How to choose the right travel expense management solution for your business

One of the many perks of becoming a VAT-registered company is the ability to claim back business travel expenses. However, for a chief financial officer (CFO), making the decision on which travel and expense management provider to go for can feel like walking a tightrope. While saving money is a key priority, there are many important stakeholders that you need to balance, especially HR and employees themselves. 

In this article, we look at the four steps you should follow when setting up an expense management solution for your business, and how to ensure that you are reclaiming all the VAT that you are entitled to.

• Understand the factors that are most important 

There’s rarely a one size fits all approach when it comes to choosing an expense management solution. To ensure that you choose the right technology for you, there are multiple factors you should first consider:

• Expense policy
• Allowed cost types
• Automated and risk aware audits
• Expense value limits by geography and seniority
• Integrations (ERP, cards, and travel management)
• Duty of care for employees
• Visibility on purchases
• Ease of use for employees and managers 

• Look at your current processes and identify what it is missing

In today’s market, there are a growing number of travel expense management options to choose from. However, if you are still relying on Microsoft Excel, or any other manual processes, your top priority should be finding a way to capture your company’s spend in a clear and consistent manner. For many, this will naturally lead them to an expense management system.

As a CFO, you should carefully consider the features of these products and the specific requirements they meet. For example, the policy, the cost type limits, and authorisation processes. You should also remember that while it may require a small investment to set up, these types of solutions can drive many direct savings in terms of bottom line spend and processing time for employees. Additional benefits can include enhanced reporting and compliance with benefits regulations.

• Don’t get caught out by local tax rules

Once your company is set up on an expense management system, it is important to make sure you are calculating and paying the correct amount of VAT. 

There are several risk areas to watch out for, from rules around mileage rates for company and private vehicles, benefits in kind, per diems, and income VAT consideration. For each of these, there is a risk to the employee’s tax values, which becomes a fiscal liability and a responsibility for the business. 

We are seeing a growing concern among CFOs regarding the accuracy of expense claims. While software is making the process quicker, businesses ultimately still rely on the accuracy of data being inputted by its employees, and its compliance with international tax regulations. 

Thankfully, many of the leading expense management systems have built-in controls and procedures that are designed to minimise this risk as much as possible.

• Complete an accurate VAT reclaim

Once you’ve logged your expenses, there are several ways to reclaim the VAT from your tax authority. This includes:

• Tasking the finance team to manually check each individual receipt 
• Reclaiming a portion of the VAT available through automated routines 
• Reclaiming no VAT owing to the risk involved in something being incorrect

Often, the cost of choosing only one of these options is too high. Therefore, to ensure that you are maximising your VAT reclaim, we recommend partnering with a provider that can provide both expert tax advice, along with cutting-edge technology solutions.

Ben Knock is Managing Director and Vice President of Value Added Tax at Ryan, a global tax firm dedicated exclusively to business tax and integrated with SAP Concur Expense, one of the world’s leading expense solutions.