February 25, 2022
Explainer

Can a managed travel solution help your business take control of your travel program?

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The world that businesses operate in today is very different from what we saw just a few short years ago. Remote and hybrid workforces have become the norm. Business travel, once tightly controlled from central office locations, is often left in the hands of employees who submit hotel and airline receipts for expense reimbursement. Because of this, cost control has become more difficult to manage. 


Relinquishing control over travel expenses can affect the profitability of a business. Employees may have different perspectives on things like business expenses so booking travel accommodations that work best for the business may not be their first thought or consideration. Extra amenities on planes, room service at hotels, and upgraded rental cars are just three of the areas where extra costs are prevalent. For businesses that spend more than $1M per year on travel, managed travel can prevent all of these.


Most companies can benefit from managed travel. Some small businesses may not have the need for managed travel right now but setting up these policies early can benefit them once they do pick up business travel. In this article, we’ll explain what managed travel is, highlight the benefits, and lay out some T&E management strategies that can help streamline your company’s travel expenses. We’ll also touch on an automation-driven alternative to managed travel that can give you additional flexibility for your employees and control for your finance teams. 


What is managed travel?


Managed travel is a system where all business travel for the company is coordinated from a central location. This can be a travel management company (TMC) or a central department within the company that is responsible for booking flights, hotel rooms, rental cars, and other travel related necessities. With managed travel, travel accommodations from A to Z are made for employees. 


The primary objective of managed travel is to manage costs and expenses. This is particularly important for companies with remote workers that have different departure destinations. In that scenario, it’s more difficult to reduce costs. With multiple employees traveling from one central location, bulk discounts may be available. 


Implementing an internal managed travel program requires real-time expense management, a dedicated team that knows how to shop around for the best deals, and in some cases, travel management software. To make their job easier, the company will also need a travel expense policy and some guidelines on how much money is allocated for travel per person. Having both simplifies budgeting.


Managed travel versus unmanaged travel


Unmanaged travel is a system where the travel arrangements are left up to the employees. They book their own flights, hotels, and cars, then submit expense reports and requests for reimbursement. Unmanaged travel gives the employee a good amount of freedom, but, without the right tools in place, it takes cost control out of the hands of the company. Managed travel can correct that.


That’s not to say that unmanaged travel doesn’t work for certain companies. There are circumstances that make managed travel more of a burden than a blessing. But for bigger businesses with multiple people traveling, managed travel is usually a good fit. That said, there are several benefits to managed travel. 


What are the benefits of a managed travel program?


The most obvious benefit to managed travel is the ability to control cash outflows that are related to employee and executive travel. If your company is going to implement a managed travel program, it’s not just for the sales team and purchasing agents. Owners can also benefit from having travel expenses managed. Here are some of the reasons why: 


1. Managed travel saves time


Unmanaged travel is time consuming for everyone. The traveler needs to take time away from their regular work to research hotel rates, airfare, rent-a-car deals, and more. They also need to spend time calling airlines and hotels to change flights and reservations. Needless to say, they won’t do that on their own personal time. As the business owner, you’ll be paying for those hours. Implementing managed travel puts teams back to work on more productive tasks. 


2. Boost ROI on travel spend


Every business trip should be booked with the intent of producing some type of return for the company. Conferences are great for obtaining leads. Purchasing trips are missions to get the best prices on goods and services. Travel expenses need to be deducted from the ROI of each trip, so saving money with managed travel increases the company’s net profit margin.  


3. Improve policy adherence


Mature companies have spending policies. Unfortunately, when employees are left to make their own spending decisions while traveling, those policies aren’t always followed to the letter. Denying a reimbursement for policy reasons does not promote goodwill in the workforce. Controlling the spending with managed travel eliminates that problem ahead of time.   


4. Simplify reporting and analytics


Putting together expense reports and reimbursement receipts to do reporting and analytics is a time-consuming and error-prone process. Managed travel is done with a central database and reporting system that keeps track of the numbers as you go. Purchases go into the appropriate business expense categories and reports can be run and analyzed with the click of a button.  


How to get the most out of managed travel


Deciding to implement a managed travel program is only the first step. Getting the most out of that program requires additional work. Ideally, you’ll want to use software with expense automation and reporting features that give you real-time numbers. You’ll also need to get all your employees on board with the new system. Here are some suggestions on how to do that.


1. Create a travel expense policy


The admins of your managed travel program need to have parameters they can work within. That includes spending limits, allowed and unapproved expenses, preferred vendors, and corporate charge card limits. These should all be part of a written expense policy that can also be shared with the employees who are doing the actual traveling. Check out our expense policy generator here.


2. Assign employees a corporate charge card for per diems


Allowing employees to use their own credit card and submit for expense reimbursement is not part of an effective managed travel program. Some companies believe in doing all the booking and letting employees govern their own expenses. With corporate cards, you can put limits on what they spend and block charges that don’t classify as business expenses. 


3. Emphasize the importance of receipts


At some point, your company or the IRS may want to do an expense audit. Managed travel programs have the reporting and transaction ledgers for that, but receipts are hard copy backup that you need for proof. Emphasize the importance of receipts to your employees. They should be able to use their mobile devices to keep digital copies.  


4. Have the travel manager keep a database of travel providers


A third-party TMC will already have this in place. If you’re doing managed travel in-house, have the admins build a database of travel providers for flights, lodging, car rentals, etc. This will be time consuming in the beginning, but it will eventually start to save your company time because booking information will be at their fingertips. A central database also helps if you transition to new travel managers. 


5. Review travel ROIs and spending behaviors frequently


One of the best features of a managed travel program is that the numbers you need to calculate travel ROI and spending behaviors are all available in one place. Review these carefully and frequently to find ways to cut costs and improve the company bottom line. Managed travel should save you money, thereby increasing profitability. 


6. Use reporting and analytics to plan ahead


Planning conference schedules and buying trips can be risky if you try to do it too far in advance. The reporting and analytics a company can glean from a managed travel program gives a business the numbers that can be used to plan. Schedule spending and budget reviews on a monthly or quarterly basis and adjust travel schedules when needed.  


Ramp for Travel: expense automation that complements managed travel perfectly


If you already have a managed travel solution, Ramp is a great complement for automating all your receipts and expenses. But if you think you don't need it, Ramp for Travel is great on its own for travel expenses and beyond. With our free solution, businesses get the access to the same controls you'd get from a TMC, without sacrificing flexibility, including: 


  • The ability to create digital travel policies for real-time expense control
  • A Chrome extension that allows you to use your Ramp card in seconds to book travel
  • A Lyft integration that allows for instant receipt matching and submission
  • A dashboard that gives you real-time insight into travel patterns 
  • Merchant and category rules that automatically categorize trip expenditures 


With Ramp for Travel, employees get the flexibility they deserve and need, and finance teams get the controls and insights they’ve been looking for. 


Should my company switch to managed travel?


If your company has a sales department that’s going to start traveling again in 2022, now is the time to implement a managed travel program. Hotels and business centers are starting to relax restrictions and live conferences should be happening again this year. The same can be said for trade shows, so start managing the travel of your buyers and presenters.


Some of the tools used for managed travel, like expense automation and corporate charge cards, can be applicable to non-traveling businesses also. Ramp has both these features and can provide you analytics and reporting on your spending. We also connect to accounting programs, like QuickBooks and NetSuite. 


If you’re currently on the hunt for a travel management solution, Ramp partners with TravelPerk and Corporate Traveler to give you our best-in-class finance automation solution to help you streamline your travel expense management. As a bonus, Ramp customers who use either platform get access to preferred pricing. 


Contact us today to learn more.  


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