business travel audits Archives

Secure savings in your business travel program- some low hanging fruit’s !!

Blog, News Business travel, business travel audits, business travel consultants, business travel programs, Domestic VAT Reclaim, emerging markets, Global VAT, Global VAT reclaim, hanging fruit, hanging fruit’s, travel managers, travel programs in India, VAT recovery by ProKonsul Consulting

As a business travel consultant, ProKonsul has seen these simple steps to secure immediate savings in client business travel programs. Use them today in your program!

The single biggest objective that travel managers have today is to drive savings. These savings can be direct hard $$ or indirect soft $$ savings. Listed out some of the top saving strategies implemented by customers of ProKonsul.

1. Global VAT Reclaim

This is the single biggest saving opportunity inherent in business travel programs across emerging markets like India.

This single category allows for savings of up to 29% on overseas business travel expenses in specific countries. The expense categories permitted for reclaim are specific and include all accommodation expenses food & business entertainment.

Additional categories include overseas MICE expenses, marketing & consultants fee, amongst others. The most attractive aspect of securing Global VAT Reclaim is that any fees payable in only if you receive an actual refund. The paperwork is simple and business travel consultants like ProKonsul facilitate submission to the individual tax offices of the designated countries.

2. Domestic VAT Reclaim

Effective handling of domestic reclaims can secure 18% plus savings on domestic hotel expenses. The impact of air ticketing ranges up to 5% on the actual air ticket costs. This aggregates to a substantial annual benefit. While deploying internal finance & accounts resources is effective, it may be more financially prudent to deploy external VAT recovery specialists. External specialists are more conversant with the overall process and prove more efficient from the resource and cost standpoint.

3. Smart buying strategies

Much of the procurement for business travel suppliers in emerging markets like India, is still based on a traditional “ supplier aggregation model”.

This means most business travel programs have an inflated list of preferred hotels & airlines, with whom the travel/ procurement department has contracted a preferred rate. However, there is limited consolidation of spend, which results in fragile relationships that have limited value and almost nil incremental year-on-year benefits.

Smart buying implies having a limited set of truly preferred vendors who get a significant proportion of your business travel reservations. When this happens & you fulfill your volume or market share commitments, they would recognize you as a credible committed client with an ability to shift business.

This develops stronger client-vendor collaboration & normally results in incremental year-on-year benefits which have both direct & indirect value.

4. Optimize Travel Administration Resources

It is common to see small and mid-size travel programs in India (travel spend between $1-3 Million) have a high number of internal staff resources, who administer the program, support internal customer inquiries & keep checks on vendors.

Globally, it is seen that multinational travel programs can be managed through a single internal resource if the technology is deployed intelligently and irrelevant controls are removed.

It is important to conduct regular business travel audits and continuously refine internal processes, so superfluous resources don’t get added. As a guideline, your internal travel admin resource cost should not exceed 1-2% of your overall business travel program spend at the maximum.

5. Domestic car hire

Most emerging markets like India require domestic car rental services with a chauffeur drive facility for airport transfers/ intracity usage. With the advent of Uber, Ola and Grab, app-based car rentals are becoming the standard for airport transfers.

Car hire services through legacy agencies are highly opaque. Many local vendors offer car rentals based on garage-to-garage mileage with incremental fees being paid for exceeding a pre-defined time limit. Such modus operandi results in massive amounts of fraudulent billings.

Many progressive travel programs have shifted to GPS-based billing that is charged only between the time and location of pick up and the time and location of termination of service. Wallet-based payments or direct credit card payment by individual travelers is preferred versus a bill-to-company model. Such steps can reduce your car rental spend by 7 to 9% on an annualized basis.

The recommendations listed above should be actively explored by travel managers. Presented as the business case to your corporate leadership, will allow you to create a stronger more positive impact on your corporate leadership.

The travel department can actively contribute to reducing overall corporate spending & optimize the process. It is important that travel managers don’t give in to inertia and maintaining the “status quo” but step out of their comfort zones to evaluate new and better ways of managing their travel programs. Active well presented recommendations to the corporate leadership, will result in the travel department being recognized as an important internal business partner & contributor to corporate success.

Want to set up your 30-minute FREE consultation with a ProKonsul business travel expert?

Drop us an email [email protected] or call +91-9873196115.

We would love to work with you! Call us now !!

