Monthly Archives: April 2016

A travel request can help local governments spend their travel dollars wisely. Clarcity Travel & Expense can help with the process!

A travel request helps governments spend tax dollars wisely

Let’s face it. Budgets are tight for schools and local governments. All types of spending are coming under more scrutiny. Taxpayer funded travel is an area that gets more attention than most. School and local government travel is often for conferences and other fun events that may not have enough business value. A good travel request process will make sure that only necessary travel is approved.

We all know that some business trips are routine and others are fun. The typical routine trip is a visit to the company’s office in another city or to a client’s office. These trips are full of attending meetings, making presentations, and other things that people normally do day to day. In short, employees don’t have an incentive to take these trips unless they believe that there is real business need.

Then there are conferences. Conferences may feature free concerts, gourmet meals, and celebrity speeches. Networking opportunities are a staple of conferences. They are typically held in major cities with lots of free time to explore. Orlando, Las Vegas, and Chicago were the most popular conference destinations in 2015. Employees have an incentive to attend conferences even when there is little business value.

The 2010 GSA conference in Las Vegas became a symbol of government waste. The $75,000 bicycle building exercise and $44 per person breakfast made national news. Newspapers often report on travel dollars wasted by local governments.  This conference of city leaders cost taxpayers of an Arizona town almost $2700 per person. The Freedom of Information Act gave the paper access to every dollar spent. Even a $7.42 Uber ride was mentioned. The city had no travel policy or travel request process. No one could justify what value the conference provided.

How can local governments incorporate a travel request procedure?

Schools and local governments can keep travel spending in check a few easy steps:

1. Require employees to make a formal travel request. The business value of the travel should be clearly explained. The travel request should be reviewed by multiple managers.
2. Store the travel request in perpetuity. A corporate travel system can make sure that proper records are kept.
3. Check that final expenses do not exceed the request. An integrated expense management solution makes this process easy.

Let Clarcity show you how easy a travel request can be.

Rewards offered by credit cards tempt business travelers to overspend. A good travel policy helps curb this disturbing trend.

A good travel policy stops bad incentives from credit cards

Business travelers are given many incentives to spend too much. Nowhere is this more true than with credit card rewards. An effective travel policy is essential to tilt the scale in the direction of savings.

It’s no surprise that credit card rewards encourage people to spend more. Credit card companies offer a variety of rewards beyond cash back. Frequent flyer miles and other travel rewards are the most common. One experiment showed that consumers were willing to pay twice as much for sports tickets when a credit card was accepted. More typically, consumers are willing to pay 5% to 10% more when using a credit card. However, a typical reward is worth just 1% of the price of the purchase. This illustrates how cards encourage people to make decisions that are not in their best interest.

The credit card rewards problem is much worse for business travel. Employees often choose an airline or hotel where their credit card gives bonus points even if it is more expensive. They are bombarded with offers for upgrade packages which offer modest benefits but include extra rewards. These rewards are compounded when purchased with their rewards credit card.

Rewards are front and center on employees minds as they travel. The miles and points they are earning from their flights and hotels serves  as a subtle reminder to spend more on meals and entertainment that they can charge to their credit card. Employees have little incentive to save money because the company is picking up the tab.

Can a travel policy curb this behavior?

Here are some strategies a travel manager can use to fight back:

  1.  Require employees to use a corporate credit card. Corporate cards pay cash back to the company instead of the employee.
  2. Use a ghost card to book travel. A ghost card is a single credit card used to pay for travel for many employees. The ghost card is perfect for employees who don’t travel often enough to need their own corporate credit card.
  3. Develop an effective travel policy. Require travelers to book with the lowest cost vendors. Set sensible limits on meals and entertainment.
  4. Notify a manager when travel is reserved outside of the travel policy.

Keeping track of corporate credit cards and enforcing a travel policy used to be a lot of work. Today. an integrated travel and expense system automates the process. Contact us and we will show you how!