Augmented Analytics for Finance: Controlling Travel and Entertainment Expenses
Every company wants to manage their costs efficiently and effectively. That task can be particularly challenging if you have to resort to manual, spreadsheet-based processes. For example, if you’re a business analyst in finance or controlling and you need to forecast travel and entertainment (T&E) expenses for the next six months across the different departments in your company, you would have to aggregate all relevant historical data across departments, which often run in silos and where sharing data doesn’t always come naturally.
In addition, you would also need to combine the historical data with various calendars of events that will require travel. Most businesses have an annual rhythm; likely, you already have a sense of the events your employees will be attending – the annual company meeting, prominent industry conferences, customer visits, and so on. But things do change, as we’ve clearly seen in 2020, which means you need to be able to aggregate all historical, new, and revised data to assess your situation at any given moment.
A consolidated view and a single source of truth
With an augmented analytics platform, all the data you need is at your fingertips. Travel plans for all areas of the business are consolidated into a single view, making it available to you in dashboards as a single source of accurate information for analysis and forecasting – without the wait.
- Segmented forecasts
This dashboard shows aggregated KPIs for a large company on the left-hand side. While these are valuable for a broad view, what’s particularly important is the segmented forecast, which breaks out spend by department.
The blue heat map in the center graphically represents the segmented distribution of T&E spend per area. The larger the size of a box, the higher the travel cost for that department – providing an intuitive view of where to expect higher travel costs in future and the ability to drill down for further details as needed.
The pie chart to the right shows the drivers of T&E costs. Here we see that customer-facing events – across several departments – are responsible for nearly 50% of spend.
- Plan versus actuals for more accurate forecasts
For staying on top of spend in real time, the line graph on the bottom is critical. In this dashboard, the three different lines represent T&E budget (top line), T&E predicted forecast (middle line), and actual spend to date (bottom line). In this case, we can see that actuals are tracking consistently with the forecast and somewhat below the budget.
Why the close tracking of actuals versus the forecast? Because the forecast is generated using smart predict technology that mixes historical and new data – providing more accurate forecasts and greater confidence that costs won’t run over budget.
By drilling down further into the underlying data (per above), it is possible to perform a detailed deviation analysis, using variances to better understand the relationship between budgets and actuals. For example, while the budget assumes that the consulting services group will spend the most on T&E, actuals show that, in reality, the sales team is doing the bulk of the spending. In this case, you would then want to adjust your budgets.
Plan with confidence and accuracy
But what about accurately predicting T&E spend? By using machine learning algorithms, patterns can be detected in the historical spend data to establish a baseline model. Then you can incorporate the actuals for what’s happening right now and run simulations based on future-looking data, such as calendars of events.
Machine learning helps you do more with less. It allows you to run through more predictive scenarios based on real-world data than ever possible with manual spreadsheet models – ensuring that you can keep an eye on future numbers, bring budgets closer to predicted forecasts, and have more confidence in your planning.
In a world where augmented analytics is becoming the norm, the role of finance becomes less about gathering data and divining its meaning and more about using smart technologies to generate more timely, accurate forecasts. As a result, you’ll have time to focus on driving business strategy and additional mission-critical activities.