Travel Cost Optimization - Understanding Your Overall Corporate Travel Spend
If you are curious about travel cost optimization then you came to the right place. How do you determine how much money you will need to budget for your company's travel program?
Examining the travel agency's invoices for services such as flight and hotel reservations, as well as car rentals, is most likely where the answer can be found. However, the combined spending on these channels is typically less than sixty percent of the total.
According to the findings of some studies, the overall cost of a company's travel program can be up to 64 percent higher than what is reported by the agency.
The question that needs to be answered is how one can track all of these sources of visible and hidden spending, and more importantly, how one can control and optimize those spending sources.
Because the actual cost of travel can make up as much as 12% of an organization's total annual revenues, it is essential for every chief financial officer to have a firm grasp on this metric and record it accurately.
COPYRIGHT_WI: Published on https://washingtonindependent.com/ebv/travel-cost-optimization/ by Candice Burns on 2022-10-06T08:08:59.464Z
When companies accurately capture and manage the total cost of their travel programs, they benefit from having the ability to accurately calculate the total cost of corporate travel.
There are many other areas that need to be evaluated and integrated, in addition to spending via authorized booking channels. These include travel bookings made outside of preferred channels and policy, out-of-pocket travel expenses such as meals and Uber rides, and other spending via corporate cards.
Utilizing a TCO methodology, such as TCG Consulting's Total Cost of Ownership for Travel, Meetings Payment & Expense (TCO-TMPESM), enables the capture, integration, and optimization of all traditional visible program costs in addition to previously hidden costs that were dispersed across multiple budgets within the organization.
These costs include things like agency account management fees, the cost of treasury, reconciliation, card and expense workflow processing, and internal administration fees. Organizations that take a more holistic approach to travel spend optimization are seeing savings of up to 23% on all visible costs and up to 35% on previously hidden cost areas.
Traditional sourcing-driven approaches are delivering annual savings of less than 3%, but these organizations are seeing savings of up to 23% on all visible costs. The implementation of this strategy has the potential to help CFOs and CPOs understand and control the total cost of their travel program, in addition to delivering a variety of other benefits.
- Check the Hotel and Travel Fares a Few Days Before and After Your Intended Schedule
- Purchase Travel Insurance As Early As Possible
- Travel During Off Season
- Cook Your Own Food
- Travel Light
Cost optimization is a business-focused, ongoing discipline that aims to reduce spending and costs while increasing business value. It entails negotiating the best prices and terms for all business purchases. Platforms, applications, processes, and services are being standardized, simplified, and rationalized.
Divide the total distance of your trip by your miles per gallon to get the number of gallons of gas you'll need for your journey. Then multiply that figure by the current gas price to get your estimated gas cost for your road trip.
Establishing travel policies is of utmost significance for any organization looking to maintain financial control over costs associated with travel and entertainment. When there are no guidelines to follow, it is unreasonable to expect employees to follow them even if they are expected to.
As a consequence of this, a significant number of employees do not take advantage of opportunities to save money, which can have an effect on the travel costs incurred by the organization.