How to solve the T&E challenges holding your business back.
Business leaders are demanding more of their T&E solutions as the costs and complexity of corporate travel increase.
Not long ago, business travel looked like a relic of a bygone era.
With most conferences, offsites, and client visits canceled during the pandemic, companies switched to virtual meetings, netting what appeared to be significant savings in the process. In November 2020, Bill Gates predicted that more than half of all business travel would go away permanently.
Almost three years later, things haven’t quite turned out that way. For many companies, those financial savings came at the detriment of important elements like company culture and customer connections. Business travel is now well on its way to a full recovery. A recent report by Deloitte estimated travel spend volumes could be back to 2019 levels by late 2024 or early 2025.
Brex’s exclusive July 2023 survey of more than 200 travel and expense management decision makers at US companies not only confirms these trends but also offers insights into what’s driving the recovery and how current patterns have made the management of business travel more complex. Companies are now contending with the new and distinct travel needs of their hybrid and remote workforces, while grappling with escalating travel costs. Our survey dives into the tools companies use to manage travel, uncovering challenges and pain points, and pointing to what finance departments need as they seek to manage an increasingly challenging and critical corporate activity.
With more employees embracing a hybrid work model, travel budgets are growing again
Companies see travel as more strategic than ever.
During the pandemic, organizations discovered the surprising utility of video conferencing and other tools for digital connection. These days, they are migrating in the other direction, appreciating the value of face-to-face meetings with colleagues, customers, suppliers, and investors. Nearly every company in our survey (98%) rated travel as important to achieving its business goals, with three-quarters declaring it “very important.”
As travel grows in importance, budgets are rising too. More than three-quarters of companies in our survey said they had boosted their travel allocation in the last 12 months, with 26% saying they had done so significantly. The shift toward hybrid work, now the most popular model for companies, is a primary reason for this increase. Sixty-four percent of respondents said they are hybrid, compared to 11% fully remote and 25% fully in-office.
Employees who work in remote or hybrid settings are traveling more to connect with others.
Nearly half of companies said that having more employees outside of company offices led to bigger travel budgets. This is particularly true for small companies (50–100 employees), with 71% saying hybrid or remote work boosted their travel budgets.
To address the challenges of building community and culture among a disparate workforce, some companies are relying more heavily on offsite gatherings. As they seek to bring employees together and facilitate collaboration: 29% of companies said that the switch to hybrid work has resulted in more offsites. And for 30% of companies, offsites now represent more than half of their travel budget.
The growth in travel isn’t solely driven by hybrid and remote employees. Among all categories of business travel, executive travel has experienced the biggest boost, with 71% of companies reporting an increase.
Hybrid work has also increased the need for accurate, timely travel data and analysis for 44% of our respondents, and it has prompted changes in the development and enforcement of travel policies for 37%.
Key considerations for adapting to a new era of business travel
Companies should assess their T&E solution's ability to manage their pre-trip approval process and enforce policy compliance, especially in the context of rising interest in group events and executive travel. Modern T&E solutions can help companies manage an influx in travel requests and auto-enforce policies at the time of booking.
As the diversity of travel use cases continues to grow, companies should assess the readiness of their travel policies and processes to empower employees to make the right decisions depending on their trip purpose. For example, a generous or flexible travel policy may make sense for a sales executive going to close a new client that will drive revenue; a slightly stricter policy may be preferable for a team-building employee offsite that will have less obvious ROI.
While offsites are a great way to promote engagement and belonging at companies, they can be costly when not properly managed. Companies should invest in implementing event management capabilities that can help them plan, manage, and track group events and related spend from a centralized system. Tracking event details, RSVPs, and attendees through a T&E solution can prevent overspending.
Companies must address duty of care implications that are omnipresent in distributed workforces. Access to the real-time location of travelers can assist companies in assessing risk, tracking, and communicating with travelers no matter where they are.
Most T&E solutions miss the mark
With business travel on the upswing and many companies hosting more group events, managing these additional expenditures with the right travel and expense (T&E) solution is more important than ever.
