Navigating the new realities of expense management in 2023

Corporate travel has taken flight post-pandemic, bringing with it a wave of new trends and challenges. Despite a relatively slow recovery in Asia Pacific, business travel in the region is predicted to reach pre-pandemic levels this year – and China’s long-awaited reopening of borders will spur on this momentum.

As compared to pre-pandemic, however, the realities of travel and expense management have certainly evolved. Rising inflation translates to ballooning expenses and tightening budgets, driving greater need for cost control.

With sustainability stepping into the spotlight, businesses must also consider how to enable sustainable choices in their travel and expense programmes. More than ever, digitalisation will give businesses an edge in analysing and managing spend.

As we look ahead, here’s our breakdown of four new realities of expense management for business leaders.

#1: Amidst soaring inflation, businesses must digitalise expense management to stay resilient.

2023 looks set to be a turbulent ride for the world’s economies, creating new challenges for businesses to do more with less. The Global Business Travel Association (GBTA) predicts that airfares and hotel rates will rise by over 8% this year due to surging fuel prices and inflation. This surge may be even greater in Asia Pacific, which has seen higher fares than other regions as travel rebounds.   

With a new reality of inflation pressures weighing heavily on Asia’s businesses, leaders will need better control over expense management to stay agile. Manual processes come with many pitfalls: when employees are left to search and book manually, it’s difficult to determine if they are selecting the best options in line with your corporate policies. You also get a less complete picture of your organisational spend, making it tougher to pinpoint opportunities for cost savings.

To alleviate inflation challenges, we believe organisations need three building blocks in place. Firstly, it’s essential to have a technology platform that offers you visibility and control of your expenses. Secondly, you need a travel management company to partner closely with you for better control and to fulfill duty of care obligations. Finally, having a corporate payment solution is crucial to optimise payment terms.

#2: Increasingly, successful expense management centres around interconnectivity.

In today’s volatile landscape, CFOs are under more pressure to make strategic decisions in real time. Faster decision-making requires a single source of truth, and this is only possible when you have interconnected systems that can integrate all your financial data.

Digital tools for expense management have advanced tremendously in the last five years, and interconnectivity has probably been our biggest evolution. SAP Concur solutions enable companies to leverage data coming through in real-time across different markets, enabling you to seamlessly manage budgets from one single platform.

One of our customers, Sysmex Asia Pacific, was able to streamline their spend management by replacing their laborious manual Accounts Payable processes with Concur Invoice. SAP Concur solutions delivered a single source of data for Sysmex’s employee expenses and accounts payable across APAC, accelerating their efficiency in validating compliance with various approval and purchasing policies.

On another level, interconnectivity allows you to do more with your expense management platform, aided by the right technology partners. For instance, SAP Concur has partnerships with organisations that can simplify the process of Value Added Tax (VAT) reclaim for overseas expenses. Such optional add-ons allow businesses to customise the platform to their needs.

#3: Issues around compliance and fraud are increasing in complexity.

Today, managing compliance for T&E spending is more complicated than ever. With the rise of third-party flights and hotel aggregators like Booking.com, employees have myriad booking channels and payment methods to choose from. 

As we’ve discussed in a previous article, moreover, today’s hybrid work paradigm is also creating new scenarios for out-of-pocket expenses and corporate card use. This makes it harder than ever to detect overstated or inaccurate expenses, putting companies at risk of fraud.

Data from SAP Concur’s customer base reveals that 15% to 20% of audited expenses turn out to be non-compliant, with causes ranging from accidental policy violations to fraud schemes like fictitious expenses. A Thailand-based auditor of an international organisation, who had brought in SAP Concur, recently uncovered multiple incidents of duplicate invoices as well as collusion amongst employees.

Left unmanaged, such fraudulent activities can be costly. The Association of Certified Fraud Examiners (ACFE) reports that APAC companies who have experienced occupational fraud suffered a median loss of USD 121,000.

Non-compliance harms more than your bottom line too. It’s critical for multinational companies to stay compliant with foreign legislation, such as the US’ Foreign Corrupt Practices Act. The right expense management platform will help leaders pinpoint non-compliance efficiently and safeguard the company’s reputation.

One of SAP Concur’s customers, Dräger Singapore, was able to achieve better control of business spending by automating their travel policy compliance. Backed by AI, their expense management platform could intelligently detect duplicate claims and automatically set appropriate meal expense limits for each travel destination. 

Most importantly, the platform offered the flexibility to customise for tax deductibility and anti-corruption policies in different countries – a huge plus given their global presence in 190 countries.

#4: Sustainable business travel is taking off.

Climate change is becoming a top priority for Southeast Asian business leaders, and it’s heartening to see sustainability taking off in corporate travel programmes. With 66% of Southeast Asian investors embracing the importance of environmental issues, companies that build sustainability into T&E will be well-placed to stand out.

At the moment, the tipping point hasn’t quite happened in the region. But we foresee a future where companies won’t simply pick the cheapest flight option – they’ll choose the one with the lowest CO2 emissions. To get there, companies will need a technology platform that can calculate the cost and CO2 emissions of each option under one buying channel, so that they can accurately measure and analyse their carbon footprint.

At SAP Concur, we’re in a great position to drive sustainability across the expense management process. When your employees first begin planning their trip, Concur Travel can consolidate low-carbon travel options and indicate the precise carbon emissions produced.

When it comes to submitting claims, Concur makes the process paperless by automatically populating expense claims using e-receipts. Finally, Concur supports companies’ ESG reporting with on-demand CO2 emission reports, offering a detailed breakdown of your total emissions by department, route, and country.

That’s just the tip of the iceberg. We’ve also supported many forward-thinking initiatives by our customers, who are tapping SAP Concur’s tools to take their sustainability aspirations to the next level. 

Standard Chartered Bank has been a pioneer in this arena, and one key initiative they’ve developed in collaboration with us is Taxi Tax. This carbon offset scheme enables employees to contribute a portion of reimbursable ground transportation claims directly to an NGO or climate change-related initiative.

Embracing the new realities of expense management

The business landscape looks set to be a highly dynamic one in 2023, and it’s crucial for companies to have the right building blocks for spend management in place. As new realities of expense management take shape, we strongly believe it’s time for businesses to leverage digital tools to bolster their resilience and stay nimble.