The management of expense claims for business travel is becoming increasingly automated. Less and less paper, dedicated IT tools and simplified processing save time and generate substantial savings, which are further enhanced by the VAT refunded by certain countries.
In companies with nomadic employees, the change is going smoothly in the management control departments. Traditionally, the transmission of their expense claims and the control and reimbursement process have been managed manually. In most cases, the use of an Excel spreadsheet expense claim form provides a standardised presentation of information. However, the data is also entered manually into the accounting system responsible for reimbursement. This is the classic process, which tends to change, with varying degrees of speed.
Thanks to recent legal advances in electronic signatures, electronic invoicing is gaining ground. The stakes are high: in Europe, 13 billion invoices are processed every year. "Paper invoices represent an area of non-productivity for companies, which need to identify possible sources of savings and optimise their processes", says one consultant. Since the early 2000s, a number of operators, notably BNP Paribas, have implemented an electronic expense management solution. For the banking group, as for others, the specifications include four key requirements.
Firstly, an electronic expense claim submission process, interfaced with the company credit card of each employee who travels, in order to automatically insert information into the expense claim form. Next, there needs to be an automatic process to ensure that expenses comply with the travel policy, as well as an online approval process. Finally, an automatic interface with the accounting systems for reimbursing expenses.
The business travel sector also has a role to play in this drive to reduce waste. Etap-on-line, Europe's market leader in business expense management, designs, develops and publishes Ulysse Travel & Expenses, aka Ulysse T&E. Available on the Internet (ASP mode) and intranet, this solution automates the entire business travel management process, from the mission order to the integration of the expense report. The result is a reduction in management costs of 50 to 70 %, time savings that can reduce the data entry phase by employees by up to two-thirds, and greater control over travel policy.
"We have 650 customers, SMEs, public bodies and major accounts, including 19 listed on the CAC 40", says Pierre-Emmanuel Tetaz, Managing Director of Etap-on-line, whose Ulysse T&E software is already deployed in fifteen countries in Europe, the United States and Asia. For the moment, this company is the only one to offer a service for digitising expense claim receipts. The NJ module, which has been in general use since 1 September 2007, provides greater visibility. It also optimises controls and audits, while facilitating VAT recovery. Some 400,000 receipts have already been digitised using this new module. There remains a sort of legal vacuum: to date, digitised receipts do not constitute evidence that can be used against the tax authorities. However, some tax inspectors do accept them.
Disappearance of paper invoices
For its part, American Express has been offering its customers a paperless solution called e-Invoicing for just over a year. "Designed in conjunction with B-Process, this solution, the only one of its kind in France, gives companies online access to their Business Travel Card statements, which are synchronised with the electronic invoices issued by the travel agencies in our network", explains Olivier Tanigault, Director of Innovation and Development at American Express. In full compliance with European and local legislation, these dematerialised invoices replace paper supporting documents.
The company using this solution contacts a secure web platform. Operating 24 hours a day, it offers access to all original invoices in electronic form from the American Express travel agency, available 24 hours after issue. This access includes automatic e-mail notification to travellers and, 48 hours after the invoice is issued, online electronic archiving for three fiscal years, in accordance with legal requirements. To facilitate the integration of invoice data into its accounting systems, the company can obtain ad hoc electronic files.
Also with this platform, the company has access to its Business Travel Card account statements, which are automatically synchronised with the travel agency's invoices. This service includes the provision of an integration file, which facilitates checks, eliminates data entry errors and enables pending invoices to be viewed.
Electronic archiving
Increased efficiency and reduced costs are the main benefits of electronic invoicing and archiving. It's true that there are no longer any regulatory or legislative constraints on dematerialisation, thanks to a solution included in the smart card. Although it does not require any changes to IT systems, dematerialisation often involves a lengthy decision-making process for large groups. American Express reports that around fifty groups have already adopted it. Under these conditions, the switch to electronic invoicing should clearly accelerate in the future. This step will be accompanied by the gradual disappearance of paper as a medium for invoicing and archiving. All in full compliance with European and local legislation. Before implementing this type of process, companies should carry out a comparative study of the main expense claim management software on the market, and may wish to enlist the help of a specialist consultancy firm.
