The True Cost of Travel Policy Non-ComplianceBy Alyson Connors
How much is your organization spending on corporate travel? A lot, probably. For a typical company, travel is the single-highest controllable expense behind labor. Wouldn’t it be a financial coup if you could reduce that cost by as much as 20%-30%? You can, says the Journal of Business Ethics. All you have to do is improve compliance with your corporate travel policy.
We know that sounds daunting. But when you consider all the ways in which non-compliance is gnawing away at your bottom line, you’ll be motivated – really motivated – to get your travel program under control.
Direct Monetary Losses
Whether inadvertent or due to deliberate self-upgrading, airfares, hotel stays, and car rentals balloon when employees go outside your travel policy. Employees tend to see “travel expense” only in terms of what will be reimbursed to them for out-of-pocket costs. It’s up to you to explain the bigger picture – what T&E really costs the company overall, and how their efforts to follow the rules help the company grow and help improve their future travel experience.
Fraud, sadly, is another source of direct dollar loss. There are myriad ways for enterprising employees to take advantage of travel for personal gain. They can overstate their mileage, claim the entire per diem but spend less, or split a meal with another employee but claim the entire cost. If your corporate travel policy requires receipts only for items over a certain dollar threshold, they can claim fake expenses for lesser amounts.
Or they can be more devious, deliberately booking flights at the last minute knowing that the higher-priced ticket will be easier to upgrade. Just a few renegades can dramatically drive up travel costs.
On the other hand, are your lodging policies so restrictive that they effectively increase costs by resulting in longer cab rides, etc. to cover distance between lodging and meeting?
Indirect Monetary Losses
According to Aberdeen Group, 43% of “best in class” companies consider T&E expense management a critical component of their business strategy. Even more say the #1 challenge in that regard is reducing expense processing costs. Wasted administrative time and labor can add up fast.
So can wasted employee time. Travelers are motivated to turn in reports because they want to be reimbursed. But cumbersome manual expense reporting just begs to be put off. Ugh. Is it even worth the effort to be reimbursed? And where is that dinner receipt, anyway? Meanwhile, your finance people are left in the dark with incomplete travel data. How are they supposed to accurately track spending so you can make smart projections or adjustments for the future?
The 90s are over. This is the digital age. Employees of every generation are used to using snappy apps that simplify and streamline their lives. Making travel arrangements and providing expense reports may be job-related, but they are not work product. The more time people spend on administrative tasks, the less real work they get done. That’s expensive for companies and frustrating for talented workers.
Lack of on-the-road productivity
Most business travelers try to get some work done while they’re in transit. The longer the trip, the more that’s true. However, if they’re forced into a plane seat so small they can’t use their laptop or tablet, or into a hotel room so cheap there’s no viable Wi-Fi, working is going to be tough. In fast-paced industries, falling behind can be deadly.
Employees take business trips for a reason. They’re attending a conference (or presenting at one), they’re negotiating important deals, they’re scouting new territory, they’re securing new business. If they are half-witted from a protracted series of flights or less-than-comfortable hotel, they won’t look sharp. Or be sharp. Your travel money is wasted, their time is wasted, your brand and bottom line could both take a hit. Everyone’s a loser.
Of course, there is a solution
Having no corporate travel policy – or one that reflects a “whatever works for you” approach – is not the answer. Without any real structure and guidelines, employees will waste time researching options. And chances are good they’ll pick one that is more expensive than necessary.
Your people shouldn’t have to fend for themselves. Providing them with a policy that is simple and clear but still flexible makes it fast and easy to make travel arrangements. It ensures your people will have a reasonable flight and comfortable, safe accommodations, all while staying compliant.
Adopting an integrated travel management tool such as Lola.com enables everyone in your organization to get what they need. Employees can book efficient, people-friendly flights, hotels, and rentals. Travel managers can track spending and compliance. Finance managers can analyze data over time to detect fraud and uncover opportunities to refine your corporate travel policy. Compliance goes up, costs, go down. Everyone is happier and getting a good night’s sleep.
If you're ready to learn more about implementing Lola.com at your business, schedule a demo with our team.