How Automation, Artificial Intelligence, and Machine Learning Are Helping Organizations Reduce Non-Compliant Spend

Over the past few years, we've witnessed a fascinating transformation in the realm of travel and expense (T&E) compliance. During the "Great Resignation," companies were more lenient with their expense policies to retain employees. Home office expenses, home internet, and enhanced benefits all found their way onto the reimbursement list. Compliance took a back seat. Non-compliance challenges emerged from various corners. Employees overspent or simply forgot the T&E policy due to extended periods without travel, new hires were unfamiliar with the rules, and workforce changes created knowledge gaps within T&E teams. Outdated manual processes further exacerbated these issues. 

But as business activities resumed and cost management became critical, the spotlight shifted back to ensuring adherence to policy. The resurgence of business travel and the surge in inflation demanded a closer look at expenses. Many organizations began exploring ways to manage costs and improve efficiency. Enter automation, artificial intelligence (AI), and machine learning (ML). 

This new reality is explored in great depth in our on-demand webinar, Reduce Non-Compliant Spend with Automation and Machine Learning, which offers valuable insights into the challenges organizations face in ensuring T&E compliance and how cutting-edge technologies like automation, AI, and ML can be harnessed to overcome these challenges. Below, we highlight the key takeaways from this webinar. 

T&E Compliance: The Shifting Landscape 

In today's dynamic business environment, managing T&E compliance has become more crucial than ever. And yet the T&E compliance landscape continues to shift, making it hard for organizations to find steady footing on shaky ground as they work to evolve their T&E policies to align to the realities of today.  

While the Great Resignation led many companies to relax their expense policies to enhance employee retention, as business and travel resumed, inflation pressures and cost management are top of mind, causing a shift back to compliance enforcement. As travel regained momentum and costs soared, organizations began to closely scrutinize their spend. 

Trends in non-compliant spend, which is simply spend that falls outside an organization’s established policies — including duplicate submissions, misuse, and even fraud — closely align with the changing post-COVID landscape. Travel has rebounded significantly, but travel spend has surged even higher due to inflation. The data shows that hotel and airline spending had increased by 81% and 82%, respectively, with a substantial rise in violations. Interestingly, violations are not limited to travel expenses but also extend to business services and supplies, constituting approximately 75% of all violations. 

Then, of course, is the prevalent, elephant-in-the-room trend: AI is taking the world by storm. And while there are two sides to the AI coin, the bottom line is there are great benefits for organizations that lean into the capabilities of automation, AI, and ML to drive compliance in their T&E programs. There is some very well-researched and well-proven AI focused on automating the detection of risk, misuse, and fraud. AI that can find patterns in the data that humans would otherwise miss, and that empowers small teams to be able to do much more with much less. This AI helps organizations stop doing the manual processes and audits they used to do, whereby they only had the ability to audit 10-20% of transactions; now, powered by AI, these teams can monitor 100% of those transactions in a fraction of the time. Organizations are not only detecting more, and looking at more, but they’re also doing it with less effort, so now their teams can focus on resolving high-impact issues and making higher-level decisions.  

Key Takeaways: 

• Trends show a resurgence in corporate travel and an increase in non-compliant spend, particularly due to inflation. 
• The Great Resignation and policy changes have led to challenges in compliance. 
• Automation, AI, and ML empower organizations to tackle non-compliance efficiently. 

Leveraging Automation and AI/ML for Compliance 

With the changing workforce landscape and the departure of institutional knowledge, automation has become instrumental in supporting new teams and travelers. Automation, a powerful ally in the battle for compliance, has been instrumental in driving adherence to T&E policies.  

Audit rules — those warning messages and hard stops that can be configured in the system — are a natural starting point for automation.  begins with clear and concise audit rules configured within the system, which is where organizations often see the biggest impact and value. These audit rules serve as guardrails, guiding users and preventing policy violations.  

Additionally, simple yet effective automation tools like email reminders can replace manual tasks and significantly enhance compliance by standardizing processes and allowing teams to focus on more valuable tasks. For some organizations, something as simple as leveraging email reminders frees up hours of valuable employee time each week, standardizing and eliminating previously manual work so the team can focus on more high-value, high-impact tasks.  

A point of caution: organizations can get carried away with the use of compliance checks in the 

solution, to the point where it severely inhibits the user experience. So, how do you keep employees compliant to policy but not compromise their experience using a tool? Striking that balance between compliance and user experience is crucial. While ensuring compliance is vital, overcomplicating the process can hinder the user experience, so aim to keep it simple and streamlined. Understanding and prioritizing the user experience is essential for achieving the delicate balance between compliance and efficiency. So as organizations turn to automation, they’re strongly advised to consider the user experience as a top guiding principle as they work to drive change across their workforce.  

Key Takeaways: 

• Automation when done right (think: audit rules and email reminders) effectively drives policy compliance. 
• Audit rules should be designed for efficiency and effectiveness. 
• Balancing compliance checks with a positive user experience is crucial. 

Compliance Analytics, Benchmarks, and Trends 

Leveraging reporting and analytics is an often-overlooked tool in the compliance arsenal. By gaining insights from spend data, organizations can pinpoint areas of risk and focus their attention effectively. Put plainly, the ability to track compliance patterns and monitor behavior gives organizations a leg up.  

