3 Ways CFOs Can Reduce Corporate Travel Expenses
It’s time for CFOs to reclaim control of their business’ corporate travel programme. Or did they ever have control in the first place?
With employee overspending making up as much as a third of a business’ travel and expense budget, and with 15% of all business fraud coming from falsified expense claims, tighter T&E control is a top priority for most senior finance executives.
In fact, a CFO survey found that 69% of respondents thought their business would benefit from greater control over travel and expenses. When a survey by J.P. Morgan finds that travel and expenses is the second biggest operating expense behind payroll, you’d have to wonder what the other 31% believe.
We look into how CFOs can work to minimise employee overspending, gain greater visibility into expenses, mitigate fraudulent claims and collaborate with travel managers to run a tighter ship.
How Much Do Employees Overspend On Business Trips?
If you’re anything like other small to medium enterprises, employee overspending may constitute around a third of your travel and expense budget.
It’s an unfortunate reality that businesses have to assume overspending and noncompliance. And when cities like San Francisco come with per diem expenses of almost $550 USD (for food, accommodation and transportation alone), SMEs need to ensure dollars are being spent wisely and the greatest return on investment is being achieved from business travel.
According to Dan Ruch in Inc. Magazine, noncompliance goes hand-in-hand with corporate travel because employees have little reason to spend frugally.
“It’s not that employees try to spend a lot on their business trips, just that they don’t have a reason not to,” he says.
“If someone’s going to be reimbursed anyway, it’s unlikely they’ll go out of their way to save a few bucks.”
Dan Ruch’s solution? Give employees a reason to spend frugally through financial incentives programs.
Financial incentives may be the time-tested measure for encouraging compliance, however businesses are still incurring costs, just on another front. After all, paying employees to reduce their spending is almost a counterintuitive solution.
So how can CFOs reduce travel expenses without paying employees to do so? Below are three ways CFOs can reduce travel expenses.
1. Use Travel Management Technology
Companies who aren’t taking advantage of travel management platforms are turning their backs on efficient, cost-effective and data-fuelled travel policies. Not only do travel management programs streamline the booking and approval process, they empower CFOs with real-time insight into employee spending and mitigate risk.
A disjointed approval, reimbursement and payment process can drive up travel and expense costs, according to CFO research. Travel programmes that don’t consolidate these processes leave unnecessary room for error, and cloud visibility into employee expenses.
Furthermore, a centralised technology solution is an efficient way to gather data insights into the performance of travel policies.
2. Control Employee Overspending At The Source
At the end of the day, a corporate travel programme is only as effective as its travellers. We know that frequent international travel can contribute to a number of stresses that damage the productivity of employees overseas.
Some travel managers have identified that frustrated employees are more likely to overspend, and have turned to bleisure travel to encourage positivity overseas. Bleisure travel, or a mix of business and leisure while overseas is a popular way to improve and maintain morale. In fact, 78% of bleisure travellers say that adding leisure days to business travel adds value to work engagements.
Despite the benefits of bleisure travel on employee productivity, just 14% of businesses have formal bleisure policies.
3. Collaborate With Travel Managers
CFO collaboration with travel managers is critical in making consequential policy improvements. Despite this, just 27% of CFOs believe their relationship with travel managers is effective.
Just as CFOs should demonstrate their own commitment to compliance with travel policies, they should demonstrate commitment to working with travel managers to make positive, data-driven changes. This can be achieved through regular meetings (including with travel teams) and by arming them with effective travel management technology.
Original post can be found on locomote.com