As the global economy continues to grow, cross-border economic flows and business travel are also forecast to rise sharply. According to data from the Global Business Travel Association, annual business travel is expected to increase by 25% between 2013 and 2018, reaching US$34bn.
On-the-rise business travel brings with it increased demand for solutions to manage travel and entertainment expenses (T&Es). Companies are constantly looking for ways to reduce the costs of managing numerous trips by employees and corporate cards have been the solution-of-choice as they help to alleviate the hassles of organising cash for business trips. This, in turn, helps to reduce administrative costs associated with cash and treasury management.
A study by Fraedom, a spend management system and technology provider which was recently acquired by Visa, showed that 86% of all corporate cards issued have been used in the last 60 days. Companies in different sectors are also increasing their issuance of corporate cards to employees, helping to make multi-currency transactions more seamless.
Beyond the convenience of being just a payment tool, corporate cards backed up by spending management solutions make it easier for employees to streamline expense reporting and monitor adherence to corporate policies.
The complexities of business travel can give rise to a range of compliance issues. For example, business travellers can, unknowingly, trigger additional and unexpected corporate and individual tax obligations. In some cases, taxes and payroll withholdings may be required. It is essential for companies to actively manage or plan ahead of business trips, as penalties and interest can start to accrue, and lead to significant financial impact.
To this end, the use of corporate cards coupled with relevant controls, reporting and expense management solutions allow more control and visibility into T&Es and enable companies to keep track of business travel activities closely. Features such as improved reporting systems can analyse spend data by category, such as expense type and Merchant Category Code, as well as monitor employee compliance with corporate travel policies. They can also create usage parameters to meet strict compliance and regulation requirements.
Concerns over leaks of company information and online payment fraud may also arise as more business trips are booked through online travel and metasearch platforms instead of traditional travel agents. To minimise the risk of exposing company information during online transactions, companies can deploy one-time virtual card solutions which allow for a wide variety of spend controls so the card can only be used for its intended purpose once.
While business travel continues to gain importance, using corporate cards to monitor and control spending helps companies work smarter. This is how companies can minimise the costs incurred and reap the benefits of business travel.