The Knowledge Gap: Why Changes in Travel Plans are a Major Problem for Finance Teams
Managing T&E budgets is challenging enough — but it's nearly impossible when finance teams aren't kept in the loop about changing travel plans
Imagine trying to manage your household finances, but you’re only told after large purchases are made or outlay patterns change. That would make it pretty difficult to stick to a budget and predict costs, wouldn’t it? Now imagine not being told about these purchases at all. Might as well throw your budget at the window, right?
Sadly, this is a pretty good representation of how finance teams are expected to manage their company’s travel budget. They’re told to come up with a budget and stick to it, meanwhile employees are constantly submitting travel expenses late and often not even alerting finance teams when (often expensive) travel changes are made.
Shockingly, one in two finance teams aren’t told about changes to or cancellations of travel plans that affect their company’s business travelers, according to new research conducted by Lola.com. This lack of notification and transparency makes finance jobs even tougher. Unexpected changes in travel plans are inconvenient enough for business travelers, but have you thought about how they affect finance teams? Well, we have and we’re laying it out for you.
Read on to find out why changes in travel plans are a major problem for finance teams.
1. A disconnect between policy creation and enforcement
Enforcing a corporate travel policy can be challenging because the team that creates the policy usually is not the one responsible for making sure it is obeyed. Typically, it’s the corporate travel manager, a team of executives, or the human resources department that creates a company’s travel policy. Ultimately, the responsibility of enforcing the spending part of the policy falls on the company’s finance department.
This dichotomy presents a problem when a flight needs to be changed unexpectedly. While the travel policy may have a protocol for handling changes like these, it most likely excludes involvement from the finance team. If the finance team has to approve every change before it happens, they probably won’t be able to act quickly enough in an emergency and the flight that was needed may sell out.
It can be difficult for finance teams to proactively enforce travel policies without tech tools like corporate travel booking software that’s integrated with the company’s travel policy, or a virtual credit card that shows real-time spending.
2. Travel change fees
Budgets are idealistic and planned in advance of spending, but they can’t predict how spending will actually turn out. Uncontrollable forces get in the way of business travel. Meetings get rearranged, flights get cancelled, and people get sick. Unlike a budget or forecast, the realities of business travel can’t be predicted.
Unfortunately, travelers are penalized when they have to change their plans. Most major U.S. airlines charge travelers $200 to change a flight. This figure doesn’t even include the price difference you have to pay when the flight you’re switching to costs more than the one you originally booked.
One way to ameliorate this problem is to work with a travel agency or corporate travel tool. These strategic partners have long standing relationships in the travel industry that they can leverage to help you avoid change fees.
3. The internal challenges of forecasting and reporting
When external forces aren’t making managing corporate travel a challenge, it’s internal challenges that get in the way. How? All of the parties involved in travel management - from travel managers and finance teams to travelers and their managers - may not have access to real-time data that can help them manage travel budgets or enforce or adhere to on-policy spending.
For example, if several travelers are booking flights at the same time, they don’t have a way of knowing that others are booking at the same time and many not know how much is left in the monthly budget for them to spend on their trips.
At the end of the day, forecasting is just a prediction and finance teams won’t know any of the real numbers until weeks after their books have closed. A T&E management tool that integrates with your company’s travel booking tool can help close the knowledge gap by giving administrators visibility into spending in real time.
4. A lack of sophisticated tools
Travel has been part of doing business for as long as commerce has existed. Despite that, tech tools that focus exclusively on managing travel spending have only recently become available. Until now, data and tools that finance teams have for managing travel expenditures have largely been inferior to those they have for managing other major cost centers.
As T&E tools continue to develop and improve, finance teams will gain better insight into their business travelers’ spending in real time and will be able to ensure that corporate travel policies are obeyed and budgets aren’t surpassed.
Changes in travel plans — and the fees associated with them — make it difficult for finance teams to do their jobs. When you use a corporate travel management tool like Lola.com, you will be able to avoid change fees thanks to our industry partnerships, and you will be able to manage all of your company’s travel-related finances in one place thanks to our Expensify integration.