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Flight Centre Business Travel has identified red flags to help companies avoid overspending
With business models becoming increasingly global, companies are spending more to send employees across the world. The Global Business Travel Association predicts that, by 2020, the business travel industry will have ballooned to $1.6-trillion in value.
There is no doubt that face-to-face meetings and business travel are crucial to grow a business. However, in-person meetings can create a serious drag on a company's bottom line.
How does a company know when it's spending too much on business travel?
Flight Centre Business Travel brand leader Andrew Grunewald identifies red flags to help companies avoid overspending.
You don't have a clear overview of your spend
Without a clear overview of total travel spend, a company may not even realise how much it spends on change fees, taxes and visas. Items such as baggage fees, breakfast and airport parking can also add up to substantial amounts.
Grunewald explains that, by defining procedures for travel and expense (T&E) management, companies will be better positioned to analyse costs and see if budgets are accurate.
“That will help identify who is spending what, and on what, and [reveal] travel trends and savings opportunities,” he says. “Without a T&E management protocol, you have no meaningful way to benchmark.”
Your employers lose time booking independently
You might think that tackling travel bookings on your own is a great way to cut costs, but have you considered what the wasted hours trolling the internet for the best price are costing you? And are you sure you secured the best deal?
Recent statistics suggest that, on average, corporate travellers spend 20 minutes reading hotel reviews before making a booking. What’s more, the cost of getting it wrong is more than paying a change fee; it’s the wellbeing of the traveller that is affected – the person whom you’ve entrusted to close that important deal for the company, whose performance and morale are now affected because their travel plans have been unexpectedly disrupted.
Says Grunewald: “Working with a travel management company cuts out the time investment and allows your employees to focus on what really matters. Having a dedicated travel manager is like having your own travel personal assistant.”
Your employees seem to overspend on 'small' luxuries
With employee overspending accounting for up to one-third of the T&E budget, it is vital to nip bad habits in the bud. An unnecessary upgrade here, a few drinks from the hotel mini bar there – such seemingly harmless expenditures can sabotage a company’s travel budget.
The best way to avoid employee overspending is to make sure employees are well informed. Unintentional overspending occurs when employees are unsure which airline or hotel they are allowed to book, or if they don’t know what the company considers to be an acceptable travel expense.
Says Grunewald: “Companies need to make sure they have a clear and concise travel policy in place that offers guidelines on entertainment allowances, changing or cancelling flights, or what travel classes may be booked. Having a travel policy in place not only provides boundaries and clarity but also ensures the traveller’s wellbeing while on the road.”
Your cash flow is compromised
Do not put your company cash flow under pressure unnecessarily. Opting for an interest-free credit account is a straightforward way to help your business save money. Instead of a company receiving receipts, invoices and expense claims from all angles, the finance department will be issued with one, consolidated invoice that indicates the total travel spend.
“FCBT offers its clients several flexible payment choices including travel lodge cards and billbacks, to make sure their cash flow is not affected as a result of their travel requirements.
"Over the past few years, we have seen the demand from our clients for travel on credit rise. A 30-day payment option can offer small and medium-sized enterprises much-needed breathing space when it comes to the payment of their travel requirements," says Grunewald.
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You’re not sure when to book to get the best fares
Did you know that companies can save up to 21% of their travel spend by simply booking flights in advance? Business travellers can pay up to 200% more for airfares purchased one day out from travel.
A professional travel management company provides invaluable information on the intricacies of travel bookings, which can help a company save. A travel consultant will, for example, tell you that opting for semi-flexible fares will save on the change and cancellation fees you would have incurred when booking fixed fares.
They will also advise that return fares offer better value than one-way tickets and that it is possible to decrease the cost of an airfare simply by booking different cabins for various legs of the journey.
You haven’t negotiated agreements with your suppliers
Negotiating preferred agreements is a smart way to reduce company expenses, but if the thought of negotiating with airlines and hotel chains gives you anxiety, partner with a reliable TMC.
Says Grunewald: “By teaming up with a travel professional, you can piggyback off their existing relationships with suppliers and their global buying power, benefitting from reduced rates and special privileges, such as not having to pay a hefty deposit when you rent a vehicle.”
With business travel rated one of the five most significant expenses for a business of any size, it is vital for companies to avoid overspending.
Grunewald says: “Flight Centre Business Travel can offer you insights on whether your company is overspending on business travel and give you the tools to make significant savings.”
This article was paid for by Flight Centre Business Travel.