Checks and validations
At every stage of the management process, the company reaps benefits. Starting with the elimination of paper. The electronic document becomes the original invoice, speeding up receipt, reducing postage costs and optimising the validation workflow. Added to this is improved access to expenditure and payment information, as well as accounting integration of data. Not forgetting electronic archiving, with invoices stored on the platform for the current year, plus the following three years to meet the requirements of the tax authorities. They are then returned on CD-Rom or stored on a secure server. This optimises space and simplifies VAT recovery and auditing. By integrating a paperless solution, businesses can do away with the need for paper invoices and statements. What's more, they can automate the entire invoicing process and optimise their control, validation and accounting procedures.
By combining the advantages of the Corporate Travel Card account with those of paperless processing, companies can reduce the cost of administrative processing. This saving amounts to between 20 % and 25 % with the Travel Card account. A further 20 % to 40 % is saved when this account is combined with paperless invoicing. "According to our calculations, processing a paper invoice costs between 12 and 17 euros. On the other hand, this cost falls to 2 or 3 euros per invoice when the company uses paperless invoicing. These are substantial savings, especially for companies that process at least 2,000 invoices a year and have an annual turnover of 100 million euros", adds Olivier Tanigault.
Reclaiming VAT abroad
At a time when business travel abroad is on the increase, companies based in France have the opportunity - under the 8th and 13th European directives - to reclaim tax paid on certain expenses incurred by their employees abroad. To do this, they can call on specialist companies such as Meridian, TVA Conseil, Global Taxe Refund, E&A VAT Refund or Vialtis. This is because almost 90 % of European businesses encounter difficulties in recovering VAT paid outside the domestic market. And the stakes are high: the annual amount of recoverable VAT comes to €5 billion! "For an exporting company with travel expenses within the European Union of €500,000, the recoverable VAT is estimated at €75,000, based on an average rate of 15 %", says TVA Conseil.
The hunt for VAT takes place mainly in Europe (in the broadest sense). On the other hand, a French company cannot reclaim VAT in the USA, except in marginal cases, or in Russia. But it is possible to reclaim VAT in Japan, if the French company has registered with the Japanese tax authorities. The same applies to Australia. To access the VAT recovery service, multinationals turn to specialist service providers, whether or not expenses are paid by card. Groups can benefit from additional services associated with their employees' payment cards.
For example, BNP Paribas is offering its Business card customers access to TVA Conseil services on special terms. For its part, MasterCard has launched a VAT Recovery service in 36 countries, in conjunction with Meridian, the world leader in business expense management. "The VAT Recovery service enables large and small businesses worldwide to recover up to 100 % of eligible domestic and international VAT", says Meridian. The solution is based on a best practice guide to optimise VAT recovery and an online reporting tool that provides visibility of potentially recoverable VAT in multiple countries. Professional MasterCard cardholders can even track, in real time, the amounts of VAT paid on their card transactions and estimate the overall VAT they can reclaim.
"Once a company has subscribed to the VAT Recovery service, we manage all the stages, from receipt of invoices to VAT refund, which can be made in the currency of its choice, directly into its bank account", explains Philippe Glätzle, Director of Meridian France. With some forty offices in nearly thirty countries, this company, the leader in its sector, boasts an effective refund rate of 97.6 %.
Recoverable VAT: highly elastic deadlines
To reclaim foreign VAT, you need to be patient, as it takes between three and 36 months. For example, it can take as little as three months for expenses incurred in Iceland, where refund requests are few and far between. On the other hand, in Central European countries such as Poland, it can take up to three years!
Using a specialist company speeds up the process. They identify in advance the additional information and documents that need to be attached to the files to facilitate reimbursement. "Refund times are a result of the proactive nature of our recovery process, which involves a full review of supplier invoices and expense claims before claims are sent to the tax authorities," explains Meridian. Files are always validated by a team of VAT consultants. Nevertheless, the tax authorities in certain countries may change their refund deadlines or delay payments for reasons dictated by their own internal policies and procedures, without informing the specialist companies. Such sudden changes in procedures make it difficult to estimate refund times.
Deadlines are generally longer if companies draw up their claims directly. This is because their correspondence is often incomplete or incorrect, leading to numerous exchanges with the authorities in foreign countries. Specialist service providers charge a commission of around 30 % on the amount refunded. At this level, speed is priceless.