Available offerings have grown increasingly powerful, yet they are not always meeting all the needs of most finance leaders. Although respondents identified a dozen different T&E solutions in use, ranging from legacy vendors to market disruptors, a common set of complaints emerged.
Given those complaints, it’s not surprising that a large majority of companies are open to trying new solutions. More than three-quarters (77%) said they are likely or very likely to evaluate and consider alternative T&E management solutions in the next 12 months. Fully remote organizations are the most open to pursuing other choices — 96% said they were likely or very likely to do this.
"Our T&E solution should be easy to use, and right now it is not."
— Survey respondent
The pain points finance execs still struggle with are varied, but ease of use, cited as a “main challenge” by 42%, topped the list.
As one respondent put it bluntly: “It should be easy to use and right now it is not.” Another finance leader yearned for a “far more intuitive user interface.”
Other challenges are slow reimbursements (32%) and time-consuming expense approvals (32%). Thirty-one percent of respondents expressed problems integrating with other software, such as accounting systems, and 29% highlighted difficulty with employees failing to submit documentation for expenses.
Key considerations when searching for a future-proof T&E solution
It’s important not to settle for the status quo or to fear the costs of implementing a new solution. The long-term cost of ownership when enduring common pain points like a clunky user experience, poor integrations, and slow reimbursements far outweighs the costs of implementing a modern T&E solution.
The cost of paying for multiple SaaS solutions adds up fast and places a burden on internal accounting teams. In addition, when it's not easy for employees to book in-policy trips using the same card, mobile app, and expense processes they use for on-trip spending, program leakage and noncompliance can lead to unnecessary overspending.
Lastly, allowing slow reimbursements to continue can be damaging to employees’ financial well-being and loyalty, and a lack of integrations will only slow down workflows, increase the chance of error, and delay the closing of the books. And as they say, time is money.
Lack of transparency and a multitude of fees remain a problem
As travel costs rise, a surprisingly large number of companies say they don’t have a full understanding of the fees they are being charged by their T&E solution.
Just 58% said they understand all their fees, while 39% said they understand some but not all. “I think I’m paying too much,” said one finance leader. Fully remote companies seem to have a better grasp of fees, with 73% saying they have a full understanding and just 23% saying they understand only some.
Indeed, companies face a wide range of fees from their T&E solutions that appear to create confusion and lead to a lack of transparency.
Key considerations for assessing total cost of ownership of a T&E solution
Not all solutions price their travel and expense programs the same. Companies should calculate all-in cost before comparing — asking about any fees for deployment, contacting support, international services, booking, itinerary changes, subscriptions, and even reporting.
Companies should consider the cost of using a consolidated platform for travel, group events, expense management, cards, and bill pay rather than paying for each one individually. And they should be wary of any product claiming to be free — there are usually hidden fees.
Companies that are unsure about how much employees will travel, or want the flexibility to scale up or down, should look for solutions that offer simple, all-inclusive pricing on a per-trip basis with no subscription fee.
Companies have high expectations for their T&E software
When it comes to expectations for their T&E solutions, survey respondents have set a high bar.
They want an all-in-one solution that includes travel, reimbursements, expense management, and bill pay, as well as corporate cards. They want to be able to track expenses, manage those expenses in real time with customizable travel policies, and get detailed breakdowns of spending, all on a platform and mobile app that integrates with their accounting systems. And they want this functionality to be fast and automated. One respondent, embodying these high expectations, said they wanted a solution that can cut through “red tape” by providing an “automated approval for expenditures normally not allowed, without having to wait for it to be cleared.”
Survey respondents also expressed a strong desire for AI-enabled automation, which can provide time-saving features like auto-enforced travel policies that simplify compliance, immediate approvals of in-policy spending, and the auto-population of receipts.
As companies consider simplicity and automation in their T&E solution, the needs of their accounting teams tend to take precedence over the needs of travelers.
Just over half of companies (51%) said that being able to close their books faster is more important than employee satisfaction. About a third (32%) said both are equally important, and just 17% said employee satisfaction takes precedence.
