29/08/07

By Brian Lloyd Duckett

One third of European businesses do not know what percentage of their controllable expenditure relates to travel and entertainment (T&E), according to a new Visa Commercial “White Paper” report prepared by Ipsos MORI entitled “Managing travel expenses”.

Despite such expenses typically accounting for between eight and ten per cent of total operating costs many companies still have not taken steps to update and improve the way they manage their travel expenses, the White Paper says.

301 larger European companies were polled for the report and acknowledged that their travel and entertainment expenses are resource intensive and difficult to manage with frequently fragmented and inconsistent policies; 85 per cent produce their own reports from several different data sources and 32 per cent still receive only paper-based reports from their suppliers.
Corporate treasurers have become so concerned about these issues that 47 per cent cited T&E payments as a priority for improvement in another recent Visa International survey.

As part of their efforts to manage T&E expenses, more than three quarters of the companies surveyed use a business travel agent. Companies have also taken steps to improve the management of travel expenses through the introduction of company accounts and corporate payment cards which together equate to 56 per cent of travel expenditure. Unfortunately, less efficient methods, such as personal payment cards and cash, still surprisingly account for 23 per cent and 13 per cent respectively of T&E costs. With over a third of employees still having to pay for their own travel expenses, many companies are unnecessarily increasing the amount of work employees, travel agents and finance departments have to do when these expenses are reclaimed.

The study confirmed that buying and paying for travel is also extremely resource intensive for a business. It showed, on average, thirteen people within the finance function are involved in managing travel expenses.

The role of travel agents also varies considerably, according to the White Paper. While almost all companies surveyed use a travel agent to book their employee air and rail tickets, a smaller proportion (42 per cent) use them to book hotels and car rental.

Senior Vice President, Visa Commercial, Luc Janssen comments: “Our report highlights how most businesses still regard managing T&E as a bit of a nightmare and it shouldn’t be. In spite of travel and entertainment expenditure being a significant operating cost, many companies have not taken steps to update and improve the way they manage this process.”

“With the Visa Central Travel Account (a lodge account) we can create a centrally billed payment account which can be used by companies to monitor and pay for travel expenses. This lodge account provides reports and data that companies need; it delivers cost benefits through the centralisation of buying and paying processes, in addition to supplying the business with an easy billing process.”

Janssen continues “When businesses surveyed listed what they considered the most important factors for managing their travel expenses the top three factors directly corresponded with some of the key features of our lodge account: electronic reporting (84 per cent), reports that facilitate supplier negotiations (80 per cent) and reports that breakdown by department or cost centre (75 per cent).”

The survey also confirmed that Visa would be the preferred provider of a lodge account with two out of every five companies (41 per cent) in its favour, some 21 per cent more than the nearest alternative provider.

“Although lodge accounts are extremely popular with companies that use them — 81 per cent were satisfied with the product - general awareness of a lodge account was low with only one company in five stating that they were aware of the product”, Janssen observes;

“Clearly companies are not likely to tell their rivals of a way to save time and money — perhaps this is the reason!”

”Managing travel expenses, an analysis of perceptions and potential within Europe” was prepared for Visa Commercial by Ipsos Mori. The study examined current expense management practices in companies in France, Germany and Italy during 2006. 301 larger European companies were surveyed with employee numbers ranging from 250 to 5,000.