Business travel can be a big expense for companies of all sizes. This makes it crucial for CFOs to have a clear understanding of their company’s travel spend. However, managing travel expenses can be challenging, especially without proper visibility into the details of these expenses.
This is where CFOs play a critical role in ensuring that their organizations have the processes in place to manage travel expenses effectively. In this blog, we will explore the reasons why CFOs need to improve travel management visibility.
When it comes to business travel, employees tend to ignore the importance of making cost-conscious decisions as they know that the company will reimburse their expenses. This can lead to overspending in various areas. For example, making last-minute bookings when prices are hiked or not selecting partner vendors that offer better discounts.
CFOs can improve their travel management visibility to identify employee spending trends and patterns. By doing so, they can pinpoint which departments or employees regularly overspend and detect any suspicious activities. Further, they can encourage employees to book in advance to get lower rates.
Companies can also compare the actual cost of a booking with the lowest-priced option available. For example, you bought a flight ticket for $1,100, but a lower-fare ticket of $900 was available. Then, you can assess whether choosing the costlier ticket was reasonable. Otherwise, you can implement tactics to avoid such losses in the future.
Booking trips out of policy has multiple disadvantages. It could lead to a higher trip cost, compromise the safety of employees or cause legal issues. However, employees may not always adhere to travel policies. They may lack policy awareness, have difficulty in understanding the policy, or have travel preferences not available in the compliant options.
To address this issue, companies can use travel management visibility to identify KPIs related to policy compliance. By analyzing data on the number of times employees are booking out of policy and the reasons for it, CFOs can take corrective actions. These may include drafting travel policies to better fit the needs of employees or educating employees about the importance of policy compliance.
Effective budget planning is critical to the success of any business. However, without proper visibility of expenses, it can be tricky for CFOs to evaluate whether the set budget is accurate or if they need to change the allotment of resources. Managing fixed and variable expenses is another critical task.
If the CFO can see where the money is going, they can decide which travel expenses are most important. This means they can ensure the company has enough money to pay for essential travel expenses first. For example, they might decide that it’s more important to pay for economy flights and hotels than for fancy meals or luxury class seats.
Moreover, having a good understanding of business travel expenses allows CFOs to set more realistic travel budgets. This way, they can allocate the company’s money more effectively. This can help the company achieve its financial goals, maximize ROI, and improve the overall travel program.
CFOs often have to deal with a lot of data from different sources when it comes to managing business travel expenses. Consolidating all this data manually can be time-consuming and prone to error, as it involves data entry and cross-referencing.
Moreover, since the data is not real-time, travel managers may not have access to the most up-to-date information, making it difficult to make accurate decisions based on it.
However, with the help of better travel management visibility, CFOs can consolidate all travel expenses in real-time. This is done with the help of travel management software, which captures travel expense data automatically and reduces the chances of errors.
Visibility into travel expense data is crucial to leverage while negotiating with vendors. You can use this information to identify areas where you can cut costs and ask for better pricing.
Not having clear insights into travel data can make it difficult to compare vendors and figure out which one is better for your business. For example, if you are trying to decide between two hotels, you may not know which one is more cost-effective because you don’t have data on how much you typically spend on lodging.
When you have a clear understanding of your business travel expenses, you have more bargaining power. For example, if your employees frequently choose a certain vendor, you can gain the advantage of the volume to get higher discounts from them.
Without proper expense reporting and visibility, employees may exploit the system and claim reimbursements for inflated, duplicated, or fictitious expenses. This can lead to financial losses for companies and damage to their reputation. A lack of visibility into business travel management can make it difficult to detect and prevent travel expense fraud.
However, when CFOs and other financial leaders have complete visibility into expenses, they can monitor spending in real-time and identify any suspicious activity.
This can be done through the use of travel expense management tools that provide real-time data and analytics. Further, with visibility into expenses, it can be easier to conduct regular audits and review expense reports to prevent fraud.
When companies receive invoices from vendors, it is important to ensure that they accurately reflect the expenses incurred. However, without visibility into travel expenses, CFOs may not have all the data they need to check the reliability of the invoices they receive. In some cases, vendors may provide incomplete bills, which can make it difficult to reconcile expenses.
By monitoring expenses in real-time, CFOs can quickly identify any errors and take prompt action to address them. This can prevent small mistakes from turning into larger problems over time. Ultimately, it improves the accuracy of reconciling purchases with invoices.
In conclusion, getting visibility into travel spend can boost your company’s financial health. However, you need the right tools to get these insights.
ITILITE is an advanced travel management software solution that provides you with complete visibility into employee travel spending. You can track expenses in real-time and get customized reports regularly. Further, you can automate the process of detecting fraud and ensuring compliance to improve your overall travel program.
To know more about these benefits, book a demo now.
Subscribe to the Itilite blog and never miss a post!