The return on investment of implementing a tool specializing in expense management (for business travel, allowances and mileage, etc.) is a simple and worthwhile calculation. Knowing how much can be saved within which timescale should be one of the main internal selling points of the project.
Most of the costs related to the business expense management process are extremely visible and easy to quantify.
MOST COSTS RELATED TO THE BUSINESS EXPENSE MANAGEMENT PROCESS ARE EASY TO DETECT AND QUANTIFY.c
In the first layer, there are all the people in the company who generate and report expenses. Depending on the system established in the company, the periodicity of the process varies. Expenses are normally reported on a monthly basis. For each expense reporter, it is then necessary to ascertain the average time taken to generate the expense report. A standard figure to use as a reference would be around half an hour. Lastly, we need to take into account the cost per hour to the organization of this employee. By multiplying these three numbers together, we obtain the cost incurred by the company for the expense report.
Now, it is time for the second part of the process: reviewing. This is also a crucial phase of the process. There tend to be fewer people involved in this stage but, as they are often senior figures in charge of a department, team or similar, the cost per hour is usually greater. This is also simply a case of multiplying the number of expense reports per month by the average the spent on a report and the cost per hour.
From this point onwards, the additional factors to be considered in the calculation of the ROI vary significantly depending on the organization. One such variable factor, for instance, is the occurrence of business expense fraud. There are also cases that involve duplicated layers of verification and approval, with the related increase in costs. These intrinsic factors must be taken into consideration in each organization.
THE ROI OF THIS TYPE OF PROJECTS RANGES BETWEEN 80% AND 150%
Typically, the ROI of the project tends to range between 80% and 150%. Moreover, the standard payback period is around three months from the implementation being completed.
