Instead of manually tracking and entering your time, benefits of time tracking software with BQE show the exact time spent on a project, including...
Business Travel is Back: Review Your T&E Process
As with all overhead costs, effective business management requires detailed tracking of travel expenses, for both accounting and tax purposes.
Air travel is back. Vacations are back. Even cruises are back. And that means that business travel is ramping up, as well. After about 16 months of little, if any, business travel, a recent survey from the AICPA shows that 34% of business executives expect their own firm’s travel expenses to return to normal levels by December 2021, and 46% expect a noteworthy increase in business travel overall. Another 30% expect it to take up to a year for travel to return to the levels seen before the pandemic. The core of this travel, according to the survey, will be focused on client and sales meetings, conferences, firm management meetings, and training.
Although that’s only a third, 76% of businesses expressed optimism on sales and growth, and 69% of businesses plan to expand in the next year, with anticipated profits up by as much as 4%. Another factor only anecdotally addressed in the survey is how the increase in remote work and video conferencing will affect business travel, with 46% saying the “shift to virtual had impacted” their travel planning, and that is surely also reflected in the respondents who had longer-term predictions about when travel will return to normal.
The Importance of Travel Expense Management
As with all overhead costs, effective business management requires detailed tracking of travel expenses, for both accounting and tax purposes. It’s also important to have controls in place to help deter potential abuse of expensing policies. Automated expense management systems, such as those in BQE CORE, can help professional services firms and other businesses streamline their processes, with automation of approvals, reminders, alerts, and reliable digitized record keeping. With business travel ramping back up, now is a good time to review your firm’s travel and expense management processes, and remove the tedious manual tasks, spreadsheets, and piles of receipts.
All businesses have expenses, and many have travel-related expenses. As such, it’s necessary to have travel and expense policies in place that define what is covered, who is authorized, whether purchase orders are necessary, who approves of the expenses, what limits there are, and other factors like types and class of travel that is approved. The policy must also be enforced, with periodic spot checks of receipts, and appropriate actions when travel policies are misused. Finally, the policy should clearly state how employees will be reimbursed for any authorized spending they make with their own funds, such as for meals, lodging, etc.
On the Road
For professionals who frequently drive or take other ground-based transportation to visit clients in their offices, worksites or other locations, apps like those in BQE CORE can automatically track the distance traveled and time spent with the client. This data is then automatically transferred to an expense report, reducing the chance of errors in manual processes, providing a more accurate record, and reducing possible exaggeration by staff. Employees can also easily take a picture of, or import, receipts and other travel-related documents. This information is then directly assigned toward a client and a specific engagement/case/project, further streamlining the expense tracking, billing and reimbursement processes.
In the Air
For air travel, BQE can import flight expense data from systems like Concur or Expensify, or users can easily import or take a picture of flight receipts. As with the “on the road” expenses, this information, along with receipts for meals, lodging, parking, tolls and other travel-related expenses is then automatically tracked by client, project and other factors. For commercial air travel and lodging, many firms choose to use corporate travel booking tools and corporate credit accounts that help standardize practices, simplify reporting, and can be set with limits on costs and class of travel.
As with any business spending, a formal approvals process must be in place to help enforce policies and reduce the risk of unauthorized or excess spending. In cloud-based management systems like BQE CORE, a manager user is automatically notified and reminded of pending approvals, and has the ability to review all expenses, make edits as necessary, and quickly send messages to employees regarding specific items. For lower threshold or routine items, the firm may decide that the employee’s manager has authority to approve expenses. For higher cost, irregular or specific items, the firm may require additional sign-off before approval and payment or reimbursement.
Misuse of business funds can be very detrimental to any entity, and is often found in organizations with loose controls and little guidance. Business travel is especially prone to fraud attempts, and unfortunately, is often not identified for more than a year after the event, according to the Association of Certified Fraud Examiners. The ACFE notes the most common types of travel expense-related fraud are as follows:
Mischaracterized expense schemes, which occur when an employee requests reimbursement for a personal expense, claiming the expense to be business related.
Overstated expense schemes, which occur when an employee overstates the cost of actual expenses and seeks reimbursement.
Fictitious expense schemes, which occur when an employee invents a purchase and seeks reimbursement for it.
Multiple reimbursement schemes occur when an employee submits a single expense for reimbursement multiple times.
Reporting and Analysis
Good internal controls and proper approvals processes can help prevent, reduce and identify fraud, while financial oversight and reporting on overall expenses and travel expenses can help firms keep an eye on spending trends, including the ability to drill down into details, including clients, staff and projects. AI-enhanced business management systems like BQE CORE provide even greater analysis, looking at associated factors such as heaviest spending months, as well as trends in your spending.
Most business expenses are tax deductible, as long as the firm can note the legitimate business purpose, and keeps detailed records of the payment of the expenses. This is often easier with traditional overhead costs such as rents, leases, utilities and vendor costs, since those are recurring and generally predicable. With travel expenses, however, the firm is relying on individual staff members to self-report their expenses and provide receipts. Therefore, it is critical that firms maintain and enforce strong travel expense policies, which are enhanced by automated expense management processes, record keeping and reporting.