Virtual payment should be a reality for business travellers

Jon West
posted by Jon West
17 September 2015

Research from VDR in 2014 revealed a massive 92 per cent of all companies with 500 employees or more receive incomplete travel expense reports.

For this percentage to be so high, something clearly isn’t working when it comes to capturing the true picture of travel expenditure and taking control of spend. So how can procurement managers address this?

Many corporates in the UK continue using outdated, clunky expense and bill back systems and this is a missed opportunity given that online payment technology has developed at a great pace in the last couple of years.

Employees don’t want the hassle of using their own credit cards and submitting expenses for stays away. Furthermore, for those making bookings in this way there can be temptation to leak from travel policies if they think they can find a better rate which can lead to a loss in productivity and inflated prices.

The general acceptance of virtual credit cards by hotels worldwide now offers procurement managers the opportunity to take control of costs as this system enables payment on behalf of the employee to the hotel, which in turns means a business benefits from being far more efficient, cost-transparent and has a total overview of all hotel bookings made.

As a result, cash advances or traditional credit card payments with the subsequent expense claim are no longer needed for employees because virtual payment systems allow companies to make an exact match of payment with booking information. This way, only the money that was approved for the booking is actually spent meaning employers can advise what additional services are covered or not, such as drinks or parking.

This method of payment is preferable to businesses because expenditure can be capped to the value of the booking or have a flexible percentage added for extras to minimise security risks. This solution is also preferred by hoteliers in place of payment by invoice or alternative charging methods as it speeds up transactions and improves cash flow.

Meanwhile, the complexities of traditional bill back systems have several disadvantages for businesses when it comes to reconciliation of invoices, allocation of cost centres, collection of VAT invoices and subsequent VAT claims. These are complicated and not time efficient for accounting teams to deal with when it comes to travel booking agents needing to claim VAT off clients.

Procurement managers can also access level three data and management information, in turn providing real insight into hotel expenditure – an added benefit.

Procurement managers should start reviewing how hotel costs are paid for and consider the latest options available to them to ensure they’re using the most streamlined approach from hotel booking to VAT reclaim in one package. They may well find that the paperless centralisation of hotel payments result in significant savings and added transparency for business travel.

Jon West is managing director of HRS UK and Ireland

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