Understanding the key differences between unmanaged and managed travel can help organizations objectively and accurately determine opportunities for process improvements to benefit their bottom line. Below, we compare an unmanaged travel program to a managed one, broken down by nine phases: starting with (1) Policy and Procedure Development and ending with (9) Reviewing and Refining the overall program.
As you review the nine phases that compare unmanaged travel vs. managed travel, think about how you would rate your company’s program on a scale from 0 – 10.
|Phase 1: Policy & Procedure Development
Setting and enforcing a cleary defined corporate travel policy is key to reducing travel costs, balancing traveler needs with business goals. The policy should embrace company culture and be well communicated across all relevant departments.
Either non-existent or unclear travel policy. Undefined policies and procedures leave travelers without direction or clarity on expectations and often:
- Leads to lack of planning, oversight and attention to detail.
- Sends an undesirable message about company culture.
- Leaves the organization vulnerable to employees who might take advantage of lax expense reporting rules.
Provides travelers with flexibility, choice, business travel perks and benefits without harm to your company’s bottom line or goals. A Travel Management Company (TMC) will assess and put into place a well-communicated and comprehensive travel policy that:
- Is easily accessible and adhered to by all employees.
- Captures the essence of your company culture and helps drive your strategic goals.
- Provides clear direction on procedures, well-defined value expectations, preferred supplier strategy, traveler profile access and information regarding service platforms and technology system use.
|Phase 2: Authorization
All itinerary options and travel choices pre-approved by the TMC or travel manager, allowing for immediate authorization, mobile access and customizable approval paths.
Authorizations are not required or are given at last minute due to urgency. Unclear or non-existent rules surrounding authorization process prior to booking gives:
- Travelers’ carte blanche over their travel expenses which can negatively impact the company’s bottom line.
- Undefined data points and spending thresholds make it difficult for the authorizing party to make an informed decision about the approval.
Authorization in a managed process is efficient, straightforward and fully automated. TMCs use automated systems that:
- Provide customizable approval paths.
- Allow travelers to include specific data requirements as outlined in the company travel policy.
- Provide mobile access and necessary data to ensure the right decisions are made.
- Use pre-set authorization that is travel policy compliant.
- Return denied authorization requests to travel manager for necessary adjustments.
|Phase 3: Trip Arrangements
Allows for custom traveler and guest profiles; secure personal data; online corporate booking tool and designated TMC agent; unbiased content; pre-programmed to comply with travel policy; and automatic unused ticket notifications.
Trip Itinerary goes un-scrutinized for value. The shortcomings with an unmanaged trip itinerary are many, including:
- Standards for determining fare values are not defined and/or ignored.
- Rogue travelers use non-secure and biased websites and booking tools for various trip components.
- Supplier leverage is not realized.
- Unused tickets go unclaimed.
- Scheduling options are difficult to piece together and share.
Trip arrangements are based on unbiased, comprehensive and customized corporate online booking tools with designated agent support. A TMC’s system gives travelers options that are typically unavailable outside the TMC industry, such as:
- Trip arrangements are made according to defined policy guidelines.
- Travelers use a custom-tailored database with comprehensive and unbiased information from airlines and preferred suppliers that meet the travel needs of your organization.
- Designated agent team books more complex trips that adhere to travel policy guidelines.
- Trip arrangements are made over a secure company and/or agent portal, ensuring travelers’ personal data remains secure.
- Unused ticket availability and expiration dates are provided.
|Phase 4: Policy Enforcement
Guarantees that an automated double-check of trip pricing is performed and that designated approval paths plus required documentation for compliance through company portal or designated agent platforms.
Unclear or overlooked policy compliance protocols and procedures make it hard to measure real value. Without an enforceable travel policy, these common issues can arise:
- Policy compliance protocols and procedures are not performed because public sites require instant purchase.
- Implicit approval for fares that “seem good” are booked without comparing the fare to baseline data.
- It is difficult to capture and process data from trips that are booked out of the company’s booking system, increasing the risk of false expense reporting.
