Tips on cutting employee travel costs

Finance tube

February 01, 2013

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A recent survey conducted by American Express found that 87% of companies are planning to spend more, or at least as much, in travelling to meetings with existing and potential clients during the next 12 months.

There is, if you think about it, an obvious reason. When it’s proving tougher to win new orders, you have to work harder to get them. That often means more sales meetings and more buttering up potential clients with business lunches or days at the races.

It also means there has never been a better time to look for ways to control travel and entertainment costs – T&E as the management accountants like to call them.

Often, T&E will be based on precedent – what people have done in the past, or what they think they can get away with. Karen Penny, vice-president and general manager UK of global corporate payments at American Express, thinks this is all wrong.

In her opinion, a comprehensive T&E policy can cut costs. This is because it will spell out what is and isn’t acceptable in travel – for example, no first class train fares or business class air travel. It also gives a company the opportunity to negotiate good rates with the likes of hotel chains and taxi firms because all employees are being mandated to use them.

But trying to impose a T&E policy before consulting with employees is likely to fail. Why? Because it’s likely to create resentment and some employees will be constantly looking for ways to get round it.

It’s much better to agree a fair and sensible policy, explains Dean Forbes, chief executive of KDS, an expense management services company. “People are smart and employees generally want to do the right thing,” he says.

“It’s incumbent on the policy to make it easy to do the right thing – and easy normally means choice.”

Of course, the obvious way to cut travel costs is to reduce the number of trips. This isn’t always possible when dealing with customers, but it can be easier when dealing with internal meetings. Even simple technologies, such as Skype, make it possible for staff to have a ‘virtual meeting’ from different locations.

Perhaps it’s time to change the old saying about it being better to travel hopefully than to arrive. When it comes to cutting costs, it’s better not to travel at all.

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