Travel and entertainment (T&E) expenses are increasingly becoming the second largest operational expense for Indian corporates after payroll, and the most difficult expense to control after maintenance and repairs, according to a survey of Indian companies.
This has meant that Indian companies are realising that these costs need to be controlled, and that the way forward in doing this is through automation, the survey report by CFO India & Happay said.
“With T&E expense being the second largest operational expense after payroll and the most difficult expense to control after maintenance and repairs, companies are increasingly cognisant of the need to minimise these costs and bottlenecks,” the report said. “As companies scale, traditional T&E solutions have led to problems such as high processing cost, lack of visibility on spending, and instances of error and frauds from manual entry.” The data shows that in 65% of the companies, expense vouchers are checked manually by approvers and the finance department for policy compliance. Further, 50% of the companies use an accounting software to process and manage expenses that requires manual data entry. Similarly, 77% of companies do not use any available technologies and require employees to manually attach vouchers for further processing. The report notes that one of results of this manual processing is that companies do not then have the wherewithal to detect frauds by employees in claiming T&E reimbursement, and that they also cannot easily access historical T&E expense data to analyse trends in the expenditure.
“While companies agree that fraud and misappropriation is a matter of concern, 48% companies do not have a system to detect fraud,” the report said. “Finally, 55% of the companies stated that inability to retrieve past expense data is a key bottleneck in identifying and managing T&E expenses.”
According to the report, 55% of the CFOs surveyed said that recovery of past data was a time-consuming task that required multiple people to gather the information, while 44% of the CFOs with cloud-based system installed said that they were able to access the data within seconds.
Misappropriation claims
“The survey aimed to validate industry reports that 14.5% of T&E reimbursement is misappropriation or fraudulent claims in every company,” the report said. “While 50% CFOs stated that the percentage of fraud and misappropriation in their companies is lower than 14.5%, 48% of CFOs were unaware of this number.”
“The significant share of CFOs who do not realise the degree of fraud and misappropriation in T&E indicates a lack of a proper system to oversee such practices,” the report added. “As a consequence, either fraudulent claims do not get reported or there is an absence of a system to monitor them, leading to huge costs for the company.”
