With sustained success in the consumer sector, sharing economy companies like Airbnb, Lyft, Curb and Uber, have committed to provide corporate travelers the same level of convenience as standard hotel and transportation suppliers, at a reduced cost. In July 2014, Airbnb for Business was launched, offering 500,000 listings (of 800,000) that it considers appropriate for corporate travelers. That same year, Uber announced a customized service for corporate travelers.
The Association of Certified Fraud Examiners (ACFE) defines occupational fraud as “the use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization’s resources or assets.” In ACFE’s 2016 Global Fraud Study, Report to the Nations on Occupational Fraud and Abuse, they estimated that worldwide, organizations lose up to 5 percent or $3.7 trillion of their annual revenue due to occupational fraud.
According to the same report, expense reimbursement fraud ranked as the fifth highest category for corporate occupational fraud (see Figure 8 below). A lack of corporate travel policy can leave the door wide open for dishonest travelers to commit expense reimbursement fraud unless proper controls are put in place.
At MacNair, we use the term Travel Anarchy™ or unmanaged travel to describe organizations that have a chaotic Travel and Expense Management (TEM) process. While many organizations depend on travel to drive growth, those that are completely unaware of managed travel processes end up creating unnecessary costs for themselves in both time and money. Granted, it can be challenging for organizations to see the benefits and measurable impacts of a travel program without having a structured Managed Travel process in place. When this disconnect occurs, Travel Anarchy™ ensues.
Many Small to Medium Enterprises (SMEs) believe the most advantageous way to reduce corporate travel cost is to eliminate Travel Management Company (TMC) fees, but cutting TMC fees is a short- sighted approach when it comes to saving money on corporate travel expenses.
A forward-looking approach is to implement a strategy that takes advantage of the significant value TMCs provide organizations. A TMC can leverage exceptional high-volume discounts unavailable to the traveler, while establishing and enforcing policies and procedures to help facilitate preferred supplier agreements. A TMC should introduce automated pre-trip authorization processes and reduce the number of rogue travelers within an organization.
An experienced TMC can save SMEs up to twenty percent in additional savings on corporate travel spend each year while supporting travel policies that improve traveler productivity. This article discusses key areas SMEs should focus on in order to reduce corporate travel costs, far more than the minimal savings that would be realized by cutting out a TMCs’ booking fees.
Companies of all shapes and sizes and in all industries are under continued pressure to find ways to reduce their costs, while improving efficiencies, productivity and performance. It would seem that after surviving “the great recession,” organizations have already exhausted the most obvious cost cutting measures.
Topics: travel policy
As a Travel Management Company (TMC), we look for valuable information to share with our current and future customers that will help identify the key components of a successful travel management program. We do this while connecting the dots with corporate travel policies and benchmarking data that will ultimately lead our partners’ to success.
Recently, Business Travel News’ (BTN) released their annual Small & Midsize Enterprise Travel Management Report. The report examined travel programs with up to $12 million in annual United States-originating air volume, which equated to approximately $1 million to $24 million in total business travel volume. It also accounted for hotel, car, meals and other ancillary travel spend. In the report, BTN shared that Travel Managers have six primary focuses:
During the company’s height of growth in the 1980s and 90s, GE’s famous CEO, Jack Welch, was asked what his secret was to running one of the largest companies in the world in a similar growth trajectory to that of a much smaller company, while simultaneously reducing GE’s underlying cost structure. His answer was remarkably simple.
He replied, “We realized that our back office, is someone else’s front office. That the non-crucial functions that are important to business execution can often be done by somebody else at a lower cost (not necessarily a lower spend) than we could on our own; and it could be done better.” And thus began one of the most valuable trends in business – the outsourcing of services functions to companies that specialize in those areas (please note this is not the same practice as offshoring).
Travel and expense management (TEM) represents the second largest controllable expense for most mid-market and larger businesses. Given the size of the expense and the consistent desire to control and reduce costs, it’s no surprise that travel management is among the most common services that go out to RFP.
What would it look like if you had better visibility into your corporate travel expenses? What if you had the right technology that integrated booking, authorizations, and payments; and then that technology streamlined your processes? What if your business travelers were happy to follow the corporate travel policy?
For many companies with unmanaged travel programs, that scenario is far from reality. Rather, your organization may experience rogue travelers and multiple inaccurate or incomplete expense reports that require you to piece together the larger financial picture.
Gaining control over Travel and Expense Management (TEM) is on the top of the minds of many CFOs. According to recent CFO Research, more than two thirds (69%) of senior finance executives agree that their company would benefit from better control over T&E.
If you’re like many CFOs, improving T&E control and addressing reporting variances are key goals for your travel program. You want actionable data when it comes to travel expense management. You also want visibility into how your travel program fits within the larger picture of your organization.
After all, corporate travel management affects more than your business travelers; it also touches on HR through duty of care and policy compliance, procurement when it comes to control and travel costs, and even the legal department as it relates to liabilities. Your challenges lie in managing the complexities around travel. According to CFO.com, “Many finance executives say that companies lack the centralized oversight or controls that would help them better manage T&E spending.”
Travel Leadership Blog
Travel and expense management is a key leverage point to enhance productivity & control costs. Join us here as we share best practices, stories, insights and tools to help you manage your travel more effectively.