The first step in trimming the fat out of any budget is to find out where the money is currently going. Then, when you try to prioritize the things you need to keep within the budget, you usually end up taking another look and finding out where the money is really going. For example, you might discover that you’re spending an average of $300 a week to feed each employee who travels to get their jobs done. That might seem acceptable when you see that most of the travelers do spend roughly that amount on meals for a week. But what if you break that down even further? If you eliminate alcohol, companion meals, appetizers, and five-star restaurants, you could easily bring that number down to $225 or less.
Looking for these types of savings isn’t as difficult as you may think. The trick is to set some goals and to drive your analytics toward a few key numbers. Within each of those numbers, a secondary level of analytics should be defined, and then even a third below those. Here’s an example:
Set your level-one analytics to derive a simple “cost per trip” number for your travelers. Let’s say $2,500 per week for a five-day business trip is reasonable. If, at the end of a quarter, you look across your report and see that the bulk of your business travel group does spend $2,500 or less per week on their trips, ask yourself: “Who are the three highest, and who are the three lowest-cost travelers?” Also what did the higher folks spend their money on? How did the lower-cost people save their cash? For those answers, you need to dig down to level two.
Under your level-one numbers, you need to break those down into logical units. Staying with our $2,500 per week example, let’s break level two down to airfare, lodging, meals, transportation, and incidentals. Here, level two requires some “common sense” evaluation. If you see that one traveler stays under the $2,500 cap but manages to spend 80 percent of it on lodging, logic would dictate that they’re either traveling to Manhattan or San Francisco a lot, or they prefer to eat cheaply but to stay in nicer hotels. Again, you’re looking for common sense things that stand out above and below the other numbers. Perhaps Sally’s meal numbers are half of what Ken spends because Sally weighs 100 pounds while Ken is the size of a linebacker.
When you break things down to level three, it gets interesting. Typically, the trends you spot doing regular level-one and level-two checks will tell you what you need to know. Here at level three, you will discover where your “spending offenders” are spending money. This is where the itemized receipts for meals and hotels are analyzed. This is where rental car receipts and parking ramp receipts, etc., are found. Here are some actual examples of things discovered at level three that required a bit of “hand holding” with the travelers in question:
- Meals that were all alcohol, no food
- An extra $10 per day to park in a covered spot
- Hotel mini-bar and movies
- Hotel gift shop receipts bundled with the main hotel receipt
- Valet and laundry service billed to the room
- Multiple entrees and appetizers during one meal
The reason to implement a multi-level strategy is simple: As a manager, you have many other responsibilities to tend to, so you want something that you can quickly glance at and scan through to see that you (and your travelers) are well within established boundaries. When and if you need to dig deeper, you should have those level-one numbers broken down in such a way that you can scan those secondary and tertiary levels quickly as well.