Firms aim to better manage expenses

Small to medium-sized firms are being urged to draw up travel policies and use corporate card payment systems to help better manage their business travel expenditure.

After salaries, business travel is the second-largest category of controllable corporate expenses.

Paul Robin, group event director at Business Travel Expo, says a travel policy can provide information for planning trips and help prevent 'demotivating' mishaps such as booking executives into accommodation miles away from meeting venues.

There is more to a travel policy than simply stipulating where to stay or when to fly economy or business class, says Ashutosh Agrawal, American Express head of corporate services, Greater China.

Small to medium-sized companies that spend less than US$2 million on corporate travel can take a tip from larger companies: most big firms have well-established travel policies that spell out the finer details in executive travel procedures, from reservations to reimbursement of expenses.

'Medium-sized corporations that spend between US$500,000 to $2 million and smaller companies that spend less than $500,000 are showing a growing interest in managing their travel expenses,' Mr Agrawal says.

Travel management companies can help corporations cut costs and organise travel programmes efficiently, he says.

One company, for example, believes it is good a strategy to use hotels that offer some kind of discount.

'Our advice is don't go for six or seven hotels. Stick to two hotels and negotiate for a better rate with bigger volumes,' Mr Agrawal advises. Mr Robin believes that having a corporate deal with hotels can cut accommodation costs by as much as 30 per cent.

And as business travel in the region takes off, the 'big brother' type of expense-tracking system is being promoted.

In addition to established corporate card systems such as American Express and Diner's Club, new player Airplus International has entered the fray.

The company, which entered Hong Kong at the end of last year, claims to offer more detailed information than its competitors, such as whether an executive has actually taken a flight that was booked.

Airplus International also records how much money a company spends on airfare and hotels, figures that can be used for bargaining with airlines and hotels.

However, it would not be cost effective to use hi-tech methods to track expenses if the travel volume is small, says Juergen Thomsen, Airplus executive director, Asia.

'A company would have to spend at least HK$200,000 a year on travel to make it worthwhile,' he says. It costs between $3,500 and $8,888 a year to subscribe to the Airplus 'analysis tool', depending on the volume of travel.

The Airplus system allows a company to see what, when and how much its employees are spending on the corporate card anywhere in the world, as soon as an expense is incurred.