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Business Management

Corporate expenses tightened

In the absence of any realistic possibility of increasing sales, at least in the short term, most companies have been forced to start looking at their expense accounts in an effort to preserve profitability

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Some of the controllable expense items on the average income and expenditure account are corporate expenses, such as travelling costs, entertainment costs, company cars, stationery etc.

Gone are the days when money could simply be spent because it was there to spend. Many businesses have, during the past few years, tightened controls over which employees are allowed to travel, whether they are allowed to fly in business class or economy class and how far and for how long they are able to travel.

Many employees are nowadays forced to travel on budget airlines and their expense accounts for onboard meals and drinks have also been severely limited.

Once they arrive at their destinations, only top executives are now allowed to stay in five-star hotels; the rest have to accept three star and four-star lodgings. They also no longer have carte blanche when it comes to wining and dining business associates.

Many companies have curtailed the size of corporate delegations. No longer is it acceptable to take everyone from the managing director to the tea-lady if you want to travel to China to negotiate expanding into that country.

When it comes to local travel expenses, such as car allowances, the corporate axe has also been very busy over the last few years. Many executives and sales people are now, once again, forced to buy a vehicle that can bring them from the office to a business meeting in a reliable fashion rather than a status symbol to show off to friends and family members.

Unlimited fuel accounts have also become something of the past in many companies. The good old log book has once again started to make a comeback. Junior staff, in particular, are once again forced to keep track of every trip they make on the company’s behalf.
Beleaguered financial house, City Group, is just one of a long list of companies that have been forced to curtail corporate expense accounts over the past few years. In 2008 Vikram Pandit, the company’s chief executive officer, embarked on a drive to cut the group’s costs by at least 20 percent. Large reductions were made to corporate expenses.

Another side-effect of the corporate austerity drive has been an increase in the use of management information systems (MIS). Today, corporate bosses want detailed information on how the company’s expense account is made up, who is spending what and why.

These developments have also had serious repercussions for companies involved in the corporate expenses industry; one of them being Diners Club. For one, the company has had to launch improved Management Information Systems, because their corporate clients wanted more detailed information to enable them to clearly see where cost cuts could be made.

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