ERP & Finance Management & Travel expense management
18 July 2018
The travel industry is complex and difficult to understand as a whole, made up of countless suppliers offering products and services that are all as interesting as each other.
It is therefore vital to draw up a travel policy to guide your employees in their efforts. It allows you to establish a framework and set limits.
Travel policy rules
Travel policy rules allow you to determine categories of travellers who will be entitled to different types or levels of services, depending on the group to which they belong. They also allow you to plan your approval processes.
Destination and mode of transport
Destinations can be served by various modes of transport and a multitude of suppliers. Cost optimisation applies not only to ticket prices but also during the travel preparation phase. Choosing services and suppliers can be extremely time-consuming. That’s why it’s important to identify in advance the most suitable payment methods (cash, business card, personal card, e-card, lodged card, etc.) and suppliers according to destination. T
he aim of your travel policy, beyond the restrictions it imposes, should be above all to reduce stress, respond to the unknown and guide employees through the search and booking process, while ensuring a reasonable budget without dictating the travel itinerary. That’s where preference given to a supplier programme should be included in the instructions given to your employees (in a memo, for example) to help them create their travel order.
Managing supplier programmes
Cost management starts with identifying expenses, which are divided into two main categories: those reimbursed through expenses claims, which often relate to a wide range of suppliers, and those for which payments are centralised. The former do not provide specific information on the relevant suppliers and must therefore be the subject of a detailed report for management purposes. The latter, on the other hand, allows you to make a full assessment of the amounts spent in each purchasing category, so the suppliers identified can be managed easily. Optimum expenses management implies drawing up a supplier programme by service type.
With a supplier programme and proper analytical reports that allow you to make a full assessment of expenses, you can approach your suppliers in order to (re)negotiate sales agreements, or even play them off against each other.
Benchmark costs by destination
In addition to the list of regular suppliers, for whom centralised payments can be used, you also need to list the destinations frequented by your employees. Prices vary according to destination and time of year: suppliers use their algorithms to apply yield management. This hidden science is responsible for the constant variation in the price of flights and hotel rooms. Cost management therefore involves being familiar with prices by destination and according to the season. Once you’ve identified the suppliers with whom you spend the most money, you’ll have all the information you need to negotiate the best possible pricing terms.
Use technology to help you
How can different technologies help you and make your everyday life, and that of your employees, easier?
Setting up an SBT/OBT (Self/Online Booking Tool), HBT (Hotel Booking Tool) or, more generally, a booking platform or end-to-end tool, allows your company to load your supplier programme into it and enforce your travel policy rules. It also allows your employees to make their bookings online and offline (via your travel agency or the business platform that takes care of your travel requests), regardless of the travel service requested (flight, train, hotel, taxi, chauffeured car, hire car, etc.).
For bookings made in open booking mode, the approval process and travel validation take place after the trip. Although the employee initially pays for travel tickets, bookings are subject to reimbursement through expenses claims on production of receipts. Your employees are even more careful about adhering to reimbursement rules and rates, and your travel budget indirectly becomes theirs.
Need for reports
Cost analysis must be performed on all expense items relating to business travel: transport, hotel, meals, parking, tolls, taxis, etc. This analysis is only possible if you have comprehensive reports including all information relating to travel expenses. Thanks to these reports, you can cross-reference information in order to identify any excesses or out-of-process expenses and, more broadly, ensure compliance with the rules of your travel and reimbursement policy. Having near-total control of your expenses then allows you to make predictions in order to anticipate your cash flow needs and tailor your budgets as closely as possible to your business. Full analysis of expenses and projections will allow you to optimise management of your employees’ travel.