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Travel and Expense Policy – part one February 12, 2011

Posted by solutionsbconsultants in Business Improvement, Increase Profitability, Procurement, Travel Policy.
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I have had quite a few requests for a travel and expense policy. Before I go into the philosophy and nuts and bolts, let me make a few comments.

First, most companies have severely curtailed travel, both for internal group meetings as well as attendance at training, seminars, and supplier visits. I am actually glad that a good number of these trips have been curtailed. With communication mechanisms like Apple iChat, Skype, Webex, Go-to-Meeting and other low-cost, highly effective tools, the goals and accomplishments of an in-person trip can be achieved without an unnecessary hit on the pocketbook. Why send three people to the same training? Send one and have him/her train the others – or film the training and put it into your training library for future hires.

Let’s look at a hypothetical scenario: A few years ago a IT executive wanted to send two of his personnel to make a presentation at an overseas conference. I challenged the $10,000 cost of the trip (which probably cost more than $15,000 if you count the loss of two IT resources for 10 days) for three reasons. 1) If you are invited to present, the body sponsoring the presentation should have covered the cost; 2) the virtual communication technology available at the time could have easily have achieved the goal; 3) the economy was showing signs of decline and it would send a negative message to the rest of the company (besides being fiscally irresponsible). I was told that this presentation was not only prestigious for the company but it would also serve as a reward for the employees. Actually, the company did issue a press release, however, both employees left the company before the year was out. There was no measurable ROI or any direct benefits to the company. Anyway, I lost the argument but would still make the same plea today.

Enough pontificating, let us talk about what you want to accomplish with a good travel and expense policy.

First, create some goals and objectives for your policy:

1) To fairly compensate the traveler and provide for his/her safety and comfort away from home
2) To ensure company resources are managed responsibly, ethically and legally and minimize costs when possible
3) To ensure consistency in travel administration, yet provide reasonable flexibility
4) When in doubt, use common sense.
5) Apply the same rules to everyone regardless of position.
6) The traveler should neither lose nor gain financially as a result of business travel

Think about these and let me know if I left anything out – I will follow up shortly with more on this in Part II.

Yours in Supply Chain,

Steve

Remember what the Aberdeen Group says……….

“For a typical enterprise, it takes an increase
of $5 in sales to equal the impact of
a $1 reduction in procurement costs.”

If you have a topic of interest you would like me to discuss in our blog, “in-person”, or see a typo, just send me a comment or email me directly. I would like to hear from you!

Respectfully,

Steve Gordon
Senior Consultant
Solutions Business Consultants
http://www.costavoidance.org
__________________________________
”Bringing Service, Value, and Efficiency to the Supply Chain”

steve@costavoidance.org
(865) 356-3575
Skype: stevegordskype
Blog: https://innovativeconsultant.wordpress.com/
Linkedin: http://www.linkedin.com/in/stevegordonthecostsavingsguy

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