Ways cfos can reduce business travel expenses in 2019 Essay

With over-employees accounting for one third of the business budget and 15% of corporate fraud at the cost of counterfeiting, the most tangible control of T & E is a priority for most senior financial advisers. In fact, a poll conducted by the finance director found that 69% of respondents considered their businesses could benefit from greater control over travel and spending. When a study by J.P. Morgan finds that travel and expenses are the second largest operating cost behind the salary, you have to ask what the other 31% means. More than $ 1.2 trillion will be spent globally on business trips this year. It is very (roughly equivalent to the GDP in Australia). It's too much There's reason to believe it, and hundreds of billions. Essentially, the business travel industry has spent more than a trillion dollars of scattered "foreign money". Every time a purchase is made is not the payer, there is a problem with improperly adapted incentives. It is not because employees are trying to spend a lot on business travelers, precisely because they have no reason not to do so. If someone is reimbursed anyway, they are unlikely to get out of their way to save some money. Even when employees adhere to the company's travel policy, they tend to spend on their maximum pay: no one is a volunteer for the airport bus when it can fly the business class. These missing savings opportunities are added. Small potatoes? Hard. For a typical organization, the senior partner consumes one-fifth to one-third of the total travel and spending (T & E) budget. According to a study by J.P. Morgan is the second largest operating cost of T & E in the salary balance. Undoubtedly, excessive use of business travel is a big problem. But, more and more, it seems that it can be solved. Carrots, Sticks, and Travel Costs Traditionally, companies have had two options to meet the high travel costs. They might accept excessive employee spending as the price to do business. Or it could try to reduce costs with tight spending limits and restrictive travel policies. The first option resulted in the final result, while the other increased the employee's discontent and turnover. However, there is a new paradigm that appears in corporate travel management, which depends on carrots and not on pallets. Instead of punishing employees overtaking excursions, many companies choose to reward those who save. Cutting costs without disturbing employees is attractive and unrealistic. In fact, several products that promised to let companies "have cakes and eat them" turned out to be semi-baked. Many of these attempts have fallen under the umbrella of the company's approval, the application of the elements of the game to business processes, to influence the decision-making decision. Points, marks, and other types of recognition seem to be rewards, which in theory can motivate employees to make a desired action, such as booking an affordable flight or hotel. But this theory has grown to the reality of human nature. Business travelers are nothing if they are not people. They act for their own interest and, understanding, understand their comfort and convenience when booking a trip. The digital gamble offering does not compensate enough employees to save them. How Much Do Employees Overspend On Business Trips? If you are similar to other small and medium-sized businesses, excessive staff can account for nearly one-third of the travel agency and the cost budget. It is unfortunate that companies have to incur excessive costs and non-conformities. And when cities like San Francisco cost around $ 550 a day (food, accommodation and transport only), small and medium-sized businesses need to make sure that money is used wisely and that the main return on investment is obtained from travel Business. According to Dan Ruch in Inc., nonconformity is consistent with business travel because employees have little reason to spend easily. Dan Ruch's solution? Give employees a reason to spend modern scholarships. Your Rocketrip platform generates individual car budgets and allows employees to keep half the money they can save. Financial incentives may be the time to encourage compliance, but companies still bear costs, just on another front. After all, employees pay to reduce their expenses almost a solution to the conflict. Where does the spending go? BCD Travel was set up with industry forecast 2019. Global transport: costs will increase this year. See what's on the horizon for travel prices so you and your financial studies can start to work now to keep costs down. flights Forecast: Business and economic class prices of regional flights are expected to increase by 1%. And, in general, the average rate will increase for both regional and international flights. Tip: With travelers and managers you can not stress enough to book ahead. How soon Reservation with more than 22 days in advance is the most common, says Egencia's research. It's a good idea to review your policies to see if there is any indication of when or how your travelers need to make reservations. hotels Forecast: Hotel prices will grow 1% -3% next year. Tip: To counteract the cost of general price increases, employees should see if they can eliminate other rates. Often, additional commissions are not listed, so experts say the best tactic is to attract travelers to call the hotel directly to see what rates should apply and if someone can quit. In order to encourage travelers' efforts, you and other managers can recognize (through the company bulletin, personally, with gift cards, etc.) those who receive several tariffs are resigned each year. He is a winner: the economies the economist has requested will be published, and the travelers will receive a grateful