A look inside expenses: How much are your employees spending?

Did you know that, collectively, companies reimburse their staff members billions of dollars each year? An employee expense could be as low as $5 for a coffee and, as these expenses add up, business leaders must be thoughtful about how they guide this spending.

At SAP Concur, we want to make expense management as simple, automated, and accurate as possible so organisations aren’t losing a cent to inaccurate forecasting, inefficient policies, or noncompliant purchases. With billions of dollars on the line, there’s a lot to lose.

To help companies understand the impact of inflation and gain a clear picture of the most common expense categories, we’ve analysed Concur Expense data collected in 2019 and 2023.

¹ Gas refers to fuel expenses.

² Mileage refers to reimbursement based on kilometres driven.

³ Miscellaneous refers to expenses that don’t fit within current expense categories.

⁴ Other refers to non-standard expense categories.

⁵ Telecom includes wired and wireless telephone fees as well as the costs of phone and communication devices.

Airfares were the most expensive purchase per transaction in 2023. The average expense for an airfare was $770, up 22 per cent from $630 in 2019. Yet, while airfares were certainly impacted by inflation, it isn’t the category most changed from 2019.

Those categories would be parking and gas. Compared to 2019, when the average expense transaction was $28, the cost of parking has increased 46 per cent to an average cost of $41 per transaction. At the same time, gas increased 40 per cent from the average cost per transaction of $50 in 2019 to $70 in 2023. Interestingly, the average expense for train travel decreased significantly from $121 in 2019 to $82 in 2023, a decline of 32 per cent. Trains are a more sustainable way to travel, so the reduced cost is good news for businesses looking to swap car or plane travel for rail.

Inflation, supply chain disruptions, and tariffs on certain imports have also resulted in higher prices for meals. The average expense transaction for meals has increased 17 per cent, from $41 in 2019 to $48 in 2023. Entertainment costs have also increased by 22 per cent, rising from $85 in 2019 to $104 on average per transaction in 2023.

While airfares are the costliest per transaction, it’s not where we see the most spending. In 2023, 22.6 per cent of expense spending across transactions in Concur Expense appeared in the other category. Indeed, it has become the most expensed category in terms of total spend, increasing from 19.6 per cent in 2019. The cost of expenses in the miscellaneous category also increased from 11.9 per cent in 2019 to 14.5 per cent in 2023.

Other and miscellaneous expenses are the second- and fourth-most expensive categories respectively when looking at the cost of an average expense. These murky areas represent expenses that don’t fit within existing categories or refer to expense categories outside of the norm. For example, we saw an increase in miscellaneous and other expense categories during the COVID-19 pandemic when workers were expensing new home office equipment or personal protective equipment. In terms of the volume of expense transactions, those in the other and miscellaneous categories are increasing, making up 37 per cent of expense transactions. These are commonly used expense types; however, it’s important that organisations have insight into what their staff members are spending on to ensure compliance with expense policies.

Since 2019, lodging expenses have overtaken miscellaneous as the category with the third most spending, though miscellaneous expenses remain high. The average cost per transaction of lodging expenses has increased 15 per cent from $183 per transaction in 2019 to $211 in 2023. Like most expense categories, inflation has left its mark on the lodging industry. Indeed, separate research from Skift observed a 20 per cent increase in hotel rates from 2019 to 2023.

Chris Juneau, head of market strategy, SAP Concur, said, “Inflation is certainly the main culprit when it comes to higher prices; however, the nuances in the data showing rising costs and shifts in spending habits provides valuable insights that should be used to guide company decisions, spending strategies, and travel and expense policies.”

¹ Totals may not add up to 100 per cent due to rounding.

Our third look inside the data shows how often employees are spending in each category. Excluding other and miscellaneous expenses, the three most common expense categories based on volume of transactions, in order, are air, lodging, and meals. Expense categories help business leaders to track and manage outgoing spend. A robust list of expense types lets organisations increase oversight into workers’ expenditure and help establish guard rails on what can and can’t be expensed through expense policies.

Tips for expense policies

Managing spending by staff members across expense categories and payment methods can leave room for error and non-compliance. However, with clear expense policies, companies can reduce ambiguity and non-compliance, saving time and money while reducing risk. Consider these seven tips for developing or revising expense policies:  

1. Review existing policies and elicit input from finance leaders and employees on what has been effective, what hasn’t, and what must be updated.
2. Tap technology to look at spend data. Re-examine your miscellaneous or other categories and find out what workers are spending on. This could result in adding new expense types or adjusting category names if they’re confusing.
3. Work with solution providers or industry experts to understand current economic, social, and behavioural conditions that might impact spending by staff members; for example, differences in how employees made purchases before and after return-to-office initiatives.
4. After gathering information, adjust policies to be fair and sensible. Write your policy to guide behaviour; yet be flexible enough to adapt to local and international travel requirements. Be explicit about what is and isn’t an acceptable expense.
5. Remove the jargon from policies. Make sure they are easy to read and not bogged down by unfamiliar terms. The easier a policy is to understand, the better your chances are that your workers will follow policy during their next business trip or purchase.
6. Make sure your policy is simple to find and use. Your expense policy won’t be followed unless people know about it; make it visible and include in internal communications.
7. Take a future-forward approach to technology. Without question, you should be using a mobile-first solution that makes it easy for staff members to submit expenses on-the-go from their mobile devices. Additionally, ask about current capabilities powered by artificial intelligence (AI) and how your technology partners are planning for the addition of generative AI for such things as helping employees better navigate expense policies.

Methodology: SAP Concur analysed aggregate expense reports in Concur Expense between January 1, 2023, through December 31, 2023, and equivalent time periods from 2019. Expenses for this analysis were tagged as “airfare,” “car rental,” “entertainment,” “gas,” “ground transportation,” “lodging,” “meals,” “mileage,” “miscellaneous,” “office, “other,” “parking,” “telecom,” and “train.”