To make the accounting process smoother and faster, companies rely on a number of different tactics. Nearly half (45%) proactively enable their expenses by creating spend limits and policies. Forty-two percent use an integrated system that allows for both travel bookings and expense management. Thirty-nine percent make their employees use a corporate credit card for all travel and expenses, eliminating the need to process reimbursements for personal credit cards, and 21% have dedicated expense admins.
Key considerations for guiding T&E vendor selection
A vendor’s all-in-one claim shouldn’t be taken at face value. Companies should research their tech stack architecture to find out if their products are built on top of a platform, or are disjointed and require separate logins or links out to different sites. They should also assess the quality of data flows across products, and the depth of integration to ERP and HRIS software because the benefits of consolidating into one system are dependent on the quality of the product’s infrastructure.
It can be advantageous to prioritize ease of use and traveler satisfaction when looking for a T&E solution, because onboarding a team quickly will directly impact compliance, adoption, and cost control. The easier it is to do the right thing, the higher compliance rates will be. It can be even better if policies are auto-enforced.
Automation is key. The more companies can set on autopilot, from receipt matching to expense policy enforcement to reconciliation, the more they will eliminate pain points like out-of-policy spending and missing documentation.
As travel increases and budgets grow, controlling costs emerges as a top priority
Although critical for business success, travel doesn’t get a blank check.
Indeed, 88% of companies said cost savings and travel management fee reductions are a priority. And more than half of companies (56%) rated cost management more important or significantly more important than employee satisfaction.
This focus on savings appears related to another challenge: A majority of companies are paying more for travel than they have projected. Sixty-two percent said that actual travel costs in 2022 were higher than projected, with 20% saying they were significantly higher. Unexpected costs hit fully remote companies particularly hard: 90% said actual costs were higher than expected, and half said costs exceeded projections by a whopping 50% or more.
Companies are actively trying to rein in travel expenses without cutting back on important and business-critical trips and group events.
To do this, they are using credit card reward points to book travel (47% of respondents), restricting employees from booking expensive flight classes (44%), and including basic economy fares in flight inventories (42%). Other approaches hold the twin benefit of saving money and helping companies close their books more quickly. These include maintaining strict policies on employee travel, such as requiring advance bookings and preapprovals for going over budget, a tactic used by 42% of companies.
Key considerations for controlling T&E spend at scale
Companies should look for solutions that make it easy to automate T&E cost controls and detect savings opportunities rather than require manual expense reviews and cost-cutting measures, which are highly tedious and easy for employees to circumvent.
Travel solutions that are integrated with card and expense management software may allow companies to embed their policies during travel booking, so employees will only see travel options that meet established rules. It’s the easiest way to control air, hotel, and transit costs and can lead to major savings.
Lastly, it’s important for companies to think about how to gain real-time visibility into how actual travel spending compares to budgets so they can take action and hold leaders and teams accountable and ensure that travel dollars are going to the most impactful purposes before it’s too late.
Key takeaways
As business travel recovers steadily from pandemic lows, remote and hybrid work models are having a growing impact on the ways in which employees travel. Those impacts touch everything from employee offsites to executive travel, resulting in growing strains on finance teams who have to contend with increased complexity and rising costs.
Finance executives expect a lot from their T&E solution, and for good reason: finance teams experience too many pain points. Their complaints range from unsatisfactory user experiences to complex reimbursement processes, time-consuming reporting, and obstacles preventing timely closes. They add up to unnecessary costs and unwelcome headaches for finance teams whose resources are already stretched thin.
Ultimately, execs paint a clear picture of what they need: a T&E solution that doesn’t force them into painful tradeoffs, helps them manage employee travel without sacrificing capabilities, gives them control over costs, and improves employee satisfaction. It should make booking easy (to ensure adoption) while providing robust expense management. It should provide the most value for their money, helping to rein in costs without requiring cutbacks in business-critical travel.
As they seek to satisfy these competing priorities, companies have an opportunity to bring transparency and efficiency to their travel operations and to future-proof their travel management with AI-enabled solutions that are flexible, automated, and holistic.