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Travel Food Expenses; control, guidelines

We're pretty heavy on sales, and the travel, food and entertainment budget always feels a little high, or at least potentially controllable. I've experimented with just setting the guidelines at the Dept of State per-diem, but I'd rather inspire austerity rather than having fixed rules that chafe. Any suggestions?

Answers

Dale Bolen
Title: VP Accounting
Company: C.R. Laurence Co.
(VP Accounting, C.R. Laurence Co.) |

I've used an "ROI on T&E" analysis in the past for a similar scenario. A quick pivot table from Concur of expenses by sales rep along side sales / sales growth by region provided insights into whose spending was productive and whose was wasteful.

Ernie Humphrey CTP
Title: CEO & COO
Company: Treasury Careers
LinkedIn Profile
(CEO & COO, Treasury Careers) |

There are survey results that benchmark T&E spend by specific categories. I moderated a webinar, 2015 T&E Expense Benchmarking: Are Your Employees Splurging on the Company Dime (https://www.proformative.com/events/2015-te-expense-benchmarking-are-your-employees-splurging-company-dime). Anyone who would like more information on the survey results can reach out to me at Ernieat360thoughtleadership [dot] com, and I will see what I can do on that front.

Grayham Hargreaves
Title: Business Analyst
Company: Johnston Press
(Business Analyst, Johnston Press) |

Many businesses Tempt Directors and Managers with a bonus based on a % saving on cost budgets, why not carry this down on to sales people, it gives them a real incentive to not be frivolous with company cash and also a perfectly valid reason to start putting budgets / targets in place for Sales rep spend.
As an added extra they may even start to see why we have these measures in place in the bigger picture!
Good luck

Anonymous
(CFO/Board Advisor) |

After years of control and guidelines and policies, I have found the best method is "company culture". People do want they believe is acceptable. They stay away from doing what is unacceptable. So T&E spending starts at the top of the organization, e.g. CEO, CXO's, and VPs. They set the tone and examples. If they are buying $300 bottles of wine at dinner, making travel arrangements late in order to do cheap upgrades to the front of the plane, staying in expensive hotels, etc, then the troops believe it is acceptable behavior, and no policy, guideline, whatever is going to change their spending habits.

Now, if executives show moderation in their T&E spending, manage their staff's spending on such items, and not pass the buck to Accounting to be the bad guys, then your T&E spending will fall into line.

This is really a management and executive issue, not a finance, accounting and control issue. So focus on the core culture and values of the company, not policies and guidelines.

My two cents.

Jeanette Tweed
Title: Chief Financial Officer
Company: Agencyport Software
(Chief Financial Officer, Agencyport Software) |

I wholeheartedly agree that company culture is a big driver of behavior in this area of cost control. But, I also think a "bonus"-based program to encourage the right behaviors can be incredibly effective as well.

Just yesterday, I got an inbound marketing message about a company called Rocketrip that has a pretty unique program for rewarding employees for saving the company money on travel. [I am in no way associated with Rocketrip, so I hope I'm not violating any promotional guidelines here....]. We had some decent discussion about looking into this model. One of the things that I think all Finance departments struggle with in terms of cost control with travel is really knowing what a particular trip "should" cost.....so, how do you know whether the total spend is above or below that level? The Rocketrip platform purports to provide an algorithm using current market data to calculate this cost in real-time which forms the basis of determining whether the employee's choices represent a true savings to the company. The employee gets to keep 50% of that savings, the company keeps 40% of the savings, and Rocketrip takes 10%. I wish I had thought of this model!

Any program that offers a "win-win" scenario versus hardcore policies is sure to be the best approach (in my opinion).

Mark Matheny
Title: VP - FInancial Planning and Analysis
Company: Novolex (formerly Hilex Poly)
(VP - FInancial Planning and Analysis, Novolex (formerly Hilex Poly)) |

In a company I previously worked for, we published a scorecard of travel costs as a percent of sales dollars by salesperson by month. Added a little peer pressure.

James Scott
Title: Consulting CFO
Company: Early Growth Financial Services
LinkedIn Profile
(Consulting CFO, Early Growth Financial Services) |

Basic travel policy applies to sales travel and living. So lowest cost air and biz class hotel requirement keeps that in line. Meal per diem same for sales travelers ($60) unless entertaining clients/prospective clients. No alcohol reimbursable unless entertaining, no restaurant bill greater than $100 per person entertained reimbursed. The sales person can, off course, pick up the difference out of their own pocket. We don't supply company credit cards. Fixed rules don't really chafe if they apply equally to all company employees.
I have never noticed a positive correlation between high entertainment spend and sales results. But to celebrate a closed sale, a bigger splurge is usually OK.

Anonymous
(CFO) |

Veering into tangential territory:

We are a public agency - a special district - overseen by local politicians. We purchase the flights and pay for hotel rooms in advance for employee and board member travel. We use the maximum federal per diem rates for ME&I even appropriately prorating for partial day travels.

I say that ME&I allowance should cover everything but the hotel and flight which were prepaid by the organization anyway.

But, some employees also submit reimbursements for things like taxis, mileage to and from the airport, etc. (Don't even get me started on the tax free, reimbursement we made to one, low level but "pet" employee for dog care expenses she submitted after the trip.)

And, our CEO is very generous with his corporate card for board members, vendors, etc. on these trips on top of the per diem checks that were already provided. He says his job depends on it.

This is from many perspectives, a clear violation of the public trust to start with. Most of this so called "business travel" is really just an excuse for our board members to take trips to resort areas along with their families and friends and take a vacation while claiming that their limited participation in some "conference" there justifies the business purpose.

But, I say providing anything in addition to the air fare, lodging and ME&I per diem violates the non-accountable plan rules for tax purposes and exposes us to potential tax issues by making all of the T&E expenses part of an accountable plan for which we have not received receipts.. After all, the "I" in ME&E is for "incidentals".

No tax expert, including our own auditors can provide me with a clear cut answer about the ME&I. Although, our auditors are clear that this is junketing by pols on the taxpayer dime and excessive too.

My research into the IRC and regs hasn't provided a firm answer either.

Does anyone have a reference?

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