When you have 30,000 examiners and educators flying all around the world, travel and entertainment becomes a key focus for you as a CFO. Plane tickets, hotel accommodation, meals and meetings can add up to millions – not to say the manpower costs of processing the resulting expense claims.
So it is with Singapore-based Toby Poulson, who is Global Finance Director at International Baccalaureate, a non-profit education foundation that offers pre-university and other programs in more than 4,000 schools in Asia Pacific, Europe, the Americas, Africa and the Middle East.
“Once we start getting trained analytics, we’ll start seeing where we’re spending the money, which vendor is better, and start having better negotiations and receive better pricing”
“We spend around US$6 million on travel, which is quite a lot,” says the CFO. T&E is the second biggest line-item operating expense at the organization after salaries. Yet until recently, the associated processes were a shambles – 54 different systems, not only inflating unit cost-per-claim to US$12, but also negatively affecting overall user experience and productivity.
Finally, in 2015, the T&E process was automated and rationalized. As a result, unit cost-per-claim has been halved.
The average cost of producing an expense report is now only around US$6 because users are directly interfacing with the paperless and automated T&E system, cutting out the US$2-4 cost-per-claim from initial business-unit processing and the US$7-8 processing cost borne by finance.
Expanding to Procurement
More exciting for Poulson, finance is experimenting with using the same cloud-based T&E system for procurement. If successful, he expects the cost per invoice to fall to US$2, from US$7 currently.
“The manual PO systems that our divisions have created handle around US$30 million in capex, mainly software development,” says the CFO. “We will now be eliminating those and putting procurement on Concur” – that’s the SAP company that provides the automated Software-as-a-Service T&E solution.
The advantage for International Baccalaureate is that users are already familiar with the Concur solution’s front-end, as is finance with the back-end. For now, what is being automated is the invoicing. Purchase orders are next in line.
Based on Poulson’s experience with travel reports, hopes are high that the same streamlining of processes, cost savings and improved user experience can also be achieved with procurement. The CFO says business travelers are now reimbursed within five days as manual rework and data mistakes have been eliminated.
And the people in operations who used to have to carve out from their core functions an estimated 20 man-days a year on travel and reimbursement matters can now fully focus on the job they were hired to do – extend support to schools and teachers.
Now for the Hard Part
Deploying the next-level capabilities of the automated T&E and procurement processes will involve new challenges. In theory, the generation of accurate and timely data should provide a wealth of information that can be analyzed for patterns signaling areas of further cost savings, efficiencies and compliance.
“Once we start getting trained on analytics, we’ll start seeing where we’re spending the money, which vendor is better, and start having better negotiations and receive better pricing,” says Poulson. The company can assess whether it is eligible for discounts if it makes early payments, for example.
This is where it gets complicated. Automating travel bookings with a cloud-based booking tool was a relatively smooth and speedy process. Automating reimbursement was more time-consuming, in part because some users were inputting wrong or incomplete banking information.
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