Managing travel spend in today’s business world

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    As finance leaders know well, business travel is booming. And that puts controlling travel spend high on your priority list.

    U.S. employees currently take about 405 million long-distance business trips per year, and global travel spending is set to hit $1.7 trillion dollars by 2022.

    Plus, when your company is in growth mode, travel spend – your second largest controllable expense – will naturally tend to increase, explains travel authority Jack Reynaert.

    With more travel spend comes a higher need to successfully manage that spend. So, how can you fine tune your process and keep costs manageable? Here’s insight that Reynaert delivered at a recent IOFM conference:

    1. Reduce rather than eliminate

    Since travel will continue to be critical to business growth, it’s better to cut back than cut out aspects completely, Reynaert advises. Have your team look at data and assess where you could reduce things like:

    • employees per trip (Do you need to send four employees for a client meeting? Could two or three accomplish the same goal?)
    • frequency of trips/meetings (Are in-person meetups needed monthly? Could they be pushed to quarterly or sometimes be conducted via a video conference call?)
    • transportation service class (When could you use economy instead of first class or rideshares rather than Black Car services?), and
    • lodging category (Can you transition from upscale to midscale hotels, so you’re not overpaying for unnecessary amenities?).

    2. Increase involvement and communication

    If each department has its own travel budget, talk to your finance team about establishing a level of competition companywide, Reynaert says. Your team can rank each department, share the standings and reward positive behavior. For example, if Sales was under budget last year, their travel budget may increase by 1% next year.

    In addition, your team can inspire more positive behavior by offering guidance on a regular basis. Departments will be more likely to stay in budget if they have access to cost savings tips in your policy, online, etc. And routinely pushing out tips via email or during meetings will keep travel spend top of mind.

    Last but not least: Be sure to work with specific departments that may have budget challenges, Reynaert recommends. Have your team refer to departmental rankings to see which ones may be struggling.

    3. Show you’re serious

    Though you want to be flexible when you can with travel spend, in the future, it’ll be important to rethink just how strict your travel policy is.

    The proof: With a suggested policy, Reynaert’s company saw savings of 14.2% per year. But when employees had to adhere to a mandated policy if they wanted reimbursement, savings jumped to 22%.

    Consider your own travel policy and ask questions like:

    • Do employees view it as a firm rulebook or just a guideline?
    • Should policies be solidified or spend limits tightened up?
    • Is reimbursement refused when employees skirt policy?

    Then, talk with your finance team, who’s enforcing policies and auditing expenses every day, about what they see on their end. Their front-line experience and your big-picture perspective will be a winning combination for a stronger travel policy.

    The post Managing travel spend in today’s business world appeared first on CFO Daily News.