Five steps to …Creating a corporate travel payments strategy

An essential component of your travel programme

Introducing corporate payments for travel has huge benefits for many different stakeholders within a company. Your travellers will have a much more convenient way to pay, your finance department can retain funds for longer and improve compliance, and as travel manager you will open up a new source of detailed management information about your organisation’s travel spend.

But how do you make sure you end up with the best-fitting payment mechanisms and the most appropriate provider to meet all those different needs? Payments procurement is complicated, but here are a few pointers to get you started.

Step 1 – Work with the right people internally

Choosing a payments provider is normally a detailed, cross-functional process. As travel manager you are unlikely to have the final say, with finance often making the decision instead. If that’s the case, it’s very important you talk to whoever is in charge of the procurement process so you can brief them on what the travel team needs from the chosen supplier.

Step 2 – Relationship bank or specialist travel payments provider?

You may especially wish to influence the finance departmentif it is considering awarding the travel payments contract to your company’s relationship bank (a bank which provides many financial services to your business). While that may strengthen the partnership, the relationship bank will not necessarily offer the best products and tools (management information for example) for the needs of your travel programme. Communicate to your finance colleagues what other options are available and how those other suppliers could help them as well as you and your travellers.

Step 3 – Understand the different kinds of payment product

There are three main types of travel payment product. You don’t have to choose just one. You may want all three:

Lodge card (also known as business travel account)

A lodge card isn’t an actual card. Instead It is a payment account lodged with your travel management company. Flights booked through the TMC are paid for with the lodge card and then every month (usually) the payment provider invoices your company. Data quality is very good and centralised payment means your travellers don’t have to get involved in the process at all.

Corporate cards

These are the familiar plastic cards, often called “walking cards” in the corporate payments world. Payment is very easy for the cardholder, but companies are sometimes reluctant to let all their travelling employees have a corporate card in case they misspend or overspend.

Virtual cards

Virtual cards only exist digitally. They are typically used once only and a set limit can be applied, as well as restrictions on which merchants can accept the card, all of which is very helpful for risk management. Virtual cards are mainly used by TMCs to pay for hotels on behalf of clients, but there can occasionally be problems with hotel front desk receptionists not recognising a virtual card as a legitimate way to pay.

Step 4 – Company pay or individual pay?

When you sign a corporate card agreement, you will need to choose. A company pay arrangement means the card provider collects payment from your company for what your travellers have spent on their cards. Individual pay means the individual cardholder is invoiced and must settle with the card company, then submit an expense claim to be reimbursed by their employer. Naturally, travellers much prefer company pay but employers sometimes feel they have more control with individual pay.  

Step 5 – Evaluate the different offers

There is a long list of criteria that will influence your choice of issuer. Just a few examples include:

• How widely is the card accepted? Levels of acceptance between different card schemes can vary significantly, especially outside major cities.

• How good is the management information?

• How much rebate, if any, does the card provider offer?

• Are there any cardholder benefits, such as insurance or lounge access?

• How user-friendly is the card management portal for administrators?

• How well does the provider integrate with your expense management tool, if your company uses one?