There has never been more pressure on businesses to do more, and yet to spend less while doing so. Today’s successful businesses are expected to deliver a fantastic service or product, unrivalled customer care, forward-thinking employee wellness, engaging marketing and social media calendars, and unprecedented growth. What makes matters more difficult is the fact that all of this must be achieved on extremely tight budgets and with very little flexibility. For a finance director, it’s an ongoing mission to cut costs as much as possible.
One of the biggest costs to many businesses, and yet one that is vital for strengthening relationships, improving employee’s skills and expanding trade, is business travel. Whether a business trip is undertaken for meeting a new and important client, strengthening relationships with existing ones, attending an industry leading conference or training, or finalising a big deal, there’s no way around it – business travel is going to cost you a great deal of money if you’re not managing it effectively.
Part of this problem stems from the fact that most businesses miss out on the best savings opportunities when it comes to business travel, meaning their spending can easily spiral out of control before you know it. For example, in ‘The Hidden Costs of Unmanaged Business Travel,’ a white paper published by CT Business Travel, a case study shows just how out of hand unmanaged business travel spending can get. The case study focuses on a particular client whose annual unmanaged business travel spend managed to reach more than £400,000.
The key here is the fact that their business travel was unmanaged, meaning that there was no travel policy in place ensuring the best decisions about business travel were being made. Greater savings could have been achieved by simply introducing an effective travel policy that ensured business travel was booked through the most affordable providers, and that employees understood the most effective ways to book. A travel policy that addresses this can go a long way in reducing the costs of business travel.
But no matter how conservative your business travel policy is, there’s only so much you can do when it comes to finding the best available rates. Unless you’re privy to specific insider knowledge, it’s not likely that anyone within your business will know the best routes and suppliers for journeys. It’s even less likely that you’ll be operating with access to globally discounted airfares, or negotiated car hire and hotel rates, as these are not accessible when booking through aggregators.
Access to these highly competitive rates is typically reserved for travel management companies, who have the ability to negotiate competitive corporate rates with various suppliers and the valuable industry knowledge that can help a business make the best business travel decisions. Once the client in the case study was introduced to the right business travel processes, fares and appropriate online booking tools, their business travel spend was reduced by 14 per cent, or £54,000. Any finance director would be delighted to see a saving of this magnitude in any area of their business, especially one as vital and costly as business travel.
Managing the issue
As a finance director, it’s also important to understand what a burden unmanaged business travel can be on the finance department as a whole. The same client in the case study saw each of their employees making business travel purchases on multiple credit cards, which translates to an excessive number of invoices that, in many cases, are incompatible with the current systems.
This creates unnecessary and time-consuming work for the entire finance department. In such a setting where employees are responsible for booking their business trips on their own credit card, the burden falls to the finance department. The result is an astounding workload for finance employees, consisting of reconciling large quantities of invoices, processing expenses and issuing reimbursements without an end-to-end auditable trail.
Furthermore, when costs are spread across multiple credit cards and systems, it’s virtually impossible for a finance department to monitor the actual amount of money being spent on business travel, meaning it can easily spiral out of control. The solution to this issue is to consolidate the entire process and provide that all important end-to-end auditable trail, as well as provide one central reporting function that provides cost-saving recommendations consistently. This also allows a business to see what its current business travel spend is, making it possible to stick to budget and not overspend.
When unmanaged business travel is transformed into a streamlined and managed travel process, it doesn’t have to be a huge cost to a business or a burden on the finance department. Instead, it can be a way to expand business, gain valuable clients, increase valuable employee skills and act as an avenue towards making money.