A quick look at a sales-rep firm that found advantages in outsourcing travel-and-entertainment reimbursement tasks.
Travel-and-entertainment reimbursement had always been a hassle for Sales Mark, a sales-rep firm in Little Rock with $27 million in revenues. "Our 100 salespeople are scattered across 40 states, and reimbursing their monthly expenses used to take about three weeks," recalls Jim Morgan, the company's vice-president of finance. "Since most of these people were younger and didn't have big bank accounts, they couldn't wait that long. So we were always having to give them cash advances that we'd then have to keep track of, too."
Last January Sales Mark's managers decided to hire Gelco PayNetwork, one of a growing number of service providers that handle outsourced financial functions, mostly for large companies. (One fast-growth company that has signed up: Snapple Beverage.) "By hiring Gelco, we cut the reimbursement cycle to three days," Morgan says.
Two-thirds of company builders outsource one or more internal functions, many of which are financial. (See "Farming Out Your Financials," Financial Strategies, April., [Article link]) For others that are considering outsourcing, T&E is a natural starting point. "At most companies, the process of T&E reimbursement takes about 17 sequential steps and three weeks or longer," says Chuck Buckner, a senior vice-president in Gelco's Eden Prairie, Minn., headquarters.
Gelco's process -- typical of T&E service providers -- takes three business days from day one (when employees call an 800 phone number and use the touch-tone keypad to "dial" in their categories of expenses) to the date when funds are electronically transferred into their bank or charge-card accounts. Gelco's research suggests that companies spend $15 to $30 per transaction when they handle T&E internally; it claims that an outsourced T&E transaction costs only about $13 to $16.
There's one more advantage to outsourced T&E functions: fraud control. Gelco's computer automatically checks that each caller is employed and authorized to receive that level of reimbursement. Later, explains Buckner, "if a manager disallows an expense we've already paid, we instruct the computer to deduct it from the next reimbursement." (For more on T&E management, see "The Rapid-Refund Expense Report," Good Form, September, [Article link].)