How spend optimisation can help manage your business travel spend
Kronos Group
Your preferred partner in Procurement, Finance & Project Management consulting.
Travel expenses can account for a huge part of business expenditure, especially in today’s economy. Understanding cost optimisation and how to apply these strategies to manage your expenditure is necessary to support your bottom line while maintaining an adequate level of quality in business travel. Establishing a centralised travel policy, negotiating beneficial supplier contracts, utilising automation to streamline processes, making data analysis and reporting a priority, encouraging employee engagement and education, and ensuring compliance and auditing expenses to optimise your business’s travel spend are some viable strategies to achieve this objective.
Business travel can be hugely expensive in today’s conditions and it is a cost that every business needs to bear, whether it is a small business or a large corporation. Efficient spending in business travel is a necessity to ensure that your business’s bottom line is not negatively affected.
The goal of spend optimisation in business travel is to analyse and manage your expenditure in a way that does not diminish the quality of travel but still benefits the company as a whole.
Understanding spend optimisation
Spend optimisation is the process of identifying, planning, organising, and managing a business’s expenses to support profitability, cost efficiency, quality, and strategic decision-making.
While areas like marketing and IT can indeed have significant impacts on business spend, most businesses only focus on core spend and overlook up to 20% of their expenditure. Travel expense is one such area among others like utilities, maintenance, and professional services.
An effective spend optimisation strategy has the ability to identify these areas specific to your business, analyse spending data, suggest spend management strategies and forecast spending to support overall financial performance.
How to optimise your business travel spend
These strategies will help you optimise your business’s travel spend.
Establish a centralised travel policy
A centralised travel policy outlines the standards that need to be followed for business travel spending. Centralised booking makes it easier for your employees to engage in business travel and helps you with easier expense management.
Negotiate beneficial supplier contracts
Business travel requires an array of services that can be hard to arrange through conventional means. Travel partnerships can result in lower costs for travel, better quality of travel, and establish a better workplace culture.
Utilise automation to streamline processes
Automating travel-related tasks such as researching and booking travel, creating reports, and analysing travel data can be done faster and more accurately through a system. This will help you keep the costs low and efficiency high.
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Make data analysis and reporting a priority
With a centralised spend management system in place, data collection, analysis, and reporting will be significantly easier. This will allow you to identify potential cost-saving opportunities, inefficiencies, and risks for the future.
Encourage employee engagement and education
Educating your employees on the best practices for optimising business travel spending is vital for the success of your spend optimisation strategies. Encourage your employees to follow suit and you will see better results.
Ensure compliance and audit expenses
Staying compliant with local, state, federal, and tax regulations is a necessity, and an effective spend management strategy ensures compliance. They are valuable for auditing too as spending data is carefully collected and reported.
Tips to minimise your travel expenses
Here are some additional tips you can follow to minimise your travel spending.
Planning your travels ahead of time can get you better prices for flights and hotel accommodations, and help you avoid price hikes. You can also benefit from off-peak scheduling, which is significantly cheaper.
Airlines, hotels, and other travel management companies often offer loyalty programmes that you can make use of to get better prices. If your business requires frequent travel, consider signing up for them.
Making use of cost-effective travel options like ride shares and public transport can significantly reduce the amount of business travel expenses you have to endure. If these services are available, use them.
Try utilising strategies like establishing a centralised travel policy, negotiating beneficial supplier contracts, using automation to streamline processes, making data analysis and reporting a priority, encouraging employee engagement and education, ensuring compliance and auditing expenses to optimise your business’s travel spending.
These spend optimisation strategies can help keep your business travel expenses at a level that will not affect your bottom line while still maintaining a quality that you and your employees can benefit from.