At that point, travel managers need to worry about things like currency exchange rates, foreign tax jurisdictions and VAT reimbursement. And not only must the back office be able to handle these things, the business traveler as well must be aware of how payments work in different nations and what information is needed in order to fill out an expense report.
Perhaps the single, most critical first step for a company going global is to make sure it has a clearly defined travel policy, diligently outlining pertinent information business travelers need to know in different regions, says Bob Neveu, CEO of travel and expense report management software provider Certify.
"If you have an engineer, and he gets to go to Milan this year for the first time, there are certain things, such as the conversion rate, he needs to know," Neveu says. In general, Neveu says currency conversion tends to be one of the biggest challenges when accounting for expenses on international business travel. If a business traveler has a corporate credit card, that will likely do the conversion automatically. But for any cash out of hand expense – such as paying for a cab that doesn't take cards – it becomes more difficult. "Proper employee communication is critical," he adds.
Certify is one of several companies that offer software to handle such currency conversions, and Neveu says Certify’s solution offers same-day expense conversion and takes into account bank fees.
Besides currency conversion, Neveu says handling VAT reimbursements can be another major headache when it comes to business travel expenses. “It’s important to know the rules, because this is an expense many people don’t recover,” he adds. Tracking VAT at the expense level is critical, he notes, because different countries have different rebates on food, hotels and other expenses. Neveu says there are between 20 and 30 countries that have VAT rebate options, all with differing rules for how to claim them.
Neveu also recommends companies set up some kind of internal hub where employees can share best practices when visiting various foreign countries, so other employees who may be traveling internationally for the first time can benefit from their experiences.
Where’s Your Data?
Another difficulty for companies in developing expense reporting solutions for international travel is retrieving the most accurate data, and being able to easily streamline that data into their expense management processes.
Global banking giant Citi and spend management solutions provider Concur have recently partnered up in an effort to make that process easier for businesses. In July Citi became the first commercial card issuer to offer an exclusive suite of global, enhanced travel reports via Concur’s TravelTrax platform, the bank says.
Subscribing clients will be able to access card issuer, expense management provider and travel agency data, where clients can authorize Concur to receive the data, consolidated into a set of easy-to-read dashboards and drill-down-enabled reports. Combining the global data from these core travel program vendors into one series of reports will enable organizations to gain a more holistic view into their overall travel program activities. This capability will allow improved analysis of their travel program’s purchase behavior, spend patterns and overall performance.
When looking for expense management solutions, “a travel or procurement manager should always take into account global availability, scalability, flexibility, ability to support standard file formats and technology linkages, current partners, and the vendor’s investment in technology,” says Julie Lubell, global head of Citi T&E Commercial Cards. “With the advancement in technology these days, unless your expense provider continues to invest in new innovations and capabilities, your solution will become out of date in very short order.”
While international travel presents challenges for travelers concerning navigating local customs and nuances, Lubell notes that there are also issues around local processes, domestic solutions and tools, and different levels of data captured and utilized for reports.
“When a program becomes global, in order to ensure that it is an effective solution, it must be flexible to accommodate local cultures and regulations, globally available to ensure consistency across travelers and administrators, and be easy-to-use to reduce out-of-policy processes and manual intervention,” she explains. “Additionally, every point across the entire expense management life-cycle must be integrated – from sourcing and booking, to card payment and processing, to expense management, ending with reporting and analysis – to ensure all relevant data is captured across regions consistently and to limit disparate processes which make managing a travel program cumbersome.”
Agility Rules
While technology undoubtedly helps business run their travel programs more efficiently, it also can be a double-edged sword, Lubell cautions.
“In the same way it allows more productivity for the traveler – such as with itinerary aggregation, receipt capture, and the creation, submission and review of expense reports – it also allows third parties outside the standard corporate ecosystem to influence traveler behavior,” she adds. “Working with vendors who have contemplated how those technologies impact travelers and have structures in place to ensure they can capture spend and booking, even when that spend and booking is done outside the designated expense system, is a critical component for ensuring that technology solution is a net positive to a company’s expense picture.”
