According to the GTBA 2016 Global Travel Price Outlook Report, global hotel rates are expected to rise 2.5%, and in North America, meetings and event costs per attendee are projected to rise 4.5%. How much will that impact your T&E budget?
If you’re like many CFOs, you realize that travel expense management is an important component of financial health, yet you may also realize you don’t have the visibility you need to improve your bottom line. In fact, you might feel T&E is something of a black hole.
It’s no secret that the first step to savings measurement is to review your existing corporate travel policy while considering your company’s financial objectives. If one of your goals is decrease spending, an area to look at is how to lower costs related to your travel program. Take some time to go over your current travel processes. The review will help to reinforce your correct assumption that reducing travel costs is largely about streamlining systems and creating easy-to-follow procedures.
Consider travel payments. Do your business travelers use an integrated payment system with built in price thresholds, authorization procedures and prepayment cards? If not, there are technology solutions that can integrate with your current systems and save valuable time, which equates to dollars saved. Automated expense tracking is another way you can streamline a labor intensive aspect of the travel program.
As you review your current travel policy, you’ll want to keep in mind measurable data points that can serve as KPIs such as: travel volume, booking source, average transaction cost, preferred supplier performance and travel compliance. Within each of those areas are opportunities to reduce costs.
Have You Identified Your Strategic Goals?
As you apply your core KPIs and savings measurements to your travel program, you may find you need to update your travel policy. It’s a good idea to collaborate with other stakeholders within the company to identify the top priorities and concerns.
Let’s look at cost-containment as a strategic goal. Within that framework you can establish supporting goals specific to travel booking guidelines such as days and time of travel, methods of travel and approaches to ancillary fees. You can review your preferred supplier agreements and negotiate lower prices. You could also work with your TMC to instrument an automated tool that will inform your travel team of any unused tickets. Then you can prioritize the implementation of each of these and similar tactics to help you achieve your KPIs.
Measurement is a key requirement for judging any successful initiative. As you capture data to measure actual travel spend, the improved visibility will help you to improve policies and procedures.
Strategic KPIs Aren’t Always Numbers
For example, you’ll want to match your goals to measurable results. You may find that increasing your travel policy compliance by 10% offers significant cost savings. Or, you may find a way to help your travelers increase their productivity while on the road by providing hot spots for them or by letting them take direct flights. Improvements to both activities ultimately contribute to the improvement of your bottom line.
When you have the right tools, information and assistance aligned with your travel strategy and KPIs, you will be better able to take control of T&E – a significant line item in your budget.
Are you looking for more ways to improve your T&E Management? Download this whitepaper to learn how to leverage travel as a driver of positive financial results while aligning with business objectives.