Travel expenses are a big ticket item, if you’ll forgive the pun. The Global Business Travel Association (GBTA) estimates that by 2022, global business travel spend will reach £1.7 trillion. Meanwhile, corporate travel expenses are widely reported as accounting for at least 10% of a company’s annual expenditure. When you’re working with such large sums, even a small percentage of wastage means a substantial cash amount in practice, directly eroding overall profits.
Of course, businesses are well aware of this. That’s why they often have large teams of analysts and administrators policing travel and expense bookings and claims. Minute scrutiny of claims and vigorous enforcement of a corporate travel expense policy has historically been the most effective way to detect out-of-policy expenses, mistakes and fraud.
But big teams, complex processes and multi-level approvals cost money and time.
It may initially be obvious how companies can reduce travel expense costs such as flying economy instead of business class, limiting daily subsistence spend and generally planning ahead to get the best rates. But restrictive policies end up constraining business productivity and growth if employees struggle to make necessary journeys in real-world conditions. Either they spend too much of their time trying to find routings and accommodation that are compliant, or they write off trips that could deliver ROI, because they’re too difficult to plan and book.
So this blog considers some other ways to avoid wasting your company’s money on travel and expenses:
1. Move to a dynamic travel expense policy and automate it
Do you have your organisation’s travel expense policy to hand? Thought not. Chances are, it’s a lengthy handbook or PDF buried deep in a shared drive with many pages and a lot of fine print. In an attempt to control travel and expenses, policies have become meticulously detailed, embracing every conceivable situation or question and prescribing exactly what’s permitted or not. That makes them inflexible and counter-productive in real-life business situations.
A dynamic business travel policy adapts depending on the circumstances of the travel and what return is expected from the resultant spend. Staying outside the city in a hotel airport that is within budget will not always be the right decision for either the company or the employee. Just as an out-of-budget Michelin starred meal with a client may actually be appropriate given the business is about to receive a multi-million pound order. Dynamic travel policies give people responsibility and empower them to make decisions that ultimately benefit the business and support revenue and profit. They’re based on real-time travel, expense, customer and revenue data already held in your business systems.
2. Enable relevant, real-time reporting
Knowledge is power in corporate travel management. Your travel and expense data holds insights that show you how your company expenses are tracking and highlights trends and patterns to focus on repeating or reversing.
Automating these reports clearly frees up staff time rather than bogging them down with time-consuming, manual reports that are out of date before they can be used.
Some corporate travel management systems go even further, powerfully combining travel and expense data with sales and operational data, to show ROI on your business expenses. That means you always have a clear picture of cashflow and profitability – and an understanding of how expenses contribute to revenue and overall business growth.
How does that save money? Firstly, your team saves time used for manual processing and error correction, reducing staffing overhead costs or freeing people for higher value work. And informed by the real-time data, you can react immediately to control inappropriate spending or to improve supplier terms and options, saving yet more.
3. Make it easy to make the best choices
Staff naturally prioritise their own comfort and convenience when planning and booking business travel. It’s easy for spending limits to be treated as targets, with employees aiming to book the most expensive hotel or travel class that’s permitted. You can hardly blame them. Business travel is tiring and a drain on personal time.
But providing an online travel booking system that offers integrated travel search, ticketing and expense management, can help to improve employee travel experiences. Through the instant analytics an integrated system provides, it can help to determine if and when it’s appropriate to make exceptions, to accommodate unforeseen or unusual circumstances where the travel or expense is in the overall commercial interest of the business.
Transparent sharing of information can also motivate good choices. Generally speaking, employees understand that it’s in their interests to work for a profitable and stable business. If you can show how expense and travel spending impacts the health of the business in a way that matters to employees – for example, in relation to available bonus or investment funds – they will better understand and embrace the rationale for your travel expense policies. This approach means every member of staff will be engaged in prudent travel cost decisions, not just the team that manages travel budgets. With everyone’s buy-in, travel costs will reduce.
4. Adopt continuous learning
Use the earlier discussed real-time reporting to monitor performance and anticipate trends and changes, both in employee behaviour and spending and in supplier costs and terms. A comprehensive travel and expenses dashboard makes it fast and intuitive for corporate travel, finance and operational managers to interrogate and drill down into data.
Integrated travel and expense systems that provide this make the dream of accurate travel budgeting and travel forecasting a reality. Predictive, actionable insights also enable you to adopt a continuous learning approach that means you’re always actively noticing and addressing potentially unnecessary spending. For example, reducing the risk that a price increase or a new behaviour adopted by employees will slip through the net and rack up unwanted costs.
5. Reconsider whether you need a travel management company (TMC)
Many companies commission a travel management company to act as their full-service travel agency. Employees can call on them for help with travel searches and trip bookings – and call on them for support whilst on the road.
However, this travel booking and phone support naturally comes at a cost with TMCs charging fees for individual bookings and financially penalising cancellations or booking amendments.
The newer breed of corporate travel and expense systems act as an online travel agency as well – providing an integrated application for trip searches and automated expense management. So ask yourself whether or not your organisation can justify the cost of a TMC who charges for the same thing that can be done through an online application. All as part of a single licence fee. If you can’t, significant cost savings can be made.
I’m confident these five areas demonstrate the less obvious ways to avoid wasting money on travel expenses and why the newer technologies of late are game-changers for corporate travel management. With the right tools and processes, companies can not only make booking work trips a consumer-like experience but they can more efficiently govern spend and take a dynamic approach to travel budgeting. In turn ensuring business travel is a growth enabler instead of a revenue drain.
To find out whether you could make savings with your travel and expenses technology, visit our calculator for an idea of how much.