August 18, 2021
How-to

How to reduce sales T&E costs

,

Business T&E is back on the rise, which signals that execs and sales teams are starting to travel again to meet customers in person.

Unfortunately, sales T&E is one of the biggest wastes of company dollars because of time-consuming systems and inefficient processes that generate unnecessary costs and spending. What are these costs and how can you avoid them? Let's dive in.


Your sales team’s time should be spent selling

If you were to guess how much of your sales team’s time is spent actually selling, what would your estimate be? 75%?  


The answer, according to the latest State of Sales Report by XANT, is a shockingly low 35%.  That’s right—almost two-thirds of your sales team’s time is spent doing things other than selling your product and services. At a salary of $105,000 per year, that means you’re paying almost $70,000 every year to have your salespeople do low-value tasks.


It’s clear that salespeople should be freed up to focus on doing what they were hired for. And sales leaders and CFOs can make this change a reality by clearing a major barrier: T&E admin.


Things like filling out manual expense reports, gathering paper receipts from months ago, or figuring out who paid for what during important rapport-building activities like prospect meals or events—a good corporate card and spend control software removes all of this. It frees up your top-performing salespeople to simply photograph receipts at the time of the transaction or forward a digital receipt when it arrives. That process takes seconds rather than hours. That’s more time they can spend nurturing prospects and closing good deals.

Ramp automated reimbursements


The perils of unchecked sales expenses

On top of the wasted hours on tedious paperwork, the other big source of high sales costs is the percentage of spend that’s wasted.


This problem affects companies large and small. Take a recent audit of New York’s Metropolitan Transport Authority (MTA), for example. The audit looked into dozens of purchases made on procurement cards over 10 week in 2020 and found that 24% of the audited purchases were “problematic,” i.e. not within policy. Because of the audit, the MTA has revoked more than 90 cards.


This MTA expenses scandal would not have happened if the authority had a way to control and limit spending in real-time. The problem with traditional corporate cards and expense reports is that the data is always delayed, sometimes by as much as a month. That’s a long delay for any finance leader who wants to nip out-of-policy spending in the bud! A salesperson who doesn’t follow your expense policy can build up a mountain of expenses over a month. 


Modern corporate card software like Ramp lets you set limits and locks on certain merchants and categories, so that salespeople only spend on the right things.

Ramp card controls


You can know what’s happening moment by moment, set up custom alerting rules, and flag out-of-policy charges as soon as they occur.

Ramp transaction alerts and flags


This combination of card controls and real-time transaction data is a powerful antidote to the cost disease that plagues so many organizations. Many businesses have generated over 10% in savings by switching to a corporate card program.


Reward revenue generation, not spending

The solutions to the issues above require sales teams to switch to modern corporate cards for their T&E. But many people have become used to charging business travel expenses on personal credit cards to take advantage of personal reward points. Despite the fact that these points are non-transferrable, hard to keep track of, and have no direct monetary value, your salespeople probably still view them as a perk they’re eager to hold on to. How can you convince them to let go?


When you think about it, these points are not so much a perk as they are a bonus for spending as much as possible. People know they keep a percentage of what they spend on personal cards—often up to 4% on the travel and meals that they are spending on. Be honest, what would you do in that situation? That’s right, you’d do everything you can to spend as much as is allowed. If the maximum allowance for meals is $30, then your employees are going to throttle that right up to a cent under the limit. This isn’t your team's fault. It’s the fault of personal cards that incentivize bad spending.


Wouldn’t you rather be giving bonuses for revenue generation instead?


At Ramp, we estimate switching to corporate cards can save you as much as 10% of your company’s current travel spend. With that saving, you can give your salespeople a replacement bonus—actual cash—that they will value much more than personal card points that have no monetary value. That’s a bonus you can link to ambitious business development targets. It's a reward based on revenue generation, not expenditure. And your best salespeople will love you for it.

