Spend analytics for analysing travel and expense data
Even after the Covid-19 digitisation, business travel continues to hold a 20% share of the overall industry. According to a global forum for the travel industry, the global spending on business travel in 2021 was $740 bn.
This makes it extremely important for businesses to track and analyse their travel and expense (T&E) transactions. A T&E transaction could include flights, trains, hotels, car rentals, meals, entertainment, telephone bills, and other miscellaneous things. Logging them into an accounting system is not sufficient, and you need a travel spend analysis platform to know if you are spending optimally.
But how should a business begin doing that? This article will explain the benefits of T&E spend visibility solutions, how it works, and the top tests you should perform in your company.
Understanding the power of T&E analytics
T&E analytics uses tools to identify spend patterns and cost-saving opportunities. By strategically organising the data, you identify opportunities and key trends to get actionable insights.
By using analytics, you can identify bottlenecks in the company’s T&E expense management and reimbursement processes. Identify areas that are cost heavy, cut down maverick spend, improve the sourcing strategy and vendor relationships, and crack better deals for travel and expense. Some of the direct benefits of using T&E analytics are –
- Detect and fix leakage of funds within the T&E area.
- Identify hidden areas to save costs.
- Use vendor consolidation to negotiate better deals.
- Prevent overspending on policy compliances.
- Use spend forecasting to make better policy and budgeting decisions.
- Identify and correct possible areas of fraud and abuse in claims.
How does T&E analytics work?
Travel and expense analytics connects with and draws data from multiple systems. It then transforms this data into meaningful insights that help you achieve the benefits mentioned above. Some of the sources of T&E data include –
- Accounting system.
- Enterprise resource planning (ERP) system.
- Finance books and general ledger.
- Bank statements.
- Employee expense reports.
- Credit card statements.
Top T&E analytics tests
Every T&E audit program must include the following tests to give you cost-saving opportunities within the company –
- Top spend categories analysis
- Merchant code(s) analysis
- Out-of-pocket expense analysis
- Weekends and holidays analysis
- Duplicate transactions analysis
- Keyword analysis
- Split transactions analysis
Employees usually have a slab of T&E spend they can do according to their position. Analyse the spend categories against each employee and know if it is within the slab. Repeated overspending should flag in the reports immediately.
Summarise and segregate T&E expenses according to the merchants to understand the spend behaviour. Identify merchants that are unusual such as electronic stores, jewellery merchants, etc. Isolate transactions that are dubious and cannot be traced to their source.
These T&E expenses include areas where the claimant does not have a receipt, e.g. cash tips. Analyse if the claims are more than the average in your T&E expense policy.
If the employees are travelling for an extended duration, you can expect some transactions on the weekends but, they should not be frequent. Most of them should be on weekdays.
Identify the same transaction amount submitted through different mediums. For example, it could be a fraud if you get a claim for the same amount and transaction type through cash and credit card.
Analyse the description of the T&E claim. Look for keywords that appear fraudulent, such as ‘gift card’.
Some high-value transactions could require additional approvals as per the company’s T&E policy. The employees may split the bill into multiple parts to avoid this approval. Your T&E system should be able to identify and flag such transactions based on the same vendor names, dates, and descriptions.
When your accounting department receives hundreds of T&E reports and claims each day, it is easy to overlook fraud and leakage of funds. By incorporating T&E analytics, you can reinforce the audit program to get more coverage around fraud transactions. The next step is to develop a program for continuous monitoring and improvement of T&E transactions.
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How can Infosys BPM help?
Infosys BPM uses cutting-edge analytics and business intelligence that converts spend data from internal systems into actionable reports. You access the visual dashboards through an easy-to-use web browser. Use the customisable and detailed reports to make data-driven decisions to save T&E costs.
Read more about T&E spend analytics solutions at Infosys BPM.