Organizations must have effective reporting strategies in place to track key performance indicators (KPIs) such as corporate card utilization and spend by expense type. This allows organizations to effectively analyze trends to understand compliance patterns and identify areas for improvement. 

Take traveler compliance behavior as an example of how understanding trends can help organizations more effectively drive impactful change. Around 70% of business travelers are generally compliant, while 25% may occasionally falter, and 5% consistently engage in high-risk behavior. By focusing on the 25% with occasional issues, organizations can achieve significant savings and compliance improvements. Identifying and tracking trends like these can lead to more significant cost savings and better overall compliance. By tracking the behavior of the 25% of employees with occasional issues and the 5% who regularly violate policies, organizations can implement targeted interventions to improve compliance. And when organizations intervene and communicate with these travelers on specific issues, their behavior becomes more compliant over time, saving the organization money and ensuring the entire program is more compliant. Tracking these trends allows organizations to see not only financial savings, but how the overall risk and compliance within their program is changing over time. 

Key Takeaways: 

• Reporting and analytics offer insights into areas of risk and improvement. 
• Tracking employee compliance behavior can guide interventions. 
• KPIs and trend analysis are essential tools for understanding compliance. 

Internal Audit and Control Strategies 

There are simple steps your organization can take to enhance audit process efficiency. Start by reviewing the effectiveness of your audit rules, categorizing issues, and prioritizing high-impact items for more efficient compliance management. Automation should be leveraged wherever possible, saving time, ensuring consistency, and ensuring that institutional knowledge is preserved within automated processes. 

3-Step Process to Drive Compliance with Automation, AI, and ML 

1. Analyze the efficiency of your audit process. To do this, follow these three steps: 

• Compile audit issues. Gather your audit rules, eliminate duplicates, and gather data on the results of your audit rules to determine their effectiveness. For example, for any audit rules that were triggered, how many were sent back to an employee? What percentage constituted a real problem? And what percentage were non-issues, and just noise distracting from the true problems? 
• Categorize the issues. Identify the cause or type, and whether payment was reimbursed or denied.  
• Prioritize for action. Determine which items are high priority based on whether payment/reimbursement was denied. Low-priority items include instances when payment/reimbursement was made, but a reminder was needed as a means of changing future behavior.  

2. Assess which AI-based tools meet your needs. Understand the capabilities of the compliance and automation tools you have access to and what can be achieved by leveraging the technology you already have.  

• Define priority goals: Clearly outline your top goals, such as risk identification, behavior change, and efficiency optimization. This will guide your selection of AI-based tools. 
• Evaluate automation tools: Familiarize yourself with the capabilities of the automation tools available to your team. Understanding what different tools can and can't do is essential for optimal implementation. 
• Leverage the right AI-based tools: Identify AI-powered solutions that align with your priority goals and can address your automation needs. For example, Concur® Detect by Oversight can be a valuable tool to aid in risk identification.  

3. Automate wherever possible. Understand which tasks you can automate, which you want to keep as manual processes, and which tasks you can eliminate altogether.  

• List current tasks: Compile a comprehensive list of all the tasks involved in the audit process. This will help you identify areas where automation can be implemented effectively. 
• Identify current manual tasks: Create a separate list of tasks that are currently managed manually. These are the areas where AI tools can potentially have the most significant impact. 
• Decide what to automate: Assess each task on your list to determine whether it can be automated, removed entirely, or should remain as a manual process. Automating repetitive and time-consuming tasks can significantly improve efficiency, especially during team changes and onboarding. 

Want to take this 3-step process on the go?

Download our tip sheet, 3 Steps to Reduce Non-Compliant Spend with Automation & Machine Learning. 

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Finally, when incorporating AI-based tools, it's vital to set clear goals, identify gaps in compliance, and choose tools that align with your objectives. Before you implement any technology or tool, you must first understand your priority goals. What do you want to accomplish? Do you want to identify risk more effectively and efficiently? Do you want to change out-of-policy employee behavior? Regardless of your goal, always keep the employee experience top of mind. Once you know what your goals are, identify gaps in existing processes and select AI tools that best fill those gaps. 

Key Takeaways: 

• Streamlining audit processes through automation improves efficiency. 
• Automating tasks reduces the impact of workforce turnover. 
• AI-based tools should align with organizational goals and fill existing gaps. 

T&E Compliance is an Opportunity, not an Obstacle 

Compliance isn't just about rules but also about leveraging technology, automation, and data to create a seamless and efficient travel and expense management process. With these strategies, organizations can reduce non-compliant spending, mitigate risks, and enhance the overall employee experience. 

In an era where every dollar spent must be accounted for, organizations can find solace knowing that cutting-edge technologies offer practical solutions to the challenges of T&E compliance. And by prioritizing automation, data-driven insights, and user experience, organizations can navigate the complex landscape of compliance more effectively, ultimately achieving greater efficiency and cost savings in their T&E programs, and strategically optimizing their compliance efforts to meet the realities of an ever-changing world. 

For more exclusive insights and actionable strategies for reducing non-compliant spend through automation and machine learning, watch our on-demand webinar, Reduce Non-Compliant Spend with Automation and Machine Learning.