Today, business travel has become a key attribute for opportunity generation, business development and other activities that drive revenue and retention. Travel is an investment that can prove to be costly sometimes. On average, a business spends $5,890,500 per year for 500 employees. Business leaders are seeking the best opportunities to reduce T & E expenses. While significant savings can be achieved through automated expense report software, most businesses have relied on these three best methods to improve T & E cost control:
Using industry benchmarks to identify savings opportunities
Enforcing T & E policy in a strict way
Method #1: Industry benchmarks
Industry benchmarking standards can help businesses reduce T & E costs. They can help gauge progress towards expense reduction. This process will increase the visibility over company behavior; allowing the organization to figure out anomalies and identifying savings opportunities. The internal benchmarking data will include:
Spending data by individual, business unit, trip, project or other categories
Cost information for frequently traveled places
Policy compliance information
External benchmarking information
Benchmark information provides visibility and helps you to understand the cost parameters, trends, and policies. To get more value, external benchmark information should include:
Cost data for frequently-traveled locations
Airfares for both domestic and international flights
City-specific hotel costs per economy, first class and deluxe properties
Guidelines for spending caps, and per diem rates for specific locations
Method #2: Centralized control
Centralized control will help organizations improve cost control. Advantages include:
Negotiation with vendors
Valid insights on spending patterns, policy compliance and trends
Streamlining operations and increasing policy compliance
Automated T & E management
Enhanced visibility is the most important advantage of automating T & E management. To get maximum control, you need to gain visibility over various perspectives such as:
Costs per trip and day – this data would enable organizations to evaluate transportation options and make better business decisions about the ROI.
Airfares for rooms and car rentals by cities – this data would help organizations negotiate with suppliers, target the right suppliers and maximize discounts.
Cross departmental/company spending – the system should track spending across the organization so that the data can be helpful for future travelers.
Project costing – the system should assign costs to specific projects, tasks and clients so that the organization can increase control over planning and budgeting to improve profits per project.
Method #3: Enforcing T & E policy strictly and enforcing compliance
A successful T & E program depends on sound and up-to-date policies to guide employees and curb unnecessary spending. High-performing organizations have good policy compliance rate when compared to other industries.
Improving policy compliance
Good practices can help organizations achieve higher policy compliance rates. Since each organization will develop policies that suit their needs, business travelers should make use of these practices to improve compliance. Centralized monitoring and creation of reasonable, fair and understandable policies can improve compliance.
Impacting employee behavior
You need to educate employees about the T & E policies to improve policy compliance. Introducing programs and sessions focused on the employees and T & E programs is important.
Employee training is required to make sure all employees understand the policy and preferable vendors. Policy enforcement is critical and managers should know how to clear out gray areas in the policy, adjust employee performance and abide by compliance. Also, using corporate cards for business expenses can help prevent expense fraud by avoiding submitting duplicate expenses.
While monitoring process control and fraud, auditing proves to be an essential metric to improve compliance and identify areas where policy compliance is low, so one can determine policy changes if required. Illustrating the reasons for low policy compliance helps you make adjustments to the policy based on these criteria.
Executing best practices
Best practices can help organizations reduce T & E spending. Industry benchmarks can help organizations understand current costs, spending patterns and policy compliance. By adopting these methods in addition to considering expense report software, one can easily track the improvement and measure the progress.
This post is part of our contributor series. It is written and published independently of TNW.