In my 20 years of practice, I have always been amazed by how poorly corporations have managed the back office of travel management. It's often been one great salad mixture of tools and processes from central billing, corporate and individual cards, direct debits on file payments, with a salsa of accounts payable, e-invoicing, expense management tools and complex general ledger rules, not to mention audit, fraud and Sarbox (the 2002 Sarbanes—Oxley Act) obligations.
Not a very tasty recipe, but a guarantee for a heavy stomach burns and a complex digestion process, particularly when the time comes for account reconciliations, financial year closures and budgeting for the forthcoming year. Not to mention negotiations and savings measurement.
Given the rise of the digital and shared economies, the new business models we are confronted with and the dependencies we are developing toward our second brain, ie the smartphone, having a payment strategy becomes the cornerstone to support a management strategy for T&E and Mice.
Let's spend a couple of minutes looking at the issues with which we are confronted for a simple trip.
- Bookings and reservations: one invoice per trip from the TMC
- Hotel stays and car rentals: one invoice per service utilisation from the service provider
- Taxi and other means of transportation: one receipt/ticket/invoice per service utilisation from the service provider
- Food and beverages: one receipt/invoice per service utilisation from the service provider
- Trip to and from the airport declaration on utilisation of personal car according to company and applicable tax ruling
- Parking charges one receipt/invoice per service utilisation from the service provider
- Telecom/internet charges from monthly mobile operator bill or alternatively one receipt/invoice per service utilization from the service provider
As the table below shows, a total of seven supporting documents will need to be processed by both the traveller and its company to get them settled, reimbursed and into the general ledger.
What means of payment do we use? Well practically all the forms that exist from the standard invoicing process and card payments to cash to reimburse out-of-pocket expenditure.
In addition to processing costs, the cost of processing an invoice will vary from €5 to €25 depending on what studies you are looking at, and an expense note from €10 to €40 whether you are "state of the art" or "brick and mortar", the total cost of the trip will not be at your disposal, as a manager owner of the budget for an average of 90 days, being the average time to process everything. The picture is the same for the other stakeholders such as travel managers and travel buyers alike; the spend information is not at the fingertips and scattered in different formats within companies' information systems. We talk a lot about disruptions, frictions and innovative approaches, but this is a major one required at the age of the Big Data.
Imagine for a moment, negotiating your agreements with only 75% of the required spend information at hand? Impossible, really, and this is why we mostly rely on other sources of information to secure our dealings. The two minutes are over…
In a recent survey of 183 travel managers and buyers in October 2014 and presented at the GBTA Berlin conference, we found the major data sources dependencies to be
- TMCs 98%
- Airline suppliers 68%
- Hotels suppliers 73 %
Moreover, only 34% of the respondents, with an average travel budget of €34m had consolidated data from multiple sources in a single data repository.
For this latter point, we traditionally complain that the various data feeds come from multiple supports, in different formats, from different sources and at different times and furthermore that data cleansing is too time-consuming, we have better things to do…
But how many of us, have a data interchange agreement as part of our contracts? What is this? Is it new? Not at all, it has been in usage in many industries for production purchases for years, under the umbrella of the EDI (electronic data interchange) between trading partners.
What it means is formalising the relationships between contractors, within the frame of common business development, by defining governance, rules, data content, formats and frequencies over the length of an agreement, in other words having a mutually binding strategic vision of the relationship. This sounds like consulting talk, and yes, it is.
If data is supposed to be the new gold of the 21st century, we need to handle it seriously too.
What does this have to do with how we pay and a payment strategy? Well it's simple. The money exchange between parties is the only evidence that the products or the services have effectively being interchanged between the parties, whatever form it takes and support document it uses. We are not any more talking about an intent to purchase, but a purchase made. For the information to be valid, there is a need for certification; this is when a payment system is required to "clear" this point. This is where your payment strategy comes into force, you need to harmonise it, simplify it and publish it.
Common sense quiz, should you have different organisations managing
- Your lodge/ghost account card programme
- Your individual/ corporate card programme
- Your virtual card programme
- Your purchasing card programme
- Your mice card programme
- Your fleet card programme
- Your petrol card programme
- Your cardless card programme (Apple pay, Google pay and more to come using NFC technologies)
If you say yes, you can stop reading the article at this point. If you say no, then start thinking about these tools, the payment cards, can under one global umbrella programme assist you in improving both data availability and quality and develop a credible data management system.
Not to forget creating some economies of scale.
Of course, you will have to organise yourself and define objectives, map your organisation and validate its stakeholders requirements, establish a plan, perform risk assessment and SWOT analysis, calculate a ROI, define a business case, convince your management, tender and contract, manage the solution deployment, find internal allies, communicate your plan, facilitate the change, interface solutions, enforce policies, integrate data streams in a secure mode, support users, face bottlenecks, resolve issues, continuously improve and administer your programme.
But at the end of the day you will have achieved a major step in improving the data quality of your travel programme by having defined your standards.
Would this resolve 100% of your current problems? No, but at least 80%, so that you can concentrate your energy on the remaining 20%.
Of course, there will be some resilience, some issues on data protection and data privacy regulations and changes in the market such as the recent issue in Europe about the capping of the interchange fees. This is having an impact on the economics of non-corporate cards, by the way, which has already been implemented in the USA in 2011 and more recently in Australia. This latter point did not result in favourable consumer benefits, as planned, but we saw a "pass-through" cost increase to the cardholders, sic transit gloria mundi…
I am sure your favourite card brands will intensively communicate their despair on this topic in the following months, some shadow remains into the definitions of corporate, business expenses and company liabilities in the new EU plan.
But after all we are talking about a tool, with requisites and benefits, and data have a price, there is no free lunch, whatever the new economy is trying to make us believe.
As a conclusion, solutions are there, tools are there, technologies are flourishing, why should you wait?