Each fiscal year brings new challenges for companies both novice and established, and while the economy is looking good now, there's no telling what the next 12 months will bring. That's why savvy executives are constantly looking for ways to cut back on unnecessary costs and make the most of every corporate dollar.
Some companies may just write off travel expenses as "the cost of doing business," but there's likely more they could be doing to minimize those bills while still maintaining top-notch client relations. If you're looking for ways to mitigate your company's corporate travel costs, consider these five game-changing policies.
1. Implement Hard-and-Fast Travel Policies
It doesn't matter how frequently or infrequently your employees hit the road for business – if there are corporate travel expenses, there should be firm policies regulating them. The easiest way to lose money on travel is to have informal or lax company procedures. Executives should create policies regarding booking, travel timelines, per diem expenses and overnight stays. Any employee that embarks on a business trip needs to be well-versed in these rules and clear on acceptable spending – after all, it is the company's money.
Just how big of a difference can formal policies make? Travel management company Egencia conducted a case study with a business spending more than $2 million annually on travel costs. The company overhauled its program and implemented advanced booking, pre-trip approval and best fare policies. After just three months with these new procedures, the business had saved more than $100,000 on travel expenses. This just goes to show that structured rules can quickly amount to big returns.
2. Don't Overlook Ground Transportation
One common misconception when it comes to business travel is that ground transportation comprises a relatively small portion of corporate spend. In fact, many travel managers may be shocked to learn that ground transportation is the fifth largest travel expense category, just behind airfare, lodging, dining and entertainment, according to a recent study by Concur. That's why more and more companies are looking to include a managed car service as part of their overall travel management program. From both a safety and cost-containment perspective, it makes sense to develop and enforce a ground transportation travel policy with an explicit definition of your pre-screened preferred providers, as well as the times and circumstances when cars should be used. You'll also want to ensure that your ground transportation providers meet safety, security and duty of care standards consistent with your company's overall travel policy.
3. Choose Corporate Cards Wisely
Corporate credit cards often come along with a bevy of perks, from hotel discounts to airport lounge access and everything in between. Businesses should make the most of these benefits by choosing a card that will optimize employee travel habits. If workers tend to rack up high bills at corporate dinners, it might be best to find a card that offers cash back on dining expenses. It's important for executives to assess which credit card fits the organization's needs the best, not just choose the card with the biggest reward package.
"Travel managers can use behavior-changing strategies to help workers to make smarter choices on the road."
4. Teach Travelers to Make Smart Choices
Research has shown that today's consumers don't always make decisions based on traditional factors like supply and demand, especially when they're relying on technology to get around.
"The reality is technologically savvy business travelers make decisions very differently than their counterparts did just a few years ago," David Coppens, executive vice president of Global Operations at BCD Travel, explained on the company blog.
However, travel managers can use behavior-changing strategies to encourage workers to make smarter choices on the road. BCD noted that decoy pricing is one effective way to get travelers to choose less expensive accommodations. Corporate booking tools can be calibrated to display a few mid-range options of similar quality as well as a much cheaper option. This will subconsciously encourage travelers to choose a lower priced mid-range hotel. Executives may also want to establish low anchor prices with new employees to set a standard for spending behavior and create more frugal travelers.
5. Gather Employee Feedback
Chances are that travel-related policies and procedures are made at an executive level, but many times road warriors have the best insight on how to cut back on costs. Employers may benefit from creating a post-travel survey that gathers feedback from frequent fliers. These workers will likely have ideas on how the company can save money without compromising business performance.