Enforcement of policy compliance, when properly instrumented, can be handled almost entirely through automation. Policy enforcement in a managed process will automatically double check the following for travel compliance:
- Trip pricing, approval paths and required documentation through the company portal and designated agent platforms.
- Messages follow customized approval paths to ensure all required data is captured for approvals and disapprovals of traveler requests.
- Online approvals via a mobile app provide quick turnaround time to ensure reservations are neither lost nor timed out.
- Data from trips booked in policy and through the company portal or designated agent platforms is accurately captured and processed for reporting analysis.
|Phase 5: Payment Management
Automated payment system confirms trip for reporting and tracking purposes; enhanced credit card security; improved rewards via consolidated payments; expense reports are automatically populated to corporate ERP.
Compromised data security and inaccurate expense reporting. Common payment management issues in an unmanaged travel policy include:
- Inability to accurately predict and manage cash flows.
- Multiple supplier websites increase the chance for compromised or stolen credit card information.
- Missed credit card payments by individuals can lead to penalties and/or lost benefits (points, insurance, access to data, etc.).
- The opportunity to leverage benefits from a consolidated payment system goes unrealized and benefits are lost.
An automated payment system confirms trip details for improved reporting and tracking purposes. Benefits of a managed payment process include:
- Easy and secure payment options via a traveler’s pre-paid card, the organization’s corporate card or a virtual payment system, keeping traveler and company credit card information safe.
- Benefits offered through consolidated payment systems can be realized.
- Charged travel expenses are transmitted directly into a company’s ERP for automatic expense reporting.
- Enhanced data exchange between the TMC and the organization for faster credit card reconciliation and accelerated payment processing.
|Phase 6: Travel Support & Risk Mitigation
Instant contact with travelers in case of emergencies or last-minute travel changes; mobile apps for disruption and trip monitoring; risk mitigation provides health and security threat predictions to prepare travelers; automated travel alerts and effective duty of care measures.
Poorly defined travel support and risk mitigation leaves the traveler unprotected and the organization liable. When rogue travelers rely on third party suppliers, rather than a TMC, travel support suffers in the following ways:
- An agent acts on behalf of the traveler, not the organization.
- Supplier traveler support is determined by status and often inadequate.
- Trip changes are not re-authorized.
- Ancillary fees (usually without the company’s knowledge) greatly increase the overall cost of the trip.
- Travelers are unprepared for security and health risks at destination.
- Changes to the original itinerary are often undocumented.
- Responsibility for monitoring trip changes falls to the traveler.
Common risk mitigation issues include:
- When not considered, organizations are exposed to liability for employees who travel without health and security support.
- A pre-trip safety and security review crosschecking the itinerary against known threats and dangers is not performed.
- Health and security due diligence is left for the traveler, if done at all.
- The traveler may be the only person fully aware of his/her itinerary, and tracking them down in an emergency is nearly impossible.
- The company must depend on each third party’s disruption management polices rather than their own.
Automating or actively managing this step will insure that additional expenses are kept to an absolute minimum and travelers are kept safe. Consistent and comprehensive travel support by a TMC include benefits, such as:
- Disruption management software tools report on airline disruptions in real-time, reducing costs incurred by unavoidable travel changes.
- Traveler security tools (like the Sabre Traveler Security Suite) identify potential travel disruptions so TMCs can get supplier waivers and reduce fees.
- Unbiased and informed change management services reduce change fees and determine the best-unbiased options to adjust the itinerary.
- Monitoring throughout the trip identifies potential threats and keeps travelers safe.
- Mobile apps advise travelers of delays and changes in real-time.
- Spending thresholds related to trip modification costs are clearly outlined in the T&E policy.
Risk mitigation by third party professionals, typically include the following benefits:
- Local or regional threats to travelers are communicated prior to the trip to inform them of updates, tips and procedures regarding safety and security.
- More complex international itineraries are managed and guidance on medical, insurance and global emergency support best practices is provided.
- Duty of care policy outlines exactly where responsibility falls in case of an emergency.
- Complete visibility to traveler’s itinerary and whereabouts allows for easy contact any time during their travel.
|Phase 7: Expense Management
Capture receipts during travel via mobile app; automatically populates expense report fields; observed time constraints in place for submitting expenses; provides for efficient and accurate budget reconciliation.