gratitude. rent of cars Expectations: a 2% -4% price increase is expected, as rental companies will increase their corporate rate in 2019. Tip: BCD Travel recommends all (travelers, managers and A / P employees) take a look at the earnings to ensure that employees are not misused for unnecessary fit. For example, if there are extra charges for one day, they should check if these supplements are used for a few days. And, in general, you can also remember employees and administrators of travelers who read carefully the contracts for any unexpected term. So how can CFOs reduce travel expenses without paying employees to do so? Below are three ways CFOs can reduce travel expenses. Ways CFOs can reduce business travel expenses 1. Assign accountability at the right level Few would argue that more support is needed for management so that cost management works to succeed. In particular, the Directors-General involved and the final directors can contribute to informing the political nature inherent in these tasks and can provide fundamental energy and motivation. However, from our experience, the commitment of CEOs is not sufficient for itself, especially in a period of growth, when, of course, it draws attention to other measures. On the other hand, the most expensive innovation takes place at a very small and practical level. Thus, cost savings helps managers find specific groups or individuals responsible for them, quickly identifying and managing pockets at the expense of management. Take, for example, the cost-saving program of a multinational high-tech company. Initially, the CFO did not have much information about who was responsible for costs. The profit and loss account (P & L) was reported only for commercial units based on products, although geographical sales units have higher costs. This lack of detail has made it very difficult to attribute responsibility for reducing total costs. E.g. If the cost of sending an activity unit increased from one year to another, it was difficult to determine whether this is due to the behavior of factory deliveries or costs incurred by the sales organization at the same time. Time of delivery to third party customers. To address these issues, the company redefines how it collected and informed the information, ensuring that the costs for each of the 100 organizational units were broken down. It helped administrators quickly identify two headquarters units and a sales organization responsible for the highest cost increases. Together, executives have made a plan to control future costs. Among other things, the plan allocated control over the costs of over 60 organizational units separated by the company. This approach has ensured that the people who managed the costs were the closest to the decisions, which could ensure that the cost management did not affect the company. It is important to note that process planners using programs such as Six Sigma enhancements tend to be the wrong choice for managing cost-effective programs. In general, they do not have enough content and powers to make complex commitments in areas that often require detailed knowledge of the costs and the ability to generate estimated subjective estimates of cost reductions. Only a sales manager level person has the in-depth knowledge and authority to decide whether it is really necessary to travel to a client meeting during another video conference. These conscious cuts are more supported because those responsible for them can be responsible for appropriate incentives, such as performance appraisals, that assess both costs and business. 2. Focus on how to cut, not just how much Cost reduction programs often lose their effectiveness over time, as top management tries to achieve overall cost reduction targets ("How much do we hold?"), But then decisions are made for some administrators to achieve these goals. take the necessary measures to control the costs. Although this is the case in some cases, we have seen too many cases where number management has led to erroneous decisions, such as delays in critical investments, cost changes from one accounting category to another, or even reduction costs. that it would directly undermine the generation of income. It is clear that the advantages of reducing these costs are obviously illusory, short-term, and sometimes harmful to long-term value creation. A more permanent approach involves how people think about costs, for example by entering new policies and procedures, and then modeling the desired behavior. When a business announces, a new travel policy says top managers need to bring their activities, such as using aggressive video conferencing, instead of traveling or eliminating catering. for personal meetings. Even as simple as not giving sandwiches to lunch meetings can be part of a behavioral pattern that points to a real and lasting change. And by reversing this type of behavior when the economy resumes, sending the message returns, administrators only have to model the costs they are going to follow. If they know that they will eventually restore catering services to their personal meetings, it may not be better to cut them. Points of interest are important. There are some external actions that can be difficult to get, but if they are available for example in travel expenses, they may allow administrators to compare the performance of different entities and identify actual differences and discrepancies that may not be in line with the organization's global strategy. Internal references are more easily accessible and have a good vision, especially because administrators are more likely to understand and correct the differences in organizational organizational units than the different companies represented by external references. The international equipment