3 Ideas for Using Expense Management Software to Help Prevent Travel Waste
New expense management tools are helping companies gain control over their travel spending. With cloud technology providing greater visibility into how and where travelers spend, companies can negotiate better contracts. And, with policies baked right into expense tracking and travel booking tools, much of the burden of policing compliance has been lifted, freeing program managers to focus on strategic program improvements.
One area for managers to take a closer look at: Unnecessary or wasteful travel. Using your expense management and booking tools in tandem, it’s relatively easy to make changes to adjust travel spending based on business conditions and in the process better achieve your Environmental, Social and Governance (ESG) goals.
The basic idea is to use the data and analytics tracked in the expense management tool to understand why employees are traveling and identify areas that could be cut. Then you would use your booking tool on the front end to implement new policies to prevent unnecessary spending.
Collecting the Data
The first thing to do is make sure you’re collecting the right data. Ideally, you would evaluate this data on a regular basis. When the company's doing well, it may be fine to allow the full range of travel purposes, including trips that aren't directly revenue generating. But, if the company needs to cut costs, you’ll want to really dig into the distribution of your travel expenses so that you can start to identify how much you could save by cutting back in certain areas.
The best way to collect this data is to have a dropdown menu where travelers can select the purpose of their trip in both your travel booking tool and your expense tracking system. What I see now is that a lot of companies just use a free form field where the user is asked to explain the reason for their trip.
That is helpful information, but you also need to add a drop-down list so that you can also track information across all trips in a standardized fashion that lets you aggregate data and identify trends. There are probably six or seven standard trip categories that cover 95 percent of employee trips. Sales meeting, customer meeting, conference, training, and internal meeting are some of the more common ones. Certain industries may have unique purposes specific to their type of company, but you should try to keep it as simple as possible. The freeform field can be used for additional detail.
Travelers should indicate the purpose of their trip both in the booking tool and the expense tracker, preferably using the same categorization system. You need this information in the booking tool for approvals, and in the expense management system because it will be the single source of the truth, capturing all of your T&E spend, not just the flights, hotels and rental cars booked through your travel tool.
For some types of companies, such as law firms or consulting firms, in addition to trip type, you may also want to consider including some way to indicate whether it can be billed back to a customer.
This will give you the data you need to use your corporate booking tool to tighten the reins strategically. Here are three ideas for cutting back.
1. Non-Revenue Generating Travel
Non-revenue generating travel is probably the first place to cut. What is non-revenue generating? Most companies would agree that a sales meeting or customer meeting directly relates to revenue generation. Trade shows would almost certainly be revenue generating. Attending conferences, recruiting events and training sessions are a gray area as far as revenue impact. Internal meetings are probably the clearest non-revenue generating target.
After communicating the policy change to employees, in your corporate booking tool, you could establish one or more extra layers of approval when the purpose of the trip is ‘internal meeting,’ so that these trips get more scrutiny than in the past, and certainly more scrutiny than a sales visit or customer visit.
You could also use the sign-in page of the booking tool to remind users that there's an extra level of scrutiny going on now around trips for internal meetings. The goal would be to get them to think twice about whether they need to make that trip.
2. Class of Travel Adjustments
Let’s say you don’t want to cut back too drastically, but you do want people to be more frugal. One way to do that is to tailor your policies regarding class of travel. Many companies have standard policies about what cabin class you can fly and what tier of hotel you can stay in, based on your seniority or role. With technology, those policies can be a little more nuanced.
For example, if you're making a revenue-generating trip, then you can stay at a four-star hotel and fly premium economy. But if you're traveling to an internal meeting, maybe you’re restricted to a moderate hotel and flying economy.
Working with your booking tool provider or corporate travel agency, you would implement “if/then” rules that tie the available hotels and cabin classes to meeting type.
That can be another way to discourage people from making unnecessary trips because they know that they're not going to stay at a posh hotel, and they're going to be in economy class with their knees up against the seat in front of them.
3. Aggregating Meetings
Another idea: Encouraging travelers to group non-revenue-generating trips together, or group them with revenue generating trips. The idea is to get people to compress several meetings into one trip, so that flight costs are spread across multiple meetings, instead of flying into the same headquarters location multiple times.
Of course, it's hard for your technology to know in advance how many upcoming headquarter visits an employee might have. Here again, the policy is communicated via email and re-emphasized in the booking tool.
There would be a notification on the login page, and when the user selects one of the "non-revenue-generating" trip options, you can present probing questions such as, “do you have another trip to this location planned that you could combine with this one,” or “could this meeting instead be done via web conference?
If the user intends on taking that trip, they're just going to check the box that says "no it can't" or "no I don't." But at least it's making them think about it a little bit more, and then it’s up to the manager to approve or deny the trip.
These are simple strategies, but hard to execute on when you’re managing T&E with Excel or point solutions. When you have a modern expense management solution integrated with a global booking tool, it becomes a relatively easy exercise. The data from the expense management system helps you identify areas for policy changes, which you implement in the booking tool. It’s a one-two punch for cutting unnecessary travel costs by influencing people's behavior before a trip is ever booked.