Not having guidelines for expense submission puts traveler and employer at odds when reconciling traveling expenses. Undefined rules regarding expense submission lead to:
- Lack of policy adherence for addressing on-the-ground expense incursions.
- Confusion on which allowances and exemptions are permitted during travel.
- Paper receipts that are often lost.
- Higher staffing costs for processing and reconciling inaccurate or incomplete expense reports.
- Late submission of expenses, which can impact cash flows.
Automated expense management facilitates quicker approvals so travelers are reimbursed through payroll fast and effectively. In an automated expense management system, the following occurs:
- Acceptable expenses incurred while on the road (such as food, parking, Wi-Fi, dry cleaning and taxis) are properly documented.
- Travelers can automatically upload photos of all receipts into the managed system through their mobile device – expediting the expense reporting process.
- After travel is completed, the expense-reporting tool automatically manages applicable project or exception codes.
- Reimbursement and budget reconciliation are be quick, efficient and accurate.
|Phase 8: Reporting
Expenses automatically reconciled with applicable project or department codes; clear policy guidelines exist for reimbursements; comprehensive and accurate reports can be generated to evaluate and measure ROI.
Without policy guidance, financial reporting cannot 100% guarantee what was spent and how the results compare to industry peers/competitors. An unmanaged process is likely to experience efficiency problems related to:
- Missing or incorrect project/department exception codes.
- Missing employee expense receipts.
- Clarifying discrepancies through additional employee or vendor documentation.
- Confusion when/which reimbursements are allowable for employees.
- Data to measure ROI or evaluate program improvements are not available.
Reporting is seamlessly accomplished in the managed process. Automation and control drives success in a managed reporting process by:
- Capturing almost all of the necessary data in the expense management phase.
- Forcing travelers to provide any outstanding receipts to meet clearly defined deadlines.
- Quick reconciliation of expenses to correct project or department codes and then posting to the organization’s general ledger.
- Reimbursable expenses are clearly defined for finance team through clear policy guidelines.
- Capturing accurate data to measure ROI and uncover any operational inefficiencies that need improvement.
|Phase 9: Reviewing & Refining
Frequently and consistently review the travel program; identify opportunities to improve efficiencies, technologies, procedures, training, and policy compliance; realize greater savings and increase productivity.
Only evaluated and improved policies and procedures can guarantee maximum value and efficiency. An absent review and refinement step for the overall travel program often leads to these common problems:
- The right policies, procedures, preferred suppliers, tools and efficiencies are not in place.
- As a company’s travel demands increase, the process fails to evolve with it.
- True program reporting/measurement accuracy is nearly impossible to achieve when evaluations are based on assumptions rather than facts.
Review and refinement with suppliers, a TMC and other third party vendors, should include a recurring program audit. In order to allow your program to evolve, the following should be considered during the review process:
- The right policies, procedures, suppliers, tools and efficiencies are in place.
- Any newly implemented automation tools should adhere to policy guidelines.
- Travel arrangements are managed via a company’s TMC and their designated booking tool.
- The company is saving both time and money through the managed travel program.
- All findings are documented and stored for easy access and future reference.
Where does your company stand in regard to corporate travel? Do you fall into the Unmanaged T&E category? Would you like to see your business travel grow from an unmanaged process to a managed one?
As you can see from this blog post, there is a lot more to your T&E process than simply a transactional purchase and travel. A lack of clarity, consistency, training and oversight of the T&E process in your travel program can leave your organization with lost savings, decreased productivity and diminished support and control of each trip. The effort to transition from unmanaged to managed travel is worth it because companies that use a managed T&E process can realize a 20% annual savings.
To learn more about the nine phases of the Managed T&E Process, download our free guide. Through reading it, you will gain a deeper understanding of the nine phases of a managed T&E program; while learning how to measure and evaluate the potential positive impact managed travel can have on your organization.
The Essential T&E Management Process Guide
Transform T&E from Costly Chaos to a Cost-Saving Managed Process