EXECUTIVE SUMMARY
* HAVE A CLEAR TRAVEL POLICY signed off on by the highest levels of management, and give someone responsibility for managing the program.
* BEST PURCHASING PRACTICES are to maximize the amount of business you do with a small number of suppliers. But small firms often do better letting travelers choose the least expensive option for each trip.
* USING A SINGLE CORPORATE CARD for all travel and entertainment expenses simplifies the process of collecting data and ensures the best service for partners and employees on the road.
* LET TRAVELERS BOOK THE LOWEST AIRFARES available for each individual trip, but funnel all your firm's business travel and meetings to one or two hotel chains in the primary cities where you do business.
* OPT FOR ONE PREFERRED CAR-RENTAL company to qualify for free insurance.
* BOOKING ONLINE AND USING E-TICKETS and nonrefundable tickets are the least costly options. Even if you have to swallow the cost of some unused nonrefundable tickets, you will save in the long run by encouraging their use.
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Anyone who's been to a supermarket or drug store lately already knows the basic rule of purchasing: Frequent customers get the best prices and the best service. It was the travel industry--American Airlines in particular--that invented the idea of a frequent shopper's program to encourage travelers to bring all their business to one supplier. Today, 30 years later, even small accounting firms and their clients can save money and make traveling a little easier for their staff by applying this basic concept. This article outlines the best practices of corporate travel management programs at America's biggest companies and accounting firms and shows how they can be adapted to meet the needs of smaller CPA firms and their clients.
At the Big Four CPA firms, where travel spending runs in excess of $100 million a year, managing the travel program is a serious business handled by a dedicated staff. When traveling for a firm, CPAs must book their trips through a designated travel agency or Internet travel site, using airlines and hotels with which the firm has negotiated discounts. Travelers charge their tickets to a single charge card, drive cars from the firm's designated car-rental company, bring their meetings to preferred hotels and file their expense reports online. These travel programs easily can be adapted on a smaller scale.
Optimizing the budget comes down to juggling pieces of the puzzle by making decisions about the five components of a viable travel strategy:
* The firmwide or corporate travel policy.
* The in-house manager of the program.
* The travel agency that serves as the intermediary to suppliers.
* The airline, hotel, car-rental, charge-card and online travel-booking suppliers with whom to partner.
* The system used for tracking and reporting spending data.
Keep your policies concise and clear, covering the basic goals and guidelines for each of the five major components. We'll look at and offer best practices for each, with a focus on small and midsize accounting firms and their clients.
START THE JOURNEY WITH A MAP
Whether employees are traveling for the firm or billing every charge back to a client, their preferences are the same as everyone's: they like to fly first class--and will, unless someone sets clear limits. Every firm and company should have a travel policy outlining basic rules that are signed off by top management and distributed to every employee who travels. Keep in mind, however, that buying travel is not like buying paper clips. Flying far from home is a stressful and emotional business, and the time of executives is a valuable commodity not to be wasted. Often the least expensive option is not the best value in terms of time and effort.
Many companies have a two-tiered policy--one for heavy travelers, senior partners and executives; and another for those who travel only to an occasional conference. That's an option worth considering.
Every travel program begins with people, and firms have two options here: to use in-house staff, or to outsource the program to a brick-and-mortar or online travel agency. In the not-so-distant past, many companies had travel agents physically sit in their buildings, but rising personnel costs make that impractical today, and technology makes it unnecessary. Travel agency and online sites provide round-the-clock service at a fair price. Unless your office is open 24/7 and your office space is extraordinarily cheap, the best practice is to outsource. Even if you do, though, it's imperative to designate a partner or employee to oversee the program, manage the relationships with suppliers, ensure best practices in pricing and execution, and negotiate some deals of your own.
Remember, too, that rule of purchasing. Consolidating all your travel buying through a single travel agency or Web site is the way to win discounts and deals, keep spending data neat and provide the best possible service to your travelers on the road.
Making reservations over the Internet is less expensive than booking through a travel agent, and the three major travel sites--Expedia.com, Travelocity.com and Orbitz.com--all offer dedicated small business programs that provide monthly spending reports. Even better, the systems can be configured so that when a traveler searches for a hotel in Phoenix, for example, the Sheraton with which you have a negotiated discount will be highlighted.
Online travel agencies like these display the widest range of choices--but not every choice. Travelers also may want to check the sites of the expanding number of start-up airlines where the lowest prices lurk. On the other hand, many small firms have reported being inundated by offers from Southwest Airlines' SWABiz program. The savings there are real, as travelers enter their own information directly into Southwest's computer system. But as on any airline-owned Web site, travelers see flights and fares for only one carrier and lose the ability to comparison shop.
Even beyond the travel-agency fees you can save, letting travelers make their own reservations over the Internet invariably results in lower costs. Perhaps the biggest surprise firms have realized from online booking is that when travelers are offered a wide range of options on their computer screens, a surprisingly high number do the right thing and change their plans slightly to take advantage of lower-priced options. In fact, if we had to offer a single piece of advice for cutting travel costs, it would be this: Get as many travelers as you can to book their travel online as fast as you can.
Shifting traveler behavior so that employees book their own trips online instead of calling Mary at the agency down the block may take some doing, though. A clear policy from top management is the only way to accomplish this; even large companies report only about 50% compliance unless there's a strong mandate from the top. Compliance is much higher if you designate one employee as the official travel arranger for staffers to call and decline to reimburse travelers who stray from policy.
TRAINS, PLANES AND AUTOMOBILES
While big CPA firms and businesses are best served by pushing their travelers to use one airline and then negotiating discounted rates, smaller entities generally do better allowing travelers to pick the airline or hotel with the lowest rates on each individual trip. Remember that every travel dollar not spent falls right to the bottom line; saving a few thousand dollars in expenses is as valuable as four or five times as much in additional revenues.
No matter how hard you try, though--and especially if your firm has international clients--the need for high-end travel will not go away. Many firms (and their customers on whose dime the CPA is traveling) allow first and business class for partners and executives and for employees traveling with customers on red-eye flights. It's on those tickets that the airlines derive their biggest profit margins. Track them and negotiate a discount for first- and business-class tickets with one major airline that offers frequent flights from your home city and on your most frequently flown routes.
Virtually every airline, hotel, car-rental company and railroad offers discounts to business customers; make it someone's formal responsibility to negotiate on your behalf and then to nudge travelers to use these vendors. Airlines typically offer small business programs that yield free tickets with the purchase of a given number. Take advantage of them.
