Few people actually know how much they spend each year on travel and expenses and most would have to spend valuable time researching to get the answer.
But we should. Travel and entertainment – or T&E as the industry likes to call it – amounts to the third largest controllable corporate expense. Just behind salaries and data processing.
We also are more likely to spend higher on T&E than on advertising. So it is even more frightening that so few of us can actually put an annual total on such a vital part of our operation.
Small businesses are hardly likely to rival a major corporation in terms of T & E spend but it could still be a leakage in our profits and is something we can take control of.
Research from American Express has shown that travel and related expenses account for 7% of total operating costs for corporations and, of that, 44% of the money is spent on air fares. Their research has also indicated that travel costs are continuing to rise.
And Barclaycard Business research has found that in 2006, 78% of people had travelled the same amount or more as in 2005, and three quarters of business travellers enjoy travelling for work.
Many argue that every business, however small, benefits from a formal travel policy and improved T&E management. With any travel policy the balance is between the benefit of the travellers and the cost saving for the company.
Time out of the office has to be managed efficiently. No-one can afford to miss too many important calls and it may be difficult to hand over to anyone else to “hold the fort” while you are away.
But the most direct travel route may be costing a lot more than it need. For example, UK businesses can expect to pay 46% more for a direct flight to New York than their counterparts in Paris and 55% than those from Frankfurt.
If you work for yourself, travel expenses will need to be minimised wherever possible. There are a number of easy steps that you can take to help control your costs.
A business can save almost a third (30%) by sending an executive via Paris to Los Angeles instead of flying direct from London. If you operate away from London and would be paying for a connecting flight, say from Aberdeen or Manchester, it may well benefit you to skip London and go direct to Paris.
The survey also found that more businesses are using economy rather than business class. For small businesses, “slumming it in the back” may well be the only affordable way to go.
Equally, using secondary airports or “no-frills” airlines can cut costs significantly. For example, a return flight to Geneva, from London Gatwick, is six times cheaper with a low-cost carrier.
Ryanair reports that some 40% of its passengers are travelling on business and, in all, some 69% of travellers surveyed said they had used no-frills carriers in the past year.
If you travel to see the same client several times a year, there may well be an opportunity to negotiate a better rate.
It is also important to remember that a travel policy is more than just about the flights. Using the same hotel chain on a regular basis can also cut costs with a negotiated rate.
And for individual travellers, who happen to be the company too, loyalty schemes are worth using. Free points towards flights and hotel bills all help the bottom line - and maybe buy a holiday or two as well.
You could use a company such as American Express that will help implement and follow a travel policy. They can organise travel for you and negotiate better rates on your behalf.