Services - Reasons to Consolidate
For many small businesses, the management of T&E spending
spins out-of-control because the companies' business travel isn't
centrally managed by an agency. So one employee books online
while another calls his travel-agent friend and still another
phones the airline directly. The result is a corresponding T&E
budget that's a mess — from expensing to reimbursement.
Focusing on T&E expense management can seriously lift earnings.
A Gartner Group study found that just a 5% reduction in operating
costs in the expense-management process has the same effect as
a 30% increase in sales. So reigning in your T&E expenses
requires both better tracking and better managing of them — which,
again, can mean a significant boost in profits. Armed with accurate
spending information, businesses can establish policies that
restrict spending to a list of approved vendors, certain categories
of spending, and spending limits. So how do you get a better
handle on your T&E budget? Here is information which might
assist your company in driving down the cost of business travel.
Set a clear, reasonable T&E policy.
It's hard to control something when you don't set boundaries.
Yet travel policies are often not articulated — or not
enforced. A competent corporate travel manager can help you create
such a policy. If you don't have one, you can do it yourself
(think of it as a statement of your business philosophy combined
with a good dose of common sense). What kind of hotels do we
stay in? Do we fly business class? Do we only rent economy cars?
Your employees should not only know
what your travel policy is, but also the consequences for violating
it. More importantly, they need to understand the reason for
these policies, and how they directly affect your company's bottom
line — and their
own prospects for sharing in your prosperity.
Consolidate travel purchases now.
You can't manage what you can't see. Consider streamlining your
travel purchases through a single agency. Your business will
also get consolidated expense reports from a single source, which
will not only help you tame the T&E tiger; as your business
grows, it also allows you to negotiate with vendors for preferred
rates. And that will cut costs.
So here is a brief list for your consideration:
1. Airlines do not like to issue contracts for multiple/many
agencies as it is unwieldy for them to manage.
2. What is the consistency of service and management regarding?
- a. service fees
- b. vendor discount utilization
- c. unused tickets the average company refunds & exchanges
15% of total air purchases, 5% are refunds & 10% are exchanges
due to non use at time of original purchase, i.e. every $1,000,000
in airfare equals $100,000 in tickets waiting to be used. Further,
you will avoid paying for:
- interest
- administrative costs
- negative cash flow
- tickets for former employees, never to be used
- tickets that are out of sight and out of mind
3. What are your administrative costs and the information required
to manage multiple to many vendors?
- What is the competency level of your travel manager(s)?
- Who will plan, execute and monitor saving programs?
- What is this person’s time availability and time
commitment?
- Who will consolidate & reconcile your travel management
data and reports?
- Will there be consistent application of your travel
policies and preferred vendors?
4. How will “Best Service” be defined?
5. Will some business units suffer due to the fragmentation
of information & purchases?
6. Will the most “productive” business unit receive
the most benefits?
Getting control of your company's second-largest expense may
seem like a daunting task. It doesn't have to be. Even if you
take 6 months to implement,by using your management skills and
common sense, and by keeping your options open for the future,
you can make sure travel costs don't become runaway expenses
that eat into your profits.
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