Narrowing the gap: The confluence of new payment solutions and expense management systems

Organizations today are seeing growth opportunities stemming from strategic business travel, as face-to-face collaborations apparently outweigh virtual meetings – especially for companies that are expanding their global footprints.

With changing employees' expectations calling for more flexible, hybrid modes of working, more companies maintaining hybrid working models require bringing remote workers together to build and foster a collaborative culture. As a result, travel decision-makers expect business travel volume to significantly increase within the decade, according to a new Mastercard report.

Source: Mastercard

Rising travel volume also equates to an increase in travel spend. Currently, 31% of travel decision-makers spend more than $1 billion on travel, while 52% contemplate doing so in 2025.

“Looking ahead, we can expect to see finance leaders continue prioritizing business travel spend when employee trips bring a true value addition,” said Chad Wallace, global head of commercial solutions at Mastercard.

While the growing hybrid work setup is leading to an increased demand for global business travel, it also brings about the expectation of solutions aimed at improving the expense management processes for employees and employers alike. 

Challenges in creating a T&E ecosystem

According to Wallace, the current business travel landscape is fraught with pain points, from cost inefficiencies and poor traveler experiences to low travel and expense (T&E) policy compliance and an overall lack of spend visibility. 

The need for better cross-functional collaboration continues to be a roadblock to addressing business traveler priorities. For many organizations today, travel decision-making is widely distributed, with responsibilities shared across procurement and human resources to finance and technology. These departments hold different priorities, making it difficult to strike a balance between ensuring T&E compliance while also delivering a positive employee experience. 

The surge in distributed work has also paved the way for T&E complexities, as companies are now responsible for managing various travel needs of remote, hybrid and in-office employees, along with non-employees such as contractors or interviewees. 

Source: Mastercard

Currently, mid-sized companies and enterprises are primarily using separate SaaS platforms to handle their spend management, procurement, and treasury functions. However, the report highlights a convergence in software needs across these functions, with travel, expense, and payment solutions coming together into a single one-stop-shop platform. This indicates that accessing T&E solutions can be streamlined through integrations with existing business platforms, such as procure-to-pay platforms and HR systems.

For example, Navan, a T&E payments platform expanded beyond travel into spend management for companies. Brex, a global spend platform, launched Group Events — an expansion of Brex travel that enables businesses to create and manage large-scale, group corporate events for employees. Additionally, Ramp, an expense and spend management solution, also expanded into the travel space last year.

By embracing the industry-wide shift toward digitization, corporations can likely restructure their existing T&E systems – many of which are still manual and time-consuming. For instance, leveraging AI to construct a more tailored itinerary using past travel experiences for a given employee. In the same vein, 91% of travel decision-makers plan on investing in AI and machine learning to provide employees with a more personalized travel experience in the next five years.

Besides, travel decision-makers are increasingly switching from a focus on expense management to a proactive spend management mindset. Companies are leaning toward spend optimization methods, such as card link analysis, virtual cards with spend controls, and solutions for real-time spend visibility. 

Tapping into virtual cards

Virtual cards are emerging as a preferred payment to simplify B2B payments friction, especially for corporate travel. The ability to tie each travel payment along with its transaction details to a card simplifies invoice collection and reconciliation for accounts payable teams. By setting transaction-level controls that regulate how, when, where, and for what amount the card can be used, companies can improve travel spend management with the conviction that employees will stay within budget. Virtual cards also enhance visibility into payment status through a traceable link, further simplifying the way businesses can track and analyze their travel expenses.  

“The ability to add virtual cards to mobile wallets and bring virtual card payments into existing business workflows hold particular promise in today’s digital age, as business travelers increasingly expect their payment experiences to be fast, secure, and contactless,” explained Wallace.

According to the report, it is anticipated that issuing virtual cards to book business travel will become a common practice by companies going forward. 92% of travel decision-makers are already laying the foundation to provide virtual corporate cards to employees in the next five years in a move to facilitate their travel expenses as well as save them the trouble of currency conversions or transaction fees.

ESG practices

The report indicates how ESG is on the minds of some organizational leaders – who want to turn emissions-tracking data into actionable insights. Implementing ESG tracking primarily requires travel decision-makers to have data management technologies in place to be able to execute their sustainability goals. 

Although weighing the ESG impact of business travel adds another layer of complexity when designing T&E policies, having the right tools in place to track and report on ESG metrics can help corporations deploy carbon offsetting programs and meet sustainability goals. 9 in 10 travel decision-makers are of the view that optimizing sustainability will likely be a competitive feature for companies (46%) designing an expense management ecosystem, while 44% anticipate it might have a broader application across expense management systems five years down the line.