Managing travel expenses properly and enforcing company policy could save businesses hundreds of thousands of pounds of indirect costs, according to aleading consultant.
CIMA member Matthew Davis, director of consulting services at American Express Corporate Services, said companies could save on indirect back office costs anddirect costs when making arrangements for their staff to travel abroad.
A recent PricewaterhouseCoopers study found that 8% of travel and entertainment costs were back office costs.
But according to the Big Five firm, this expenditure could be cut to 2%. Davis said one way to do this was having a ‘one-stop shop,’ that is making all travelarrangements in one place.
He added that direct costs can also be cut by using corporate airline deals and ensuring employees use the company’s preferred suppliers when booking hotels andflights.
At the CFO conference in Warwickshire, the accountant told finance directors they should have a corporate T&E policy in place and ensure it is enforced.’Internal compliance and communication is the key to delivering savings,’ he said.
Davis told Accountancy Age that UK expenditure in T&E amounts to about Pounds 10bn per year and that compnies could save 10p on every pound with proper managementof these expenses.
He said T&E is the second largest controleable cost for companies, accounting for 30% of indirect costs.
With the globalisation of business, travel remains high and flights alone account for 44% of companies’T&E spend.
But in the current economic climate, with the downturn in the economy, companies have to cut all unnecessary expenditure. Davis said: ‘What we are seeing at the moment is compaines are cutting on internal travel butcontinuing international travel.’