It can be surprising to realize that corporate T&E spending is one of the biggest costs in most companies behind salaries, and yet so many businesses are completely unaware if they’re spending the right amount, if spending could be cut while maintaining effectiveness, and even what the right benchmarks to measure ROI should be.
It’s unnecessary for a company to waste money on travel and entertainment expenses in today’s age of modern software and technology tools, yet they do.
If you’re like so many companies that are spending around 10% of total revenue in this area, it is incredibly important to know how to gauge ROI of corporate T&E expenses. The following are some benchmarks and things to keep in mind.
Where Is the Money Being Spent?
One of the simplest areas of measurement to begin looking at is where your company is spending the most. For larger companies, air travel tends to make up the majority of the budget, while for middle market companies air travel is pretty similar to lodging. Costs related to entertainment and restaurants are relatively minimal across most companies regardless of size.
Companies can start by breaking down corporate card spend within their organization and see where opportunities might exist to save on these costs. This may also be an area where you could incentivize employees to save money with their personal choices.
What Are The Pain Points?
Another area to analyze once you’ve looked at where general spending is going are your company’s well-known pain points. A lot of companies will just continue to let these problems occur without looking at the hard data as to how big a problem they represent.
For example, the biggest general concern for most companies isn’t the T&E spending itself but is the need to lower the cost of expense report processing. Many companies also report having very little visibility and control into spending, and these are benchmarks that can be looked at internally, and costs can be saved without requiring employees to change what they’re doing.
What’s Getting Accomplished In A Trip?
Companies need not just to look at what’s being spent on the cost of travel and entertainment, but what’s happening while employees are there. For example, are employees taking expensive trips to visit only one client, when there could have been several clients visited? What is the cost of a single trip versus the returns?
You have no way of gauging these benchmarks without a robust reporting system, which is why it’s so important to utilize automation software.
So how do you analyze these benchmarks and determining things like the ROI for a single trip? Luckily there is an option, and that’s automation of expense management.
It’s essential to choose an option with complete visibility and centralized control so that it becomes easy to outline strategies for corporate travel, and then compare those strategies against the data. This is a win-win for companies because not only can they boost the effectiveness of employee travel while seeing where costs can be lowered, but they can simultaneously cut down on high processing costs.