Rizzo began his thought leadership presentation at the 2018 Financial Leadership Forum held on May 3 in Atlanta by stating, “There are two parts of cost management—indirect spend and direct spend. I’m going to talk about the ‘ugly dog’ scenario of travel and expense management, which is really a big problem for organizations.”
Rizzo presented some facts about expense reporting from a survey conducted earlier this year:
“Most business travelers are asked to use an expense-reporting tool if they want to be reimbursed. The employee doesn’t need to like the tool, because reimbursement is a powerful motivator. To book travel, companies use software provided by expense software vendors and, again, it doesn’t matter if travelers like it. It seems like the tail—the expense-reporting application—is wagging the dog, which is the cost of the trip,” he observed.
“It seems like the tail—the expense-reporting application—is wagging the dog, which is the cost of the trip.”
“Would a more appropriate approach to managing T&E spend be to make sure the bad expenses don’t find their way into the expense report in the first place? Let’s prevent noncompliance, expensive airplane flights and hotels, and eight-martini dinners. Let’s constrain the system in such a way that we can use intelligence to make sure that what goes into the expense report is compliant and proper. We can make the expense reporting process easy and effortless and provide the CFO with precisely accurate data in the reporting. More importantly, the odds are high that there are going to be good expenses in the expense report,” observed Rizzo.
“Let’s constrain the system in such a way that we can use intelligence to make sure that what goes into the expense report is compliant and proper.”
“The challenge isn’t trivial,” he said, noting there are three ways that the finance organization can manage T&E spend:
“None of these are optimal, because, on the managed side, there are a lot of constraints and, on the consumer side, it’s a free-for-all, and you have no clue as to what’s going on,” he said. “To solve these problems, you can buy an integrated travel-and-expense solution, which is one application that does both, or you can think about other options such as best-in-breed expense solutions and best-in-breed travel solutions that are tightly integrated. These make both the expense reporting and booking processes easy and simple, and save on costs. There’s a shift in the industry away from the integrated single vendor to best-in-breed vendors,” said Rizzo.
“There’s a shift in the industry away from the integrated single vendor to best-in-breed expense solutions and best-in-breed travel solutions that are tightly integrated.”
Rizzo then gave the example of the number of flight pairs between San Francisco and Los Angeles. “There are 60,000 flight-pair combinations. How can a traveler possibly figure out which of these is the best? Technology can do this, but often an expense-reporting tool won’t capture a costly piece of content on the trip,” he noted. “If the technology is smart enough to indicate flights and hotels that save the company money, are in policy, and are mindful of traveler preferences, that’s a huge win.”
Rizzo pointed out that it’s essential to optimize time during the traveler’s journey to dramatically enhance human capital productivity. “There’s technology available to do this.”
In summary, Rizzo recommended asking three, fundamental questions: