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A formal policy controls the costs.

Travel and entertainment is a substantial and often-overlooked expense for many companies.

Controlling those expenses has most recently become a top concern for a majority of CEOs and senior financial officers. The real challenge, however, is to control the bottom line while maintaining personal contact with customers or with branch-office employees.

There are still many organizations which fail to view the booking of travel arrangements as a purchase because they do not literally write a cheque for services rendered. As a result, they often miss opportunities to hold down costs.

The critical first step to controlling costs is to establish a formal business travel policy. It lays out which airlines, car rental agencies and hotel chains your employees can use, which airline seats they can buy or class of car they can rent, and how much they can spend on meals and entertainment.

Without a written policy, it is nearly impossible to convince employees that following established guidelines can benefit them as well as the whole company.

Formal travel policies must be clearly communicated to employees, consistently enforced and reviewed regularly to be effective.

Enforcement can be simplified by consolidating travel agencies. This also provides employees with uniform service and managers with consolidated reports and leverage to negotiate with both suppliers and the agency.

Negotiating volume discounts is a significant cost-control opportunity, but before you can do so, you must be able to report what your costs have been in the past and be able to prove them to the supplier.

Planning plays a vital role in the cost-cutting effort. Use of the budget can be maximized by reaching as many contacts as possible in one trip and by reducing wasted time during individual visits.

In addition, advance planning enables businesses to cut costs by purchasing airline reservations in advance.

Accumulating and managing travel spending data is a major, often hidden expense in itself. It includes the time travellers take to prepare expense claims and requests for trip approvals, the time managers take reviewing the requests and expense claims and the time bookkeepers spend processing the expenses.

Any simplification of the request and claims process through the use of standardized forms and computerization can result in significant savings. A travel agency can also help by providing regular financial reports on travel expenses.
COPYRIGHT 1992 Laurentian Business Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:Supplement: Small Business Survival Strategies; travel and entertainment expenses
Publication:Northern Ontario Business
Date:Apr 1, 1992
Words:382
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