ProKonsul ® optimizes the business travel lifecycle of its clients. It delivers domain expertise in enterprise business travel. Established in 2014, it is the pre-eminent business travel consultant firm in India, Asia & emerging markets. We are located in Gurgaon, India. ProKonsul ® advisory services are supplier agnostic & governed by a robust integrity policy.

Indian Multinational’s – How to create a global Business Travel program

News Business travel, business travel audits, business travel industry, global business travel programs, global travel program, Global VAT reclaim, Self Booking Technology, VAT Reclaim by ProKonsul Consulting

ProKonsul is a business travel consultant to multiple clients in this segment, in India & emerging markets

There are a significant number of global multinationals that have their origins in India. Tata, Reliance, Tata Motors, Mahindra & Mahindra, Rajesh Exports are just some examples. Most of these companies are in the Fortune 500 listings.

While these companies are world-class, their global business travel programs are still very nascent. Much of their travel buying in international markets are decentralized with individual offices securing local vendors and purchasing retail.

As a business travel consultant to many companies in this segment, these fast-growing corporate entities have found incremental value by creating an integrated global travel management program. It is expected that given the fast rate of growth, building scale will be the most important aspect of their future corporate strategy.

Listed are the top three success strategies that these organizations can implement;

1. Create a consistent global framework of travel strategy and policy

The first step involves establishing a common global travel strategy & related policies. These will facilitate easy administration and consistent implementation. Rather than give in to variances at an individual market level, the company should strive for a simple yet effective travel policy.

The policy should accommodate different business units and corporate hierarchies that may exist across markets. The approval framework should ideally be common or similar. The key to achieving success globally is to reduce excessive variances based on individual market operations. This is however likely to be difficult. It is advisable to create standard operating templates and allow individual countries to select from one of the templates defined centrally.

Recognizing regulatory, government and tax-related obligations should be factored at the outset to ensure compliance. Recovering permitted VAT / GST on domestic in-country expenses from the outset is important. Similarly, Global VAT Reclaim of overseas travels to designated counties should be planned initially – this will impact structuring the travel policy. A focus on such initial optimization will have long term benefits financially & create an optimized travel program.

Most developed economies have a very stringent corporate duty of care obligations. Such obligations can have a far-reaching negative impact on the corporate entity. Its board of directors can be exposed to litigation and expenses. When structuring a global travel program, such legal obligations must be factored and built into individual country programs. Alternatively, there could be a single consistent approach to Duty of care at a global level which can account for a simpler implementation.

When building such programs, engaging an external business travel consultant like ProKonsul, ensures that all primary factors are accounted for.

2. Aggregate buying and consolidate purchase data

Most global business travel industry leaders don’t recognize these multinationals as significant buyers. This is because of disaggregated purchasing that these companies prefer. It is common to find individual market offices purchasing through local travel agencies, online channels & airline/hotel websites.

There is limited or no data available which supports their total aggregated global purchasing power. Nor do they have data to outline productivity by respective airlines, hotels and other business travel partners. Given this, the first step that these organizations need to take this to consolidate data, for the preceding period. Some level analysis by respective destinations and vendors can provide a baseline for initiating a strategic sourcing function.

3. Adopt technology to develop a global travel program

It is important to create a technology lead global travel program. While having a single vendor across all geographies may be a challenge, establishing a common technology-led fulfillment is key. This will allow simple and consistent enforcement of global travel policies. Apart from generating data, technology can also automate expense claims and settlements.

As a business travel consultant, we have seen that deploying technology intelligently, reduces costs and optimizes resource deployment.

The best approach is to start a phased global travel program launch targeting primary markets first. This would allow for a progressively phased roll-out in secondary markets, eventually leading to a full global program. Self booking technology implemented with utilities like Single sign-on & HR / ERP integration in different markets would eliminate the need for individual in-country travel managers. This will also generate consistent data from every global office. The central sourcing team will get a clear line of sight to transactions, spend and fees being incurred in different locations.

Today, apart from global business travel industry majors there are several products, based on mobile apps, that eliminate the need for paper filing of expenses. In addition to user convenience, they offer increased compliance and data capabilities.

Given the rapid growth in turnover and global footprint, multinationals based in India & Emerging markets should invest in creating a global travel program. This will be an important step in building scalability & sustainable growth.