It goes without saying that an accountant’s priority is to keep costs down – even more so for mid-sized businesses that operate in such a price-driven environment as they do now. But though business travel is the second most controllable business cost, it is also one of the most complex: spending less does not always equal saving more.
A simple approach is first to define what, where and why you are spending on travel. It is worth appointing a travel manager, selecting approved travel suppliers and adopting a well-defined, company-wide travel policy. Once that is in place, there are other tips to keep costs down.
Make spending visible
During and following a recession, spending inevitably gets put on hold and budgets are snipped. However, the “trim now, pay later” ethos that applies to people also applies to travel: short-term cuts can have a long-term impact on the financial health of the company. The answer is not necessarily to slash travel and meeting spend – important accounts may be at risk if you do not get out to see contacts regularly – but learn instead how to make the budget work harder. For example, booking the cheapest instead of the nearest hotel room to your meeting may cost you more when you factor in cab fare, parking fees, airport transfers, internet charges and travel time.
The travel industry calls it “visibility of spend”: not only being aware of how much you are spending, but also what you are spending it on. It is essential that companies know how their total spend breaks down between airlines, trains, taxis, hotel accommodation, meetings and conference venues, chauffeurs and so on. Once you have visibility of spend, you can see where the savings are to be had.
The best thing you can do when it comes to business travel is to make someone responsible for it. Too often, travel and meetings expenses are an afterthought, but many organisations could be doing it more efficiently and getting better value for money if they made it a job an individual owned. Once you are aware of your visibility of spend, have appointed a travel manager and chosen your favoured suppliers, you can create and implement a company-wide travel and meetings policy.
Use agents carefully
If you are responsible for booking travel for your company and are not a travel expert, resist the temptation to use online leisure travel agents. It eats up hours of valuable time and usually incurs hidden fees. If you know what you want to book, always go direct. You will receive better service and equally good prices from suppliers. However, if the majority of your business travel is domestic, investigate rail and hotel booking agents as the opposite applies: they can save you time, often do not carry arrangement fees, and have access to a wider pool of choices at better prices.
If you manage minimal long-haul travel for your company or you are responsible for arranging trips to places with which you are unfamiliar, consider using a local business travel agent. They are equipped to deal with more complex itineraries.
Plan ahead and be loyal
Travel managers have a policy of buying three weeks ahead to get the best deal, so you can exploit their economies of scale by planning ahead. Fly mid-week or out of season, purchase a multi-city ticket rather than a round trip, bundle your flights and accommodation, buy a restricted ticket and stick to your plan rather than fork out for a fully flexible fare. And for rail travel, never buy tickets at the station: you’ll be stung for 30 to 40 percent more.
Finally, price is king but it pays if you can be loyal. Sign up for programmes that reward both companies and travellers, and use the perks to get more for your money. Most major airlines and hotel groups operate reward schemes and, thanks to the recession, these are on the rise.
A version of this article first appeared in Accountancy Age. David Chapple is event director for the Business Travel & Meetings Show 2011