Business travel allows us to get closer to partners, learn together and ultimately drive better business performance. However, despite travel and expense (T&E) representing the second largest line of expenditure for many businesses, quantifying the return on investment of this major corporate spend remains a challenge.
So what do companies want to achieve through business travel? There are common problems in managing T&E and ways to gain maximum return on investment.
The motivations of business
All too often travel management is viewed solely as the domain of the travel manager. Also the return on investment (ROI) from travel is many times only assessed through the lens of expense spending and budgeting. In reality, T&E delivers against objectives for many parts of the business and ROI takes different forms for different executive areas.
In the report 'Managing Every Mile: How to deliver greater return on investment from Travel and Expense', CEOs from large companies said that the main priority for business travel is growth — through new business meetings and client retention. CFOs will be looking for a highly efficient programme that still delivers low costs. CIOs will look for technology which integrates into their business applications and daily processes.
Given these different but connected objectives, the report calls for a holistic, unified approach to corporate travel, its management and its assessment.
New priorities
As well as delivering commercial and financial corporate gains, there are shifting priorities around T&E with more focus on the traveller than ever before. From usage of technology to duty of care, and the ability to self-service travel and expense in trip, the processes are being built around the traveller within the corporate ecosystem.
Duty of care and the traveller experience have only become present on the executive radar relatively recently. The high requirement for on-trip changes, taking place in a volatile world, means that corporations need sophisticated tracking and support for their travelling executives. Having the right support structure in place is one of the key responsibilities of a business requiring its employees to travel.
So, what are the key challenges preventing businesses from gaining a clear picture of where the travel and expense budget is being spent, and what value it is delivering?
T&E compliance barriers
On average, companies with travel policy compliance rates of more than 80% could achieve 23% lower indirect costs per traveller. The key to this is ensuring the ease of use and the right content within the T&E process. However, our research has found that 95% of executives still permit travellers to buy and spend out-of-programme. As a result, 15-20% of all bookings were found to not adhere to managed buying guidelines.
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Scanning expenses on the go is one way of streamlining the processDespite being offered by two thirds of the companies spoken to, only around 15% of employees said that they use a corporate card for their travel. This is far too low when corporates should be capturing spending for consolidation, analysis and improvement. 32% of corporations allow flights paid on personal cards before departure, leading to more expense claims than if a central card had been used.
In addition the submission and review of expenses remains a manual and sluggish process for many firms, frustrating travellers and management alike. The ability to update expenses in real-time removes the annoyance of recounting travelling costs at the end of a trip, or part way through but only 21% of interviewees indicated that mobile scan-and-send of expenses were deployed in their organisation. These tools would improve the accuracy of captured expense data. Making travel administration easier will ultimately get employees on-side.
One of the biggest drivers identified for non-compliance with travel policy focused on a disregard for flight requirements and accommodation guidelines. If corporates are not providing the right or appropriate travel content, travellers can be forced to go out of programme to keep their itinerary on track.
Automation and streamlining
A significant roadblock to achieving T&E best practice is a lack of clarity in data capture. 80% of executives told us they felt they did not have enough information to make more strategic T&E decisions.
Through the investment in the right technology and automated capturing of data, analytics and feedback, managers can receive analytic information in real-time, and tighten up their business decisions. This is invaluable for a CFO attempting to analyse out-of-programme trends that are financially damaging to ROI. It is no surprise that around 60% of executives were considering changes to their T&E systems in the next one to three years.
There is significant frustration amongst employees as a result of laborious approval procedures. Streamlining processes, like identifying regular key accounts trips where automatic pre-approval for travel could be granted, can take away an additional and unnecessary job for employees. Smart approvals can also be tied to content for booking in-trip, as well as in the sourcing and buying phases.
Proactive management to deliver results
There is no one-size fits all solution to managing T&E, but opportunities to enhance ROI are readily available to all organisations regardless of their shape or size. Proactively managing travel buying and sourcing, the consistent application of a logical, objectives driven travel policy, coupled with mandated corporate card use will result in improvements in ROI. Given the size of the spend on travel, achieving anything close to 23% lower indirect costs per traveller would be a financial win for most companies.
However, it is only when the whole organisation is involved in building the policy and when the traveller is put at the heart of the process that the universal gains, far greater than just cost savings, will be realised.
Five steps travel managers can take now
- Look at your sourcing and buying of travel and evaluate how well communicated the policy on it is and how well your travellers are using the preferred suppliers. Ask yourself the question, 'are getting they best out of your programme?'
- Take a closer look at the expense process, speak with the finance or accounting teams, ask them about what could work better and look into what can be done to make your expense process more seamless for travellers, travel managers and the finance department
- Speak with the IT department see if they have processes or tools in place on adopting technology, understand what is in the technology roadmap and how that will complement travel, secure adoption and align with enterprise IT decisions
- Take a closer look at the data you have, and the data you do not have. Use this to identify inefficiencies or oversights in the process and implement feedback loops to ensure self-optimisation in the future
- Evaluate how strategic your overall travel programme is and whether it has been built with input from all the necessary stakeholders in the business (IT, Finance, HR, and the traveller)