"You can give your salespeople a replacement bonus—actual cash—that they will value much more than personal card points"

How to reduce the cost of sales T&E 

To sum up, here are 3 ways that founders, finance teams, and sales leaders can cut T&E costs by at least 10%:

  1. Free up salespeople to sell. It’s what you hired them for, it’s what they enjoy doing, and it’s what delivers value to your business. Replace your hour-long expense report processes with one-minute receipt matching and accounting automation.
  2. Set proactive spend controls, and monitor transactions as they happen. Expecting busy managers to enforce your policies isn’t practical. Instead, use automated controls to prevent the most common types of inappropriate spending, and use automated alerts to catch whatever’s left.
  3. Reward revenue, not spending. Letting your sales reps keep the points they earn on their personal card may seem like generosity, but it’s really a reward for poor behavior. Give your reps corporate cards and a pay increase instead—the better spending behavior will more than pay for the bonus, and everyone will walk away with more money in their pockets.


The shift away from personal cards for salespeople is a winner for everyone across the business. Founders and finance leaders can stop worrying about out-of-policy spending and rest assured they are not leaving expense management to chance or blind trust. Ambitious salespeople can be motivated and incentivized with bonuses funded by the savings made possible through the more efficient systems. And you can free up your top performing sales leaders with the time they need to develop your business by closing bigger and better deals.

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Calvin Lee
Chief of Staff to the CTO, Ramp

Prior to Ramp, Calvin interned at Facebook AI Research and Google Research. He has a background in competitive programming and math, with a deep interest in machine learning and fintech.

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How to reduce sales T&E costs

August 18, 2021
by
Calvin Lee
,
Chief of Staff to the CTO, Ramp

Business T&E is back on the rise, which signals that execs and sales teams are starting to travel again to meet customers in person.

Unfortunately, sales T&E is one of the biggest wastes of company dollars because of time-consuming systems and inefficient processes that generate unnecessary costs and spending. What are these costs and how can you avoid them? Let's dive in.


Your sales team’s time should be spent selling

If you were to guess how much of your sales team’s time is spent actually selling, what would your estimate be? 75%?  


The answer, according to the latest State of Sales Report by XANT, is a shockingly low 35%.  That’s right—almost two-thirds of your sales team’s time is spent doing things other than selling your product and services. At a salary of $105,000 per year, that means you’re paying almost $70,000 every year to have your salespeople do low-value tasks.


It’s clear that salespeople should be freed up to focus on doing what they were hired for. And sales leaders and CFOs can make this change a reality by clearing a major barrier: T&E admin.


Things like filling out manual expense reports, gathering paper receipts from months ago, or figuring out who paid for what during important rapport-building activities like prospect meals or events—a good corporate card and spend control software removes all of this. It frees up your top-performing salespeople to simply photograph receipts at the time of the transaction or forward a digital receipt when it arrives. That process takes seconds rather than hours. That’s more time they can spend nurturing prospects and closing good deals.

Ramp automated reimbursements


The perils of unchecked sales expenses

On top of the wasted hours on tedious paperwork, the other big source of high sales costs is the percentage of spend that’s wasted.


This problem affects companies large and small. Take a recent audit of New York’s Metropolitan Transport Authority (MTA), for example. The audit looked into dozens of purchases made on procurement cards over 10 week in 2020 and found that 24% of the audited purchases were “problematic,” i.e. not within policy. Because of the audit, the MTA has revoked more than 90 cards.


This MTA expenses scandal would not have happened if the authority had a way to control and limit spending in real-time. The problem with traditional corporate cards and expense reports is that the data is always delayed, sometimes by as much as a month. That’s a long delay for any finance leader who wants to nip out-of-policy spending in the bud! A salesperson who doesn’t follow your expense policy can build up a mountain of expenses over a month. 


Modern corporate card software like Ramp lets you set limits and locks on certain merchants and categories, so that salespeople only spend on the right things.

Ramp card controls


You can know what’s happening moment by moment, set up custom alerting rules, and flag out-of-policy charges as soon as they occur.

