them with expense reports, using XMS’s bar-coding capability.

Harvard University also chose XMS for its travelers, in large part because of the software’s flexibility. The new system had to work with, rather than replace, Harvard’s old “legacy” systems.

XMS/3 comes in both Web-client and Windows-client versions. Fairly new systems – browsers, disc-storage and communications capabilities – are required to get the most out of this tool.

XMS is designed for major companies. “Our average client has a couple thousand business travelers,” says Concur’s Natalie Hadfield. “XMS is suitable for companies with two hundred to several thousand travelers.”

Go globalInterPro tracks those e-tickets!InterPro’s Expense Express is a state-of-the-art expense management system well suited to companies with global reach, complex requirements and a desire to keep expense management in-house.

“The power of the product is that it can completely automate the expense management process,” explains Marketing VP Pat Mullin. InterPro’s special strengths are that it is very flexible and can be tailored to specific business processes. “More than with any other product, the client company can define its terms,” Mullin says.

An InterPro client can define the expense categories, or “fields,” as well as “literals,” the particular names the company uses, rather than fit its own system into InterPro’s. InterPro handles all the currencies of the world, as well as calculates taxes according to different national tax rates – an important consideration for global companies.

The goal of all expense processing is to reduce costs, increase speed and reimburse quickly, Mullin says. “With this product, the company will save bottom-line expenses.”

InterPro offers three choices of “front ends” for submitting expenses. Its Expense Express PC uses a client-server PC. The traveler’s laptop is dialed in to the system and reports are emailed to a manager for approval. “You can do the work anytime, anywhere,” Mullin says.

InterPro also offers a Web-based option, Expense Express Web. “The traveler’s computer only has browser access to the InterPro front end on the Web,” Mullin explains. This front end is usually on the client company’s Intranet.And Expense Express Telephony allows expense filing and tracking by simple telephone connections.

The major return on investment in InterPro and other expense management systems comes from reducing administrative costs. “It reduces the number of people you have doing the processing, the time for review, approval and preparing reports and the cost of check writing.”

Automation gives a company more options as well. “When it’s automated, you can write a separate check, you can include payment as a line item on their paycheck or you can make a direct deposit to their account,” Mullin says.

When timing is under your control, you can make it work for you. “Instead of reimbursing for use of the corporate card, simply pay the card yourself,” Mullin advises. “Employees submit their expenses and can be reimbursed in three to seven days. But card payment is often not due for 30 days or more. By having your company pay, you can manage your cash flow by paying only what is due. That saving alone will pay for the system in the first year, for a large company.”

There are other ways to save money through automation. For example, InterPro’s Airline Ticket Manager module tracks unused or partially used plane tickets. “This is especially important when you are using electronic tickets (E-tickets),” Mullin points out. “It is very easy to lose track of E-tickets.”

“One travel manager filed away his E-tickets in a folder, along with ones that had expired. So they were missing opportunities to reuse or receive refunds for the unexpired tickets.” With InterPro’s ticket module, the customer saved $300,000 by tracking its E-tickets. “They had no idea they were losing money,” Mullin says.

Another feature helps with credit card disputes. “You can automate the dispute,” Mullin says. “We provide the capacity to immediately email the card company to notify them that you are disputing the bill.”

The data stored by InterPro can be “mined” by managers for a variety of purposes. “You can get summaries for each travel area, you can use it for activity-based costing, for budgeting or to negotiate better vendor rates,” Mullin says.

Expense Express requires only Windows 3.1, 95 or NT. It is self-installing and takes only 16 megabytes of RAM and two MB of hard drive memory.

InterPro is a high-end expense management system. “It has a high level of functionality and flexibility, including the ability to handle multiple currencies,” Mullin says. “It was designed for medium- to large-size customers.”

Cargill and Marathon Oil have used InterPro in eight countries since 1995. It is also used by J. D. Edwards, which integrates software packages for enterprise-wide applications. Edwards is an alliance partner with InterPro.

A typical InterPro client might pay $85,000 for a license, plus installation and consulting if needed, for 500 users.

“Our key strength is our configurability, a company can modify it to implement their requirements without any programming,” Mullin says. “Say a company will pay for laundry, but only if it is 400 miles away and three nights in a hotel. You can enforce that with InterPro.”

TravelCenter Books and Manages Travel Together
TravelCenter is an integrated system for booking travel on the Internet and managing the consequent expenses. Its particular strength is that the same company, Travelguide Software, makes all three components – a booking system, a virtual travel agent and a management system.

“We have a common data base,” says Marketing VP Joseph Koshuta. “That’s the biggest distinction in our features. TravelCenter’s components will fit together seamlessly without any of the programming that you might have to pay a consultant or IT staffer for. Further, Koshuta notes, “you don’t have to log in at separate places; you don’t have to contact two different people for support.”

The firm’s DirectRes allows travelers, administrative staff or agents direct access to vendors’ reservation systems. They can search for and book their air, hotel and rental car requirements. Your company can customize DirectRes for its own travel policies and users set their own travel preferences. DirectRes can access the major reservation systems 24 hours a day, seven days a week. The user interface is clear, friendly and easy to follow.

DirectRes allows travelers to pick the best travel options at the lowest prices available when they book. Wouldn’t you like to have an experienced travel agent sitting at your employee’s shoulder? TravelCenter’s DirectQC is the virtual agent.

Direct QC picks up after the booking. It watches for lower fares or better routes between the time of booking and the trip. It automatically re-books if a better deal becomes available.

“Say you have booked a round trip to Los Angeles for $1,100,” Koshuta explains. “Very possibly, that can change. QC constantly monitors the LA fare. If it drops by a certain amount, enough to offset the re-booking charge, QC will change the booking.”

DirectQC also watches airline wait lists and looks for upgrade opportunities. Again, it will automatically seize these when available. This module performs about 150 quality control checks to make sure the trip conforms to your company’s travel policy.Even as the trip is being booked, the information is being passed to TravelCenter’s third element, DirectTrack. This part allows input of both booked travel and other expenses, such as meals, entertainment, tips and local transport. It prepares reimbursement vouchers for check writing and summary reports for management. It can be customized to report expenses according to your company’s format, at each management level.

As with other automation tools, TravelCenter should reduce administrative costs. Travelers save time on booking trips. And fare shopping cuts airline costs. For companies with $2–$10 million in annual travel expense, TravelGuide estimates it can cut costs in half compared to those of traditional management. For a company spending $9 million per year, that would mean about $750,000 per year in reduced administrative expenses, according to TravelGuide. A firm with $50 million in annual expenses could save much more – nearly $6 million measured against an old management system.

TravelCenter’s target market is companies with $1 million or more in annual travel expense. TravelSoft charges a license fee of $5,000–$50,000 up front. It offers TravelCenter both as a “drop-in” installation and as a service bureau with TravelSoft employees manning the system. With volume discounts, the company charges a monthly fee of $10 per user. The system requires “One NT server, probably two,” for the drop-in installation, Koshuta says. TravelSoft is allied with the Galileo and Apollo reservation systems, which market TravelCenter around the world.