Written travel policies: foundations for savings.

• Author: Hunt, Randall A.
• Position: Tips for managing business travel

WRITTEN TRAVEL POLICIES Foundations for Savings

Whose responsibility is it to ensure that we are efficiently spending company funds for travel and entertainment (T&E)? This is a frequently asked question by corporate controllers, travel managers, CEOs, department managers, vice president, travel planners and, yes, sometimes by travelers themselves.

Companies here and abroad have learned that successful T&E management requires a strong partnership between them and their travel agencies. If that relationship is viewed as a true partnership, great opportunities exist for aggressive savings in T&E expenses.

Consider this: travel and entertainment currently ranks in the top five line-costs for most companies. Only payroll and data processing exceed T&E costs for many companies. According to industry analysts, a company's T&E budget typically breaks down as follows:

Air Travel 50% Lodging 25% Meals 14% Rental Car 6% Miscellaneous 5% Once you have selected a travel agency with which you feel confident, one which has earned valuable purchasing power with its suppliers (airlines, hotels, etc.), you must then evaluate the effectiveness of your company's T&E policies.

Your company can save thousands of dollars annually by using effective travel practices. Such practices stem from good travel policies in a written travel-policies manual.

Goals of a Successful Manual

1. To control employees' expenditures of company money. 2. To prevent fraud. 3. To control and utilize vendor contracts. 4. To provide basic accounting guidelines. 5. To enhance employee morale. Objectives A team of executives should determine travel policies. It is recommended that the team be composed of executives from the following departments: * Finance - For the ability to analyze past expenses and project future budgets. * Internal Audit - To approve expenses. * Purchasing/Procurement - To analyze expenditures on an annual vs. unit-cost basis. * Administration - To serve as catalyst for all departments involved. * Personnel - To maintain performance records which frequently show an employee's past trends in spending company money. * Sales/Marketing - To represent the department that frequently uses the greatest share of the travel budget. * Traffic/Travel - To represent the department that is probably the most current on issues, technology, and terminology. * An experienced travel planner - to offer extra insight.

Determining Travel Policy

The executive team should strive for these...