Getting data on expenses

The corporate card is
changing, not in ways that business travellers will see on the road but that
they will notice back home when they fill out expense reports.

Credit network
processors like Visa and MasterCard as well as the banks that issue cards have
been developing new tools for corporate customers in anticipation of a rebound
in business travel. The volume of travel and entertainment charges has
increased by 20 percent to 30 percent from the fourth quarter of 2009, when
recession-related declines first began to reverse, according to Kevin Phalen, a
commercial card executive at Bank of America Merrill Lynch.

The new tools are
largely aimed at helping business travellers and travel managers do a better
job of tracking where and how company money is being spent. The idea, Phalen
said, is to offer more “visibility into cash flow.”

The financial crisis
in 2008 prompted a call for greater transparency in how public companies spend
their money, particularly on travel. The reaction began after reports that the
American International Group had run up a bill of about $440,000 on a company
retreat in October 2008 at a Southern California resort hotel, shortly after the
insurance giant accepted an $85 billion federal bailout.

That so-called AIG
effect, in turn, led to a demand for programs that monitor both card use and
expense reporting.

“Travel managers are
getting more and more data around where their cards are used,” said Hubert J.P.
Jolly, a managing director in the global transactions services business at
Citigroup.

As the tools give
managers a more complete picture of their company’s spending, “we’re seeing
corporations use that data to renegotiate,” he said.

New imaging
technology, for example, lets travel managers look at a hotel bill line by
line, rather than just seeing a single charge with a total dollar amount. This
way, they can see if the traveller took bottled water from the minibar or paid
for Internet service, both charges that can be bundled into a corporate rate
when companies bargain with hotels.

Many of the new
programs cater to small businesses, traditionally the ones that first
experience a rebound in an economic recovery.

“What we find in
smaller companies is that current penetration of expense management tools is
very low,” said Jay Cary, a vice president at American Express Global
Commercial Card. “In many cases, they’re hand-writing or using an Excel
spreadsheet,” he said.

American Express worked
with the travel expense software firm Concur to roll out Concur Breeze, an
expense-reporting tool aimed at companies with 100 or fewer employees. The
company introduced the software in June.

“Expense reportage
decoupled from the card is a pain in the neck,” said Elena Donio, executive
vice president and general manager for Concur Breeze. Letting small businesses
automate their expense management cuts down on the time that cardholders and
their managers need to spend on the process.

Hillel Zafir can attest
to this. As chief technology officer for EMI Yoshi, a party goods manufacturing
and distribution company in North Brunswick, New Jersey, Zafir said that
managing the travel expenses of the company’s 10 salesmen was time and labour
intensive.

The reporting was all
done in Excel, and salesmen would have to print out and mail hard copies of
receipts to headquarters. “The charges they put in didn’t always coincide, and
if there was a discrepancy, it became a problem,” he said.

Now, Zafir said the
hourlong reporting process has been shaved to a few minutes of work. Salesmen
like Zevi Mayer are taking photos of receipts for cash transactions using their
smart phones and adding it to their expense reports, a perk of the program.

Other new tools are
aimed at travel managers or meeting planners. Banks have begun offering
corporate customers the ability to create an account number that is valid only
for a single transaction. While some financial institutions have long offered
this service to their customers so that, for instance, they do not have to
expose their debit card numbers when making an online purchase, this tool gives
corporate buyers the ability to control the amount charged.

“That is the product
where we’re seeing the fastest growth, 90 to 100 percent growth year over
year,” said Eduardo Vergara, a managing director at JPMorgan Chase Businesses.

Companies like this
option, he said, because they – not the vendor – stipulate the amount charged,
and because it simplifies billing by sending it back to an internal cost
centre. Hotels and other vendors like it because it means they will be paid
promptly. Traditionally, vendors would bill the company and often receive a
check a month or more after the fact.

Also growing in
popularity are meetings cards.

“As we’ve seen an
uptick in corporate travel, we’re seeing a lot more demand for the meeting
card,” said Jim McCarthy, global head of product for Visa Inc.

Since big corporate
conferences can easily cost $100,000 or more, being able to consolidate all the
expenses onto a single account gives companies a more complete picture of the
total cost. It also gives meeting managers insight into areas where they can
realize savings. And it gives them more clout when they negotiate with a hotel
or other location for future business.

For the future, McCarthy said, he envisioned
an array of services provided by third-party developers in addition to Visa
itself, much the way the App Store from Apple operates.