Many
organizations continue to struggle to calculate the return on travel and
entertainment spending, according to a new survey, even as they
identify it as among their biggest variable corporate costs.
Commissioned
by SalesTrip and conducted by 3Gen Research in October 2019, the survey
canvassed more than 500 senior finance leaders for companies ranging
from 50 to 50,000 employees. Half of the companies were based in the
U.S. and half in the U.K.
T&E spending was the expense
category most often cited as a company's biggest variable
cost—identified as such by nearly 27 percent of respondents, outpacing
salaries by 1 percentage point. However, about 48 percent of respondents
reported a lack of understanding of the return on investment for their
organization's T&E spend.
That disconnect can be attributed
to a lack of real-time visibility into T&E spending and siloed data
sets creating a barrier between spending and revenue, according to
SalesTrip. A whopping 87 percent of survey respondents at midmarket
companies between 101 and 5,000 employees said their finance teams take
more than a day to report on travel spending. Meanwhile, 60 percent of
companies included in the survey don't have a single system of records
that links travel and expense data to customer and revenue data.
Those
conditions can leave companies to attempt to calculate ROI via an
after-the-fact reconciliation process focusing solely on travel cost,
often leaving the resultant revenue to fall by the wayside. Retroactive
calculation also hinders managers' ability to predict ahead of time
whether a potential trip will be worth the cost in terms of revenue
generated, the report said. Further, a lack of understanding as to
particular employees' productivity means leadership has no basis to
reward top revenue creators, increasing the risk of losing valuable
employees.
"If organizations were able to better manage, track
and forecast spend according to business activity or purpose, business
leaders will be able to evidence travel as revenue-generating … [and]
corporate travel would be widely considered as an enabler of business
growth rather than a necessary evil," said Manoj Ganapathy, founder and
CEO of SalesTrip.
An effective method of bridging the gap between
T&E spending and resultant revenue long has been something of a holy
grail for the managed travel industry. But new technology integration
models have achieved promising progress toward that goal in recent years.
SalesTrip,
a U.K.-based T&E management service delivered through customer
relationship management giant Salesforce, has set its sights on the CRM
as the key node of intersection between spending and revenue.
Certify/Chrome River's Prosper tool takes
a similar tack. But there are other approaches, including linking
expense management platforms with booking systems and corporate credit
cards.