The process of procuring a new travel management service, at best, can be lengthy.
From the moment your organisation decides to begin the search right through to the first day of implementing your shiny new supplier, there’s a lot to consider. More often than not most attention is, quite rightly, paid to what your prospective travel management company (TMC) can offer in the way of innovation, functionality and results, with a lot of consideration also given the fees that potential suppliers will charge should they be appointed.
However, an aspect of travel management that often gets skimmed over more quickly than some of the more sexy topics is that of paying for business travel.
Finding the right payment method, one that fits the way in which your organisation works, is a quick win in terms of making savings on your travel spend, as once implemented it’s something that will tick over without the need for close monitoring or tweaking.
We’ve assembled this short, straight-to-the-point guide to walk you through the pros and cons of each way of paying for business travel so that you can decide which is the best fit for your organisation:
#1 Credit Cards
Credit cards are simple and universally accepted, but if your spend is large, they can become problematic from a data perspective.
Some credit card companies provide points and prizes based on the amount of spend that you put through your account
Your credit card account is portable – you can take it with you if you switch providers, or even use it with multiple providers at the same time
Paying by credit card can sometimes incur merchant fees, which could otherwise be avoided
Data will be next to non-existent beyond the merchant name, and linking it with travel data provided by your business travel agent will be virtually impossible
In the UK, credit card statements cannot be used for VAT purposes which means you still need to collect original VAT invoices for every transaction that appears on your credit card statement
Increased risk of travellers booking away from the TMC, meaning less visibility of your travel spend, not being able to fulfil your duty of care to travellers and having very little control on policy compliance
#2 Lodge Card
A lodge card is a credit card which is specifically designed purely for business travel expenditure. There is typically one credit card number which is “lodged” with your travel management provider, and to which all expenditure is charged. Whilst they are relatively simple and universally accepted (because they are effectively just a clever credit card), they can cause issues from a data perspective if your spend is large.
As with standard credit cards, some lodge card companies also provide points and prizes based on the amount of spend that you put through your account
Again, your lodge card account is very similar to a regular credit card account, in that it’s portable – you can take it with you if you switch providers, or even use it with multiple providers at the same time
Paying by lodge card can sometimes incur merchant fees which could be otherwise avoided
Data will not be perfect as it is dependent on consolidating data from many different sources
In the UK, lodge card statements cannot be used for VAT purposes which means you still need to collect original VAT invoices for every transaction that appears on your lodge card statement
You can come unstuck if you have a query about a charge as it’s difficult for the TMC to investigate
#3 Credit account
A credit account is arguably the simplest payment method to pay for an organisation’s corporate travel spend. Your finance team will save hours on processing expense claims and tracking down hotel invoices to claim back VAT, and have fewer invoices to review and fewer payments to make. And it saves time for the business traveller too, because they don’t have to pay and then claim back via expenses.
Many business travel companies will offer a credit account directly with them, and, because these accounts are built into the corporate travel agency’s systems and processes, they typically offer by far the highest data quality – in fact, the data quality should be perfect.
A credit account with your TMC should provide perfect data
You will be able to avoid almost all merchant fees
You’ve only got one relationship to manage – there’s no blame game between your payment provider and your TMC when charges are in query, or data is not acceptable
You should get a HMRC approved invoice that can be used to reclaim VAT on hotels and other vatable suppliers
Terms and credit limits may not be as good as those offered by credit and lodge card providers
Some TMCs won’t allow all travel to be charged to your account
So there you have it! We hope that helped you to understand how best to go about paying for business travel.