CFOs, static travel policies are hurting your business

In the last 4 months, we’ve met 150+ companies in France and abroad. We talked about their business travel habits and their travel policies.

I already wrote a small article about traditional travel agencies, but I wanted to write a small note about rigid travel policies that harm almost every international SMB.

In most SMBs, CFOs put in place static travel policies. They set fixed budgets for recurring routes, state the companies’ preferred airline and the reservation classes… For example, the company policy might mention that the price ceiling for a roundtrip from Paris to San Francisco is $1500. If they book from the company’s booking tool, it is integrated in the search results. If they book on their own with their credit card, they have to respect this ceiling to get reimbursed.

We believe these strict policies produce two major problems for companies. First, they don’t optimise the price choices. Second, they drive travellers away from companies’ processes.

Case 1: The flight is too expensive for the policy

Let’s say that you need to go to Paris during the Fashion Week or to Las Vegas during CES. The price of the tickets will be much higher than usual, but your company policy will stay at the same level.

You have 2 options:

– you don’t go, which is bad for your business

– you need to go. You ask your supervisor to accept it. You book your flight on a B2C website (your B2B platform will not let you do it).

This is a problem for CFOs:

– this trip is not taken into account in their metrics/dashboards.

– they spend a lot of time getting back the bills and reconciliating expenses reports

– the validation process is subjective and time consuming

Today, in vast majority of companies, only 60% of business-trips are booked through the company’s booking software. That means the finance department has no visibility or control on 40% of the trips.

Case 2: Overspending

Let’s say your company policy sets the budget to $1500 for a Paris-San Francisco roundtrip. You need to go to San Francisco, and the cheapest acceptable flight is $600.

Yet, there’s that great flight on Air France (on which you get tons of miles) that costs $1490. No-one would ever question your choice if you take the expensive one: you’re compliant with the policy! If you book it, your company will “lose” around $890.

These everyday excesses happen in every company, and represent large losses for SMBs.

How we’re fixing this

At Okarito, we’re building a solution for SMBs to better manager and optimise their business travel, and we want to fix this.

In the last months, we’ve been building a tool that defines the “fair price” of a trip at any given date. That means more choice for your travellers, and more cost control for you.

How? Our tool sets a dynamic data-driven travel policy that defines the “fair” price for a flight while displaying the cheapest travel options. In our previous examples, the fair price for the Fashion Week would be higher than the usual price, while the fair price for SF would be lower.

We believe that our tool will reinvent how you organise and manage business travel in your organisation by helping you save on travel spend while preventing travellers from stepping away from your processes.

Do you know someone that might be interested in Okarito? Let us know!

Découvrez Okarito, solution gratuite de réservation des voyages d'affaires.

Remi Duvoux

Cofounder of Okarito. In charge of product.

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