Leading Companies Share Best Practices on Controlling Travel Costs

Chevron, Starbucks and Tiffany & Co. among businesses leveraging T&E cards


New York — July 24, 2007 — JPMorgan Chase has issued a report titled "Controlling and Cutting Travel & Entertainment Costs" in which some of the nation's leading companies share cost- and time-saving steps that they have taken to maximize their travel program and help minimize the impact of rising business travel costs.

JPMorgan Chase surveyed dozens of its corporate customers to gather some of the industry’s Best Practices for leveraging travel and entertainment (T&E) card programs. Among those surveyed include Chevron Corporation, ConocoPhillips, Jones Apparel Group, Moen, NBTY Inc., Ricoh Americas Corporation, Sears Holdings Company, Starbucks, TDS Telecom, Tenneco Inc., Tiffany & Co., U.S. Cellular, and Woodward Governor.

Travel and entertainment is the second-largest business expense in most organizations — and costs continue to grow.

While domestic airfare rates have remained stable, costs for hotels, car rentals and international airfares all continued to rise over the past year. For example, Smith Travel Research recently reported that hotel rates for the first four months of 2007 increased nearly six percent compared to the first four months of 2006.

According to the 2006 Corporate Travel Card Benchmark Survey by RPMG Research Corp., spending on travel cards by business and government in North America is currently about $143 billion per year and expected to grow at an annual rate of about 12 percent over the next 5 years.

JPMorgan Chase found that, as a result of implementing T&E card programs, department heads are able to capture more of their T&E spend, improve supplier negotiations, manage travel budgets more efficiently, better monitor department travel policies, and optimize cash flow. Financial administrators are able to reduce overhead significantly; minimize paper-based administrative tasks and allow staff to focus on other responsibilities; improve payment flexibility; and easily identify other cost-savings opportunities.

Some of the best practices highlighted in the report include the following:

  • Use T&E visibility and reporting tools to help better leverage vendor discounts. Tiffany & Co. has negotiated better rates with its suppliers, including hotels, airlines and car rental vendors, due to the enhanced visibility into spending provided by its T&E card program. Discounts with its top travel vendors have been in the range of approximately 15-20 percent, while overall costs associated with travel have dropped approximately 10 percent as a result of negotiated discounts.
  • Use T&E visibility and reporting tools to help satisfy Sarbanes-Oxley requirements. Ricoh Americas Corp. has raised the bar on corporate compliance by using an automated online program management and reporting tool to manage the company’s T&E card application process. The technology enables Ricoh to maintain an auditable, accurate record of all cardholders and the corresponding authorizations of their managers, as well as save three business days per month on credit card application processing.
  • Use T&E visibility and reporting tools to help manage delinquency. U.S. Cellular reduced write-off or charge-off fees by nearly 85 percent after using visibility and reporting tools to bring greater control over T&E spending. Jones Apparel Group linked its card program with an expense management system to better monitor delinquency. The company often had $1 million worth of expense reports in the queue that could take 120-160 days to process. Now there are only $9,000 in outstanding expense reports at any given time. The oldest expense report to be processed is just 30 days old.
  • Establish effective controls and business rules. Examples of some control measures in place: ConocoPhillips has one employee assigned full-time to conducting random audits of its 120,000 annual expense reports. Business controllers at Sears Holding Company audit 30-60 cardholders per week and conduct a weekly audit of hotel spending. Sears also reviews all transactions over $1,000. Starbucks performs random audits on 5 percent of expense reports each month.
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