manufacturer combined two perspectives, analyzed the main cost categories and developed both internal and external references. Through external use of journeys, drivers found that the company's travel expenses were higher than those with a pair employee and a percentage of income (Exhibit 2). They then set an aggressive target to reduce travel costs and made efforts to make new travel policies for hotels and flights. Managers, who need better education for their travel policy organizations, have also been identified by managers through internal organizations (eg departments, business units, or locations) to investigate internal controls. In addition, they increased their commitment to the monthly performance of each unit to measure compliance and encouraged inadequate performance distributions to drive travel costs more aggressively. Efforts changed travel behavior throughout the organization, as suburbs shared best practices. 3. Organize your travel program Systematic is important for an effective business travel program. Simplified booking, approval, expense and risk management processes increase the speed of travel management. Systematization also enriches travel guides with a consistent overview of how travel policy works, so that any improvements are consistent with the data. In addition, a systematic business travel program will ensure that your business fulfills its service obligations and operates with sufficient risk management to protect itself against financial and legal damages. For example, travel planning platforms, such as the Travelport Locomote automation devices that alert tour operators about exit, make requests for high-risk destinations and provide updated security information. 4. Plan ahead — make sure to book flights and accommodation as early as possible We understand that sometimes a gout trip is part of the business. However, we usually recommend that companies start the booking process as soon as the trip is marked and its purpose is in the newspaper. The clear purpose of the tour is to help companies make reservations to their representative's needs. It's also more profitable. The first reserves may vary significantly on monthly accounts. Avoid last minute reservations, if possible, and ask your employee for the same approach. This will allow you and your business to travel more with the same budget. 5. Be faithful to airlines If you are not yet a member of the frequent flyer program of the airline, register! These programs are the ideal way to deal with business travel costs as they provide good incentives for business travelers. Basically, the more loyal you are to an airline, the more improvements and benefits you can get. From a home perspective, Qanta offers priority check-in and extra luggage, as well as Virgin Australia's enhanced seat and tourist options. When you travel internationally, you can get Singapore Airlines credit points when you book a hotel with one of your global partners and Cathay Pacific offers free access to the international airport exit worldwide. If your employer decides to issue a corporate credit card tailored to the payroll program, you will also receive discounts, prizes, and shopping credits that will save you money on future flights. 6. Harness the power of virtual meetings to service clients Undoubtedly, face-to-face meetings have a greater impact in proportional terms. Generally, people's meetings improve the report, mean greater commitment, and allow people to face emotionally smarter challenges. And even if it's true, it probably won't make a billion dollars for Skype companies, Google Hangouts, or other video conferencing solutions. It is a proven, proven and highly affordable tool. A tool that, when used well, helps a company keep in close contact with customers, solve problems, and organize new offers. Why not explore previous meetings that require travel, and consider whether there is enough easy conversation with the right people in your organization? 7. Create your own business trip Although smaller companies usually do not have an official travel policy, we can say that this segment is most affected by revenue transfers. In any case, companies need to codify large and small procedures to control the budget of a balloon trip. In addition to booking time and travel, if it is really useful, provide personalized tourist instructions. Consider payments based on doors, meals, customer costs, preferred travel service providers, and transport policies. The budget is at your discretion, but often the implementation of policies can control costs and offer greater value to all stakeholders. Unclear rules save your stress and therefore your employees can plan their safety in relation to the company's wishes. 8. Renegotiate for better corporate rates with flight vendors or hotel chains Your business often travels to the same destination and chooses the same hotels and airlines. Or perhaps there has been a growing season and a new market is open to increase the last traffic in the region. As for the previous one, see if you can turn to a regular vendor and negotiate after a stable check to get a better position on the back. In the latter part, discuss travel forecasts with travel service providers and improve the agreement that warms up. If this is not the first market expansion, point to the growth of similar trips to the markets it enters. If your business is too small to get a better deal, try working with a company that has already negotiated at a better price for the region. Cooperation with smaller companies can help to improve the shared value of hotels and tour operators. This solution is suitable for small businesses and even for people who often travel to certain destinations.

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