Ramp transaction alerts and flags


This combination of card controls and real-time transaction data is a powerful antidote to the cost disease that plagues so many organizations. Many businesses have generated over 10% in savings by switching to a corporate card program.


Reward revenue generation, not spending

The solutions to the issues above require sales teams to switch to modern corporate cards for their T&E. But many people have become used to charging business travel expenses on personal credit cards to take advantage of personal reward points. Despite the fact that these points are non-transferrable, hard to keep track of, and have no direct monetary value, your salespeople probably still view them as a perk they’re eager to hold on to. How can you convince them to let go?


When you think about it, these points are not so much a perk as they are a bonus for spending as much as possible. People know they keep a percentage of what they spend on personal cards—often up to 4% on the travel and meals that they are spending on. Be honest, what would you do in that situation? That’s right, you’d do everything you can to spend as much as is allowed. If the maximum allowance for meals is $30, then your employees are going to throttle that right up to a cent under the limit. This isn’t your team's fault. It’s the fault of personal cards that incentivize bad spending.


Wouldn’t you rather be giving bonuses for revenue generation instead?


At Ramp, we estimate switching to corporate cards can save you as much as 10% of your company’s current travel spend. With that saving, you can give your salespeople a replacement bonus—actual cash—that they will value much more than personal card points that have no monetary value. That’s a bonus you can link to ambitious business development targets. It's a reward based on revenue generation, not expenditure. And your best salespeople will love you for it.

"You can give your salespeople a replacement bonus—actual cash—that they will value much more than personal card points"

How to reduce the cost of sales T&E 

To sum up, here are 3 ways that founders, finance teams, and sales leaders can cut T&E costs by at least 10%:

  1. Free up salespeople to sell. It’s what you hired them for, it’s what they enjoy doing, and it’s what delivers value to your business. Replace your hour-long expense report processes with one-minute receipt matching and accounting automation.
  2. Set proactive spend controls, and monitor transactions as they happen. Expecting busy managers to enforce your policies isn’t practical. Instead, use automated controls to prevent the most common types of inappropriate spending, and use automated alerts to catch whatever’s left.
  3. Reward revenue, not spending. Letting your sales reps keep the points they earn on their personal card may seem like generosity, but it’s really a reward for poor behavior. Give your reps corporate cards and a pay increase instead—the better spending behavior will more than pay for the bonus, and everyone will walk away with more money in their pockets.


The shift away from personal cards for salespeople is a winner for everyone across the business. Founders and finance leaders can stop worrying about out-of-policy spending and rest assured they are not leaving expense management to chance or blind trust. Ambitious salespeople can be motivated and incentivized with bonuses funded by the savings made possible through the more efficient systems. And you can free up your top performing sales leaders with the time they need to develop your business by closing bigger and better deals.

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Learn more about Ramp

Streamline approvals.
Review requests, pre-approve expenses, and issue general expense cards in a few clicks – or directly in Slack. Delegate approvals and empower your team leads to spend on the things they need and control their team’s expenses.
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Issue instant cards.
Unlimited virtual and physical cards with built-in spend limits, instantly available for everyone in your team. Define spend rules and let your smart cards enforce your policies automatically. No more surprises or under-the-radar spending.
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See spend as it happens.
Stop waiting on monthly statements or manual spreadsheets. Find, browse, and download real-time transactions from any employee, department, or merchant – on any device.
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Close your books 5x faster.
An accounting experience by finance teams, built for speed and efficiency. Automate manual processes and start enjoying instant reconciliation – Ramp does all the heavy lifting.
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Trim wasteful spend.
Ramp analyses every transaction and identifies hundreds of actionable ways your company can cut expenses and alerts your team via email, SMS, or Slack. It’s like having a second finance team, laser-focused on cutting costs.
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Consolidate reimbursements.
Ramp makes it easy to reimburse your employees for any incidental out-of-pocket expenses. Review, approve, and pay employees back for anything that didn’t make it onto a card with the rest of your Ramp transactions.
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