• Strategy
  • CFO Magazine

Think Small

"Door-to-door" expense management can be a great way to reduce the cost of business travel.

Heading off on a business trip? Don’t forget to get a receipt — from the chambermaid, the coat-checker, and the barista. Sound impractical? Maybe, but these days no travel expense is taken for granted, and travel policies now routinely impose strict guidelines on reimbursements and the documentation you need to get them.

That may not surprise CFOs, who don’t just abide by such policies but often champion them. Having wrung as much cost as they can out of big-ticket items like flights, hotels, and rental cars — which typically account for 75% of every T&E dollar, according to a recent survey by Procurement.travel — companies are focusing on the remaining 25% of the travel budget, which consists of smaller costs like airport parking, sedan services, meals, and, yes, tips. Approaching travel with this “door-to-door” mind-set represents a new front in the war to subdue costs.

Business travelers, in short, are being asked to sweat the small stuff. “I’ve turned down expense reports where I thought the meals were excessive,” admits Jack Egan, CFO of Volt Information Sciences, a $2.5 billion staffing and telecom-services firm. “Employees will come in and argue, but generally the amount will get reduced. We need to watch every dollar.”

How T&E dollars are spent

No longer can an employee return from a trip with a fistful of blank taxi receipts, filling in the figures based on a blend of foggy memories and wishful thinking. At ConAgra Foods, nobody paid attention to such travel crumbs three years ago, but the company has since managed to chop those smaller costs by a double-digit percentage. “We did not wait for the change in the economy. We were proactive,” says D.K. Singh, senior vice president, enterprise procurement, at the $14 billion company. “Now we see that other companies are focusing on these smaller travel expenses the way that we are.”

Many companies have tended to overlook small travel expenses in the belief that it isn’t worth the effort to control them. “CFOs have to be willing to tell travelers that, ‘This is where you’ll stay or I won’t reimburse you,’” says David Clevenger, vice president of Corporate United, a group purchaser for 140 companies. “But I’m shocked at how few mandates like that there are, even in Fortune 1,000 companies.”

Such mandates are tricky, of course, because it’s hardly a trust-building exercise for a finance manager to question a salesperson’s decision to order that second bottle of Pinot Noir. Fortunately, nitpicking isn’t the only way to address that last mile of expense. But it takes an experienced and sophisticated cost-cutter to explore and implement new approaches. In other words, CFOs are studying this category more closely than ever. “CFOs are now personally involved in understanding this category,” says Hervé Sedky, general manager of advisory services at American Express Business Travel. “They know there’s waste in the system, and they want to better understand how they can optimize their investment in travel.”


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