T&E: What does it mean and why is it important?
We hear of T&E almost everywhere in the B2B world these days whenever employee travel expenses are discussed. From T&E fraud to T&E policies and providers. It is mostly used to describe the operational business costs related to business travel. It gives visibility of employee spending and enables you to reimburse them quickly and easily. But what does T&E actually mean? In this new article, our team will provide you with all the information you need to know about T&E and its importance within your business.
What does T&E stand for?
There is actually no general consensus as to what ‘T&E’ really stands for. It can be either ‘Travel & Expenses’ or ‘Travel & Entertainment’. On the one hand, while the term is commonly used, it is only rarely found in any governmental or administrative documents. Therefore, there are no sources for a clear and authoritative definition.
However, the Business Dictionary defines it as “An expense incurred by an employee while he/she is traveling for business purposes or entertaining a business client. Examples of traveling expenses include money spent on lodging, transportation, and meals.”
On the other hand, the term ‘T&E’ is mostly found in the US but there’s an alternative acronym that is getting more and more popular within the UK – ‘T&S’, meaning ‘travel and subsistence’. Unlike ‘T&E’, this term can be found in government documentation. It is regularly used by the UK’s HM Revenue and Customs (HMRC) who describe T&S as ‘the cost of providing for employee travel, accommodation, meals and other ‘subsistence’.’ Subsistence is defined as the ‘necessary costs of traveling’, such as meals, parking, and business phone calls.
Google data has shown that T&S is becoming a popular search term within the UK, but either way, what is really important is that your organization has effective control over this particular area.
How important are T&E expenses?
Based on a Forrester Research survey, T&E is the second most difficult operating expense, after payroll (i.e. salaries). According to the Aberdeen Group, “business expenses related to travel and entertainment encompass 8% to 12% of the average organization’s total budget”. This means that if you are thinking about saving costs or driving more efficient business processes, you should really pay attention to your T&E expenses.
Why is it important to report these expenses?
T&E expenses are tax-deductible. Entertainment expenses draw the attention of the IRS because they must be proven to be business-related. This is why it is crucial that companies keep records of all receipts and invoices for reported expenses.
How can you report T&E expenses?
In the era of digitization and automation, Excel sheets should no longer be the go-to option when reporting any sort of expenses. Travel expense management software, like Expensya, are the new thing. Using our solution, employees can submit expense reports on-the-go, using only their cameras, thanks to our unique OCR+ technology. This eliminates the need to save physical receipts.
Managers and accountants can also verify and approve/reject expenses in one click. Automation also makes it easier to detect expense reports that are not compliant with the company’s T&E policy by making them stand out from the rest of the expenses.
Beware of Fraud!
Still, T&E expenses are prone to fraud. According to the Association of Certified Fraud Examiners’ 2018 Report to the Nations, almost 21% of fraud in small businesses is due to expense reimbursements. In large businesses, it accounts for 11%. T&E fraud can be in the form of duplicate receipts, fake reimbursements, or altered expense reports.
All the more reason to switch to automated expense management software like Expensya to avoid the risk of fraud or human error. Expensya deeply analyzes expense reports to detect unusual patterns. This is done through an ultra-advanced BI module based on Data Lake technologies and with a rendering generated by Power BI and various algorithms. You will be notified with any inconsistencies and can control your employees’ expenses and adapt rules as you go, all through a user-friendly platform.
