The MacNair Travel Leadership Blog

Corporate Travel Mistakes: The Silent Bottom Line Killer

Posted by Mike MacNair on Jan 19, 2016 12:00:00 PM

Corporate Travel Mistakes: The Silent Bottom Line KillerIt’s the start of a new year, and inevitably, everyone wants to start the year off right with a new exercise regimen or a renewed commitment of healthy eating. What about a resolution to avoid mistakes that can negatively affect your corporate travel program?

Often, the corporate travel mistakes that are made by businesses are the result of an unmanaged or undermanaged travel program…and these mistakes negatively impact a business’ bottom line. Because specific items aren’t often talked about and quantified, the organization isn’t analyzing them. As a result, the impact is unclear, and the actions required to address any opportunities aren’t normally taken.

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This year, let’s tackle these potential travel mistakes head-on. Here are the top five silent bottom line killers that we’ve seen in the small to medium sized enterprises:

1. Failing to assess travel program value

A critical question that every business needs to ask itself regarding their travel program is: How do we compare to others with regard to value? For example, am I getting the same or better price on airfare, than my peers? More often than not, the businesses that we work with don’t know what their average domestic fare and international ticket cost is and how it compares vs. similar organizations. They live in the “…gray twilight that knows neither victory nor defeat” as Theodore Roosevelt once said.

The first step to ascertain value is to establish a benchmark- a starting point of where their ticket costs land. Once this benchmark is established, your business can judge whether they are improving or not based on that number. Here at MacNair Travel, we compare our rates through Topaz International, an organization that provides unbiased rate information. In fact, one metric that we use often is our average ticket cost compared to others. We’ve found that for domestic airfare, the national average ticket price was $572. By taking a fare and fee approach, our clients paid an average of just $447 per ticket – a savings of $125 per ticket. If you’re tracking the data, you can easily see positive or negative results and adjust your program accordingly.

More often than not, without detailed analysis, organizations choose to do little or nothing to manage the value piece – and it’s one of the biggest mistakes we see.

2. Reduced employee productivity

It’s vital to understand how productivity is affected when employees work with an unmanaged or undermanaged travel program. Unlike booking a personal trip, there are many different steps that need to be taken when booking corporate travel. Once an employee is asked to go on a trip, they need to look up fares, get the flights approved, book the trip, make changes, possibly change it again, and then complete all of the necessary paperwork for expenses. Industry knowledge says corporate travelers often change travel details 1.75 more times per trip compared to changes they would make with personal travel arrangements. In fact, a recent survey done by the I.B.M. Institute for Business Value Analysis found that almost 40% of business travelers spent at least two hours shopping and booking their airline travel.

When we talk with our clients about reducing costs and improving productivity, we recommend using travel and expense management automation to effectively streamline this process. The technology that’s available right now to simplify everything from online booking to expense management saves business’ time and money, ultimately giving employees the ability to do what they’re being paid to do, not booking their travel.

3. Missed cash flow opportunities

A third item that can kill your bottom line is the missed cash flow opportunities that result from unmanaged or undermanaged travel. In addition to streamlining productivity as defined above, cash flow can be improved by picking the right payment system for travel. Some businesses have chosen to work with a credit card company that provides them the opportunity to extend their cash flow without incurring interest.

American Express offers corporate credit cards that can be used to manage cash flow, but also reduce processing costs, earn incentives, streamline approval processes, reduce risk and provide information on spending. For example, with the American Express Corporate Credit Card, your vendor receives payment immediately, but the full corporate credit card bill does not need to be paid for another 30-60 days, therefore providing extra cash flow opportunities for your business.

4. Lack of Safety and Inclement Weather Protocols

Ultimately your people are travelling for a purpose – to close an account, perform a service or attend a meeting. The last thing you want for your road warrior is an unexpected “hiccup” in their travel plans. Poor safety can result from using an inappropriately staffed TMC, or by working directly with suppliers who, understandably, have other things on their mind. These seemingly minor service mishaps can have a significant impact on your road warrior’s travel and in effect, on your overall business.

In addition, weather and other unexpected security issues can also cause travel disruptions and unneeded stress – the storm that hits the airport a day earlier than expected, or the warehouse strike that begins on the day your traveler arrives at the plant can significantly reduce the production from your employee.

It’s critical to make sure that your employees are supported with a system that protects them from possible weather, security or any other unnamed issues that may arise while traveling. In addition to supporting the traveler, this support also protects your business from potential lawsuits related to these unexpected incidents.

When you proactively address these possible safety and production issues prior to travel – with the help of your TMC or travel manager – you and your traveler will be well-prepared for potential negative outcomes as a result.

5. Missed preferred supplier opportunities

There are a wide variety of preferred supplier opportunities that offer discounts and corporate relationship programs to the small and medium-sized business. Through these programs, travel vendors can look at the amount of volume your business is procuring, and through negotiation can provide a better value that ultimately reduces the bottom line of your travel budget. Without having an idea or control over what is spent, and your supplier volume, money is being left on the table for these preferred suppliers.

Take a look at what you spend with each supplier, and be sure to talk with each of them about ways to keep the relationship working smoothly.

Is your business’ corporate travel program in a position to address these potential bottom line killers? When you work with a travel management company, a 10-20% savings can be realized on your bottom line. Start addressing these common mistakes and utilize our How to Create an Effective Travel and Expense Policy Workbook to lead your business to success.

Travel Policy Workbook  

Topics: Corporate Travel