Corporate travel was a casualty of the COVID-19 pandemic. As business travel begins to rebound this summer, some organizations may continue to keep travel at a minimum as a method of cost control in response to inflation and the rising costs of supplies.
Sure, that’s one approach to cost control – but is it the best one for your business? Reducing business travel may cost companies much more in the long run by limiting their opportunities for profitability and growth.
Current state of business travel
Right now, over two-thirds of C-suite executives expect their companies to spend less on business travel over the remainder of 2022 than they did during the same period in 2019. That’s according to the Business Travel Survey – 2022 Q2, conducted by J.D. Power and the U.S. Travel Association.
Per the survey, employers plan to spend less money when they’re sending employees to conferences, trade shows, customer and stakeholder meetings, and internal meetings in the summer and fall months.
Existing travel policies are also more limiting than they were pre-pandemic for half of execs surveyed. Companies are allowing fewer business trips overall (71%) and sending fewer employees on the road (58%). In addition, there are stricter limits on the destinations where employees can travel (36%) and more stringent guidelines concerning who travels for business and why (35%).
These restrictions may not last in their entirety for much longer since 52% of execs plan to re-evaluate their company’s current travel policies at some point this year.
And for good reason: Both business travelers and execs feel that the lack of business travel during the pandemic has hurt their companies in several ways.
In fact, 36% of execs and 32% of business travelers said that a decrease in business travel has negatively impacted the company’s financial performance. And nearly 30% of execs also said that it’s negatively affecting the company’s ability to keep its current customers and attract new ones.
Plus, about 46% of execs said that the short-term cost savings of limited business travel will contribute to long-term reductions in sales.
How much does corporate travel matter?
As you know, business travel is critical to a company’s financial health for several reasons. Almost 70% of execs agree that it helps develop relationships with customers, suppliers and others that are key to a business’ profitability – a sentiment echoed by 46% of business travelers who responded to the Business Travel Survey.
Nearly 60% of execs said travel is also essential to help build awareness of their company’s services or supplies. Additionally, it’s crucial to understanding current trends (cited by 45% of execs) and gaining an edge over the competition (cited by 38% of execs).
Although most execs say business travel is essential, they also say that it’ll likely be constrained by several elements moving forward – including cost controls, a concern cited by 69% of them.
Even with current budget constraints, it’s clear that the benefits outweigh the drawbacks for business travel. Because of this, controlling costs by limiting business travel won’t be feasible for most firms over the long term. That means it’s critical to have a different strategy for cost control.
Spend management software & cost control
Using spend management software with expense management capabilities to keep better track of employees’ travel expenses is one effective tactic companies can take for better cost control.
Spend management software can help everyone from A/P to the top brass have better visibility into what employees are purchasing and what travel expenses are being reimbursed.
A spend management solution with expense management features can also automatically screen out expenses that don’t fall in line with your company’s T&E policy, saving A/P time from trying to determine if reimbursements are valid. And it can track company credit card usage to help you avoid losses from fraudulent charges.
Plus, it streamlines the reimbursement process since employees can enter their expenses directly into the software. Spend management solutions often allow employees to scan in receipts and other supporting documentation, or take photos of them, so there’s no need for A/P to have to track that down, either.
Spend management software helps companies control costs in other ways, as well. Particularly, it can help A/P avoid paying for the same invoice twice. Some solutions can even help you keep track of your petty cash.
And it all happens in real-time, so you and A/P can see where money’s going immediately and quickly flag any suspicious transactions.
Additional options to control travel expenses
Along with investing in a comprehensive spend management software solution, you’ll want to make sure that your internal travel expense policies clearly spell out what expenses are and aren’t covered. This should take top priority as you re-evaluate your pandemic-related travel policies since it’ll help Finance avoid many hassles up front.
Besides this, there are other ways to improve cost control for business travel across the board.
For instance, execs can lead by example and choose more cost-effective options for their own travel and accommodations. If employees see that the top brass are willing to make concessions when planning business trips, they’ll be more likely to follow.
Your A/P pros can look into working with a travel agency to find better deals on business travel for your company. Some spend management software solutions also have tools to help you find better deals on airfare and hotel stays based on a traveler’s existing itinerary, so that may be an option for your company as well.
