To Bid or Not to Bid

In 2010, I audited an Organization based out of Miami noticed a reduction of travel, conference and related expenses of 32%, by making two changes; 1) centralizing the airfare and hotel procurement for all employees into one position, and 2) using a travel management company to negotiate with hotels for conferences, rooms and food.

No matter how much time you’ve spent on your travel policy there are hidden efficiencies waiting to be realized. The next time your board is looking to reduce expenses ask these questions to find strategies to slash through that travel budget:

• Do you require three bids?
• Is one employee assigned to travel administration and management?
• Does the organization require post-trip evaluations?
• Does the organization use technology such as video and web conferencing when possible?
• Does the organization use a travel management company to control costs? If so, was a careful evaluation made before choosing a travel agency?
• Are senior fares obtained for employees over 62?
• Are off-peak airfares negotiated with?
• Have guidelines been set for tipping?

You may be saying, well a centralized function and internal controls are great in theory, but is that really practical in light of the staff reductions many organizations were forced to make resulting in consolidated positions and employees unable to carry out their current assigned duties.

At a minimum, employees can get three bids and organizations can require documentation of the three bids with no additional use of resources. Travel can be booked in advance in order to obtain the lowest prices and compared against indices such as the Runzheimer Meal-Lodging Cost Index to gauge the appropriateness of travel in different cities. No matter what strategies you employ for your organization, the travel policy should be easily understood by employees.