The MacNair Travel Leadership Blog

Reduce Costs With an Intelligent Travel Policy

Posted by Mike MacNair on Sep 8, 2016 12:00:00 PM

Reduce Costs With an Intelligent Travel PolicyCompanies 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.

Organizations must be increasingly intelligent about how they reduce costs, or otherwise risk harming organizational performance and suffering unanticipated costs, in their effort to reduce them. The good news is that there are still areas within your business processes that provide smart opportunities for cost reduction. Your travel program is chief among them.

The key to running a successful travel program that supports your travelers, enhances productivity and lowers cost, starts with your travel policy. A clear, comprehensive and well-defined travel policy, can save your organization a significant amount of money.

Learn how to create an effective travel policy here.

There are three common mistakes we see made with travel policies that can have unintended consequences for your travelers and your organization:

  • Travel policy is not updated and refined on a consistent basis – oftentimes it hasn’t been updated in years.

  • Clear procedures to follow travel policy guidelines are not in place.

  • Flexibility is not built into the policy.

In all of these cases hold true, the inevitable outcome is that an organization will experience what we call “travel anarchy.” In other words, the interests of business travelers don’t align with the organization’s financial objectives, making chaos and complexity become the norm. When this happens, travel expenses rise and, as a result, you may be spending 10-20% more each year than is necessary.

It’s important to draft travel policies that are built for your organization. Taking a template policy, filling in the blanks, and considering the task done, is not an effective approach for organizations that spend more than $100,000 per year on travel. An intelligent travel policy aligns the various interests and stakeholders within your company to ensure that your road warriors are productive and that you’re meeting your financial objectives. It also serves as a safeguard against travel anarchy.

5 Travel Policy Tips

There are a number of ways to streamline your travel program to lower costs and improve performance. To start you off, here are five tips that should be a part of every travel policy:

  1. Preferred vendors: Procedures put in place that lead travelers to observe preferred supplier commitments with airlines, hotels, and car rental companies can offer significant savings.

  2. Virtual Prepayment Cards: You can prepay many of your employees’ expenses such as hotel and car rental. These cards offer one-time use numbers and work similar to a check. Not only do they make life more convenient for your business travelers, but they also cut down on the risk of credit card fraud.

  3. Reporting Procedures: Today’s travel technology allows for on-the-go expense reporting so travelers can input their expenses in real time. The information is moved through a workflow defined by the organization. Not only is this easier than keeping up with paper receipts, concerns can be handled on the spot rather than waiting for an employee to return from their trip.

  4. Non-refundable plane tickets: Your travel policy should outline what to do with canceled or non-refundable plane tickets. Having procedures in place to track and rebook unused tickets will ultimately save you money rather than having to consider them as sunk costs.

  5. Pricing: All travelers are not created alike, and therefore should not be treated the same way. Your travel policy should account for the underlying needs and purpose of different types of travel. The goal should always be to reduce the total cost of travel while directly supporting the business purpose of travel. A focus on “lowest price only” can have negative effects on business performance and direct travel spend, so be careful how you design your program.

Follow these five tips and you’re certain to see program improvements and reduced costs. But, don’t stop there. Download our Travel Needs Assessment Checklist for additional tips.

Managed Travel Needs Assessment Checklist

 

Topics: travel policy