Another wrinkle to consider is the difference between a US-based employee traveling internationally and a company having employees who permanently reside in many different countries, says Mary Miklethun, vice president product management, travel payment solutions at U.S. Bank. In the latter case, she advises having all expenses rationalized into a single currency in the company’s internal systems, to make information flow smoother and more consistent.
Due to the logistics of dealing with different currencies and tax rules, when choosing an expense management solutions provider, Miklethun recommends choosing one that can parse data that is in different formats, as well as having a tool that can navigate the VAT rules in different countries “in a way that is going to be intuitive for the user.”
Alan Rich, co-founder and CEO of online expense management solutions provider Chrome River Technologies, says his company’s clients tend to be global enterprises that deal with the burden of international travel management and have to have knowledge about tax reporting requirements all over the world.
For companies as expansive as these, Rich says one main key differentiator they are looking for in an expense management tool is a superior user experience. Beyond that, it is important to have solid underlying technology.
“We heavily use a technology called business rules engines,” says Rich. “It takes a lot of the business logic that used to be hard-coded and moves it aside so that customers can work with it. So all of the things like complicated routing and charging rules and compliance rules and tax rules – it means we can take these big organizations and capture their rules in this rules engine.”
Generally speaking, Rich notes that savvy companies have to utilize nimble technology in today's current business and regulatory environment. "The whole business model today is about being agile; taking advantage of opportunities, and moving quickly," he says. "Don't undertake huge projects; do small things and then keep refining them. I'd say that's the Harvard Business School story of how to run a business today: Be agile."
Rich says that this applies to expense management as well.
“So we’re trying to say to the travel manager, you are part of this agile business process,” he notes. “Your goal is to help your company respond quickly to business opportunities, and give them the information that they need and help them work. It’s the difference between viewing travel managers as part of your business process, or as an extension to procurement.”
It’s also a difference in how travel managers view data, according to Rich. “A lot of them look at the data as, How many room-nights am I spending at this property?” But with Big Data comes the opportunity to ask questions that will make travel part of the strategic picture, he maintains. “Are we feeding the information to the departments that need it? Are they seeing how they’re using their budgets in the right ways? Are they charging things back in the best possible ways, are they capturing the right cost centers? So I look at it as part of the finance world," Rich says.
The Power of Technology
Mobile technology has changed virtually everything about life on the planet today, especially the travel experience. That includes the way people handle payments. Beyond that, it also has the ability to change the way corporate expenses are managed. Especially when it comes to tracking out-of-pocket expenses, mobile devices can be a boon to the international business traveler, Miklethun says.
“For the traveler it absolutely is a benefit,” she says. “Taking a picture of receipts is a top example of something that makes the process a whole lot easier for a traveler. If they can snap a picture and upload it to an expense report it’s much easier than saving receipts. Further, if they can do that while sitting in a cab on the way to the airport, as opposed to sitting at their desk and spending a half hour doing it, it’s that much better.”
Certify’s Neveu notes that internationally, the world is largely standardized on a paper receipt, which is an unstructured document. But now that digital wallets are coming into play, companies have a more efficient way to document and keep track of expenses.
Despite these potential benefits, it does not appear that corporate travel programs are by and large set to implement mobile payments. According to a report from the GBTA Foundation, there is only tepid interest among travel managers in these emerging technologies. Currently, interest among travel managers in using methods such as mobile payments, contactless cards and electronic devices for business travel payments is low.
However, while interest in mobile and emerging payment technologies continues to be tepid, travel managers are intensely interested in software solutions or mobile apps that can assist directly with expense management. The report found that 70 percent of respondents reported that they are “very interested” or “interested” in utilizing technology that can record or image receipts; assist employees with completing expense reports; create, submit, and approve an expense report; record and append transactions to expense reports; assist employees with recording expenses and consolidate travel data to a single system.
Among business travelers, the top three technology functionalities they desired were real-time updates, photographing receipts and being able to create, submit and approve expense reports from a mobile device.
