Is digitalisation worth it - travel expense reporting?
How do you calculate the return on investment for the digitization of the travel expense report? What else to consider?
How should a return on investment be calculated for a travel expense report project?
Actually, a continuation of the content-related topics was planned for our next blog post. We will resume this in any case with the following posts.
However, due to current events, we decided to talk about money today.
This morning, a pre-arranged date for a presentation was cancelled, as it is assumed that such a project is not profitable in view of the projected costs for the implementation and the subsequent running costs. This mainly referred to the ratio of regular travellers to project costs.
This is exactly the discussion we have quite often with people interested in our travel cost accounting. And of course a commercial audit of prospective projects makes sense in any case. We ourselves point out the costs to interested parties very early on for precisely this reason. In the course of time, it has become clear that from about 50 regular travellers onwards, our projects are considered commercially acceptable. If the number is smaller, it is often viewed critically.
The mathematical issue behind this is also described very quickly. Basically, it makes no difference whether a company has 20, 50 or 500 travellers. The legal requirements are equally complex and to some extent this also applies to the company's internal guidelines. Interfaces have to be set up everywhere, etc. This means that if the number of active travellers doubles, the project will be at most 5-10% more expensive. This effect even increases as the number of users increases. In concrete terms, we have implemented projects where the implementation costs for approx. 800 monthly active travellers were just twice as expensive as projects for companies with 50 active travellers.
How do you deal with this? At what point does such a project pay off?
Calculating the (in)famous RoI
Controllers want to calculate a return on investment (RoI) for security.
And this is where it gets a bit tricky, which doesn't mean it can't be done. Some market participants (e.g. Concur / SAP) have nice calculation examples in their marketing documents.
Naturally we have also looked into this.
We measured in concrete terms how long it takes to record 29 specific receipts with the APP, digitise them, check them for laws and company guidelines and submit them as a travel expense report. It took us exactly 12 minutes. (For those who are interested: There were 5 different hotel receipts, 4 DB receipts, 3 x rental car invoices, 4 airline tickets, 2 x parking, 7 partly handwritten taxi receipts, 3 fuel receipts and 1 public transport ticket).
The subsequent approval by supervisors took approx. 1-2 minutes, as all rule violations or unusual features that may need to be observed are pointed out. And the final approval after checking by the accounting department takes another 5-10 minutes. The range can be explained by whether auditors rely on the software's checking routines and visual indications of violations after some time or whether they look at each digitised document again.
Based on these figures, every interested party could now measure and compare their own figures with the stopwatch. But they only quantify the actual working time and still say nothing about speeding up the entire process from submission of the expense report to payment. Here we often shorten the processes from “weeks – months” to “days – weeks”.
That the digitisation of receipts and, above all, the processes for submission, review and approval are faster, more accurate and more efficient is almost never disputed. But it is also a fact that after such a digitisation project, no travellers, no approvers and no auditors are laid off (and thus no personnel costs are saved).
Are there other costs that can be saved?
This is where it actually gets interesting. But back to the time saved (see above). The fact is that we save time in many places with our projects. Travellers no longer have to prepare receipts to pass on at the weekend or in the evening with staplers or glue sticks.
Supervisors are elegantly integrated into the processes and have to sink little to no time into their part of the expense workflow.
Similarly the accounting department also saves time.
You might say, that’s all nice and well, but we don't know what your employees will do with this “saved up” time.
- Do they work more and create added value?
- Will overtime be reduced or avoided?
- Do they simply reduce the workload a bit?
- Do they use it for recreation?
Our answer: It doesn't matter.
In essence, all aspects are worth money for your company. How much specifically is certainly impossible to calculate, but we wanted to look at other ways of saving money.
We had not considered the following aspect at all. It came as feedback from customers and we believe that it can be applied to almost all companies.
I'm sure everyone agrees that it is increasingly difficult to get suitable skilled personnel on board. How much do you spend in your company to find and onboard a skilled employee? We asked around and the answers ranged from €3,000 to €15,000. In addition, this new staff often comes from a generation that has grown up with IT, smartphones, etc., or at least is very familiar with them. We are talking about a generation that chooses employees, working conditions, etc., that does not tie itself down from education to retirement.
This means we as employers have to do everything, we can in order to retain them. What do you think binds young professionals more: pieces of paper, Excel, PDF forms & Co or efficient processes with a "fancy" APP?
No one quits because travel expenses have to be submitted on slips of paper, not outright at least. Yet at the same time, it may be a piece of the mosaic that leads to dissatisfaction, low retention, reduced performance in the core task, etc.
So just imagine that the project to digitalise the travel expense report contributes to 3 fewer employees quitting their jobs or taking sick leave due to stress. This would save a minimum of 9,000 € in recruiting costs. (not including the training costs for new employees).
Opportunity costs?
To return to the beginning and talk about money: Maybe it is worthwhile not only to look at a potential RoI, but to look at opportunity costs at the same time. What does it cost your company not to digitise? What do you lose by not doing so and the associated stress for accounting, "grumpy, unmotivated" travellers because of bad process, etc.?
It is precisely the one-sided view of costs in this context that has generally led to difficulties and problems in German companies regarding digitalisation, as well as troubles with processes during the lock down phases when half of the country was supposed to work from home.
So here is a different way of looking at a project to digitalise travel expense accounting:
It is an investment in the future, in your employees, their satisfaction and loyalty to your company. It is worth thinking about it in any case, no matter how big or small your company is or how many regular travellers you employ.
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