T&E Spend: How Does Your Organization Measure Up?

Data analyzed over time, with the right rigor, can tell a fascinating story. Benchmark metrics, representing the results of hundreds of corporations, can illuminate key trends and showcase best practices. In travel management, identifying payment best practices can illustrate how your organization's card program can help you control spend, support vendor agreements and enforce compliance with policies.

In Corporate T&E Spend Benchmarks: Spend Metrics That Highlight Winning Performance, a new publication by J.P. Morgan Treasury Services, key findings from a survey of more than 800 corporations and non-profits that use cards for Travel & Entertainment (T&E) are summarized. The results tell a compelling story about current trends and serve as a guidepost to future process improvements.

The publication highlights results from RPMG Research Corporation's "The 2009 Corporate Travel Card Benchmark Survey Results," written by Richard Palmer, Chair of the Accounting and MIS Department at Southeast Missouri State University, and Mahendra Gupta, Professor of Accounting and Management at the Olin School of Business at Washington University. Survey respondents included clients of all major corporate card bank issuers in the U.S., including J.P. Morgan. The results, which spotlight the value of a travel card program, outlining best practices at the company level and common behaviors among card users, can serve as a guide for making your T&E program more effective.

Where Do Companies Spend Their T&E Budgets?

Survey results show that Fortune 500 corporations spend more than one-third of their T&E budgets on air travel but their non-travel spend is quite low at seven percent. By contrast, large and mid-sized companies spend an average of 17 percent of their T&E budgets on non-travel spend, which suggests they are more expansive in defining what's expensed in their T&E budget.

Government and non-profit organizations surveyed show a different balance, with restaurant and entertainment spend relatively low, totaling only 13 percent of their budgets, compared with mid-sized companies, which designate 20 percent for meals and entertainment.

Taking Bold Steps to Control Spend

Companies are tightening controls in a number of ways, motivated by recession belt-tightening, and spurred on by newer technologies that give them more control at the point-of-sale and better ways to identify incidents of misuse. Recent trends include:

• A reduction in spending limits - in some instances, as much as 25 percent,
• Fewer companies allowing ATM cash withdrawals on travel cards,
• Better training for personnel who approve expense reports; and
• Mining card data to identify policy violations or travel card misuse.

One trend that could negatively impact the effectiveness of card programs is the decline in ongoing, regular policy communication to employees. Only 62 percent of survey respondents (down from 72 percent) indicated that they regularly communicate T&E policy information to employees.

Program Performance and Cardholder Activity by Company Size

Want to compare your organization's card program to others? The publication summarizes the variations of T&E card performance, based on company size. Fortune 500 companies, large market and middle market companies are compared on a number of details, from the age of travel card programs to measures of cardholder activity, from spending limits to the use of card data in discount negotiations.

Shifting Focus: Travel Card Program Goals of the Future

Survey respondents showed a striking difference between current and future goals for their card programs, with cost control appearing to be the priority. Data will be a prime player in that effort as organizations focus on how information on spend can help in vendor negotiations or be used to monitor compliance with travel policies. Other emerging trends include automating expense reporting and integrating card spend data into accounting and information systems. Controlling card misuse and reducing cash advances, while still important, are no longer at the top of the list as organizations indicate they have made progress in these two areas.

As T&E program priorities evolve, corporate card programs must also adapt. At J.P. Morgan, recent refinements to our Corporate Card program, including an alliance with IBM to provide an end-to-end expense management solution and our expanded corporate rewards program, are just two responses to the changing nature of our clients' T&E programs.

For more information, contact your J.P. Morgan representative.

Additional Resources

For a copy of RPMG's "The 2009 Corporate Travel Card Benchmark Survey Results," visit www.rpmgresearch.net