19 May 2008 | Jake Kanter
Companies are wasting millions on administration costs while purchasing travel, a survey has revealed.
The study of 66 European businesses by American Express and AT Kearney found the respondents spend ?2.6 billion (£2 billion) on travel every year. Almost ?85 million (£67 million) of this is spent on management costs such as planning, booking and claiming expenses.
Since the survey was last completed in 2003, the firms have driven down administration costs from 5.6 per cent to 4.6 per cent using purchasing systems and improved expense claiming processes. But researchers suggested they could find greater savings by adopting best practice techniques.
These include putting in place a defined policy for purchasing travel and working with suppliers to reduce costs and improve processes. The study also said companies should centralise back office activities and increase spend visibility.
Karen Penney, vice-president, business solutions group, commercial card EMEA at American Express, said the hidden nature of the administration costs can make savings difficult to find.
"In the current economic climate, with financial directors looking for ways to reduce costs of travel, companies should be placing greater scrutiny on inefficient, fragmented back office processes," she added.