3 Factors that Can Cause T&E Spending to Get Out of Hand… and Ways to Control Them

In large corporations, business travel and entertainment expenses (T&E) can swiftly mount up. Your employees could think that the bill from their dinner with a client is insignificant compared with the deals they conclude (which may be true!) But this leads quickly to a mindset that minimizes focus on the business expense bills, and causes them to get out of hand.

Employees might forget to submit expense reports on time, don’t see the importance of correctly recording how big of a tip they left after dinner, and fail to bring home the paperwork that’s required to file a VAT return.

Every company needs to take steps to control T&E spending. Here are the three main factors that cause your T&E spending to potentially spiral out of control, and simple solutions to help bring it back in hand.

1. Forgetfulness

By the time your employees get back to work and write up their expense reports, the chances are good that they’ve forgotten things from their trip. Sometimes they can’t remember the final cost of their taxi ride from the airport, so they estimate the rough amount. Perhaps they lost the VAT receipt from the restaurant where they had their dinner meeting, or forgot that they paid for emergency dry cleaning when their power-suit got dirty on the evening they arrived. Forgetfulness is part of human nature, but it causes a lot of difficulty for the expense department.

The solution: replacing your expense report process with an automated expense system.

This helps employees to submit their expenses immediately, allowing them less time to forget important items. An automated system can draw data directly from corporate credit cards, saving employees’ time and removing the opportunity for manual errors. You can also set rules for expense approval. The system flags non-compliant expenses, and asks for an explanation from the employee. Accurate expense reports go through swiftly, helping employees get reimbursed more quickly, while anomalies are spotted and questioned as soon as possible.

2. Fraudulence

Sometimes, human forgetfulness is only part of the reason for inflated T&E spending. It’s not so unusual for an employee to report that they paid the taxi driver a 20% tip, when they actually gave a 10% tip. Your employees might feel that their expense claims are ‘fair’. For example, they argue that they deserve compensation for the inconvenience of business travel.

The solution: providing corporate credit cards for all T&E expenses.

When your employees have to use a corporate credit card, you can easily catch an inflated tip to the taxi driver or the waiter in the restaurant. Using a corporate credit card also makes it a lot faster for you to implement an automated expense system, since you can integrate credit card data straight into your business travel expense process. Your employees can still use their corporate credit cards for personal items when they need to; they’ll just mark the item as ‘personal’ so that it can be automatically removed from their out-of-pocket reimbursement allowance.

3. Ignoring Opportunities

Many companies miss opportunities to reduce T&E spending by failing to apply for their full VAT refund. Making a VAT reclaim can be a long and complicated process. You need to assemble all the VAT receipts from each employee, find the relevant line that shows the final VAT amount, and enter it correctly into your VAT return.

It’s even harder when your employees are bringing back foreign VAT receipts. Then you have to decipher receipts in foreign languages and handle amounts in different currencies. All too often, the VAT receipts that land on your desk are torn, crumpled, or badly printed. It’s tempting to skip these VAT reclaims, especially when the transaction has only a small amount of VAT.

VAT reclaim seems like small beans when set aside multi-million dollar partnerships; but that’s the type of thinking that leaves up to £15.3 billion of foreign VAT refund on the table. When you think of it that way, it’s not such a small number.

The solution: use an automated VAT reclaim system to apply for a VAT refund from every eligible country.

Automated VAT return systems save you the headache of understanding non-standard VAT receipts and completing each VAT reclaim. It makes it far easier to complete a VAT return for every employee expense, so you can maximize your VAT refund and use it to help balance your employees’ T&E spending.

VAT returns can be complicated to complete, and mistakes are easy to make, preventing your business from enjoying your full VAT refund entitlement. But the right tools help streamline the process to raise your VAT refund income. For all the details about filing successful VAT returns in the EU and other countries around the world, download our eBook.

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