The best way to pay travel expenses to business travellers

Why it is important to think about it

Are you a frequent traveller yourself or do you work in accounting and are responsible for checking and/or paying travel expenses? No matter where in the process or organisation you work, you are likely to be directly affected, and it doesn't matter whether the expense claim is still done with Excel/PDF form, SAP, Concur or with us.

Travellers understandably want to be reimbursed their travel expenses as quickly as possible. On the one hand, managers who have to approve travel expenses do not want to have anything to do with it, as it does not affect the core business. At the same time, nobody needs demotivated employees who are angry because they are waiting weeks or even months for their money. And everyone in accounting knows, only what has been correctly submitted, calculated and checked can be paid out.

Of course, there are plenty of starting points in the process of digital travel expense management from which you can start. This is what we want to illuminate step by step in this and future posts in our blog. Today, however, we want to focus exclusively on the reimbursement options. So basically, we start at the end of the process. We offer our customers three options, all of which have their advantages and disadvantages. The customers decide independently, whereby our recommendation is option 3.

Option 1 - Payment of travel expense claims via SEPA

Of course, it seems easy if we as a service provider simply provide our customers with a SEPA file after the travel expense report has been submitted. This can then simply be imported into online banking and that's it. But it is not quite that simple. For one thing, data still has to be transferred to the finance, accounting  and payroll in order to guarantee proper bookkeeping and cover all aspects of taxable expenses in business trips.

And what is even more important: the account data of your travellers must then also be stored in the tool for business travel expense. The following questions then arise:

- Where does the data come from?

- Are there interfaces or does it have to be maintained manually?

- Who keeps the data up to date?

- Is this task being shifted to the travellers, who were actually supposed to be relieved of this kind of work?

The most important aspect to consider and the reason we do not recommend this option is dataprotection. The EU-DSGVO has clear statements on DATA-MINIMISATION. So why should bank account details be stored and processed in a tool if it is not necessary?

Option 2 - Payment of travel expenses via payroll accounting

This option is used somewhat more often by our clients. This is certainly due to the fact that it was in part habitually done this way in the past and people are slow to change old habits. And of course, an interface to the payroll systems is needed anyway. After all, the M-print, the tax-free allowance, benefits in kind and, if applicable, the flat-rate or individually taxable components of the expenses must also be transferred.

This is exactly the kind of automated interface which we make available to our customers. As such it is relatively trivial to transfer one more value – the payment amount to travellers.

However, it is also a fact that pay checks are only paid once a month. This means that with this option, travel expenses can also only be paid out once a month. We make an effort to digitalise the processes of travel expense accounting only to end up slowing down the process again at the end when it comes to payment.

If the travel expense data is then to be transferred from the payroll system to the accounting system, things get complicated. All of a sudden, the customers need a lot of additional wage types in order to be able to transfer different VAT rates, G/L accounts, etc. cleanly.

A seemingly simple matter may turn into a complicated technical process that is more prone to errors.

Option 3 - Payment of travel expense reports via financial accounting (credit-side)

With the last option (recommended by us) the travel expenses are simply paid out with each payment run of the financial accounting. The apparent disadvantage is that a creditor numbers must be created for all travellers.

There are several advantages.

- Enables the fastest possible payment to the travellers (e.g. twice a week), which leads to a high level of satisfaction among the employees.

- Simpler interface to the payroll accounting

- Full control in accounting

In these cases, our clients always receive the interfaces for both the payroll accounting for the tax-relevant aspects and for the financial accounting on the evening before the payment runs. This is where the payment amounts for the creditors are transferred and, of course, all data for the debit-side posting to the G/L accounts.

Conclusion and outlook

We have a clear preference and at the same time our customers and their satisfaction are our top priority. This is precisely why we offer all options. For us, there is no such things as RIGHT or WRONG, but rather FIT or UNFIT for the customer. We would be happy to discuss with you which option would fit for you.

The speed with which travellers receive their money is not only determined by the payment option. There are many process steps beforehand that can save you time. We will be writing more articles about this in the coming weeks and months here in the blog.

Here you can find all the blog posts from this mini-series

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