E-Newsletter: Road Warriors (October 2005)





October 2005	In this issue:

Good morning!

It's getting brutal out there on the roads with gas at more than $3 a gallon. Wait until the airlines catch up! This will have severe implications for your travel and entertainment budget, especially in the absence of a well-established T & E policy.

Here's how to keep it under control.

Best regards,

Bradlee T. Howe
Financial Managers Trust

Road Warriors

Last weekend my 25-year-old son Will flew from Boston to Sydney. Business Class: $11,500 round trip.

He landed safely and made his way to the Quay West Hotel, where he'll be housed for six weeks. Five-star. A 500- square foot suite. In-room laundry. Overlooking the Opera House.

My wife, Annie, and I have occasionally said from time to time during our long career as parents that we'd love to be reincarnated and come back to life as one or another of our five kids. Usually this has had to do with summer camps that they attended in early adolescence, or with colleges offering great faculty and facilities, or with overseas programs best characterized as "broadening the educational experience."

Add to the enviable list, the corporate expense- account trip. Will's company, a well-established multinational, has sent him as part of a team of six to augment their start- up efforts in Australia. They left Boston on Thursday evening in order to arrive in Sydney on Saturday morning and have a couple of days to deal with jet lag before reporting for duty on Monday. Recognizing that having to make important decisions or judgments — or even just to establish positive first impressions — is done better after a good night's sleep, the company is willing to invest in Will's arriving with mind and body reasonably intact and creature comforts covered.

Clearly, this is an enlightened application of expense account living.

For smaller companies, not yet part of the Fortune 1000, the challenge in establishing a travel and entertainment policy is to strike the right balance between "needs" and "wants." The fulcrum in that process is to control expectations.

Contrary to popular opinion, "expense account living" is not about three-martini lunches or corporate suites at Fenway Park, at least not for most smaller companies in my experience. Dinner with a prospective customer, an overnight trip to a client's site, or a week-long on-site installation and training exercise are all subject to basic assumptions about employee-generated expenses.

For example, as responsible outside representatives of your company, your employees should be responsible enough to make good judgments about their outside conduct. If part of this involves spending the company's money, it should be spent wisely and subject to review and accountability. "Over-the-top" spending most often sends a negative message about the company's business practices.

When he's operating in the Boston area, Will has a company car, he carries a corporate credit card, and he relies on a company-provided laptop as he spends 80% of his time in the field. Like many large organizations, Will's company has elaborate policies and procedures regarding travel and entertainment. For smaller companies, however, clear standards regarding a few key issues, well- communicated and consistently applied, will confirm the principles described above:

Travel arrangements — Employees make their own using a company-guaranteed credit card and paying the monthly invoice themselves. Expenses must be documented and submitted within 7 days of the completion of travel and, once approved, will be paid within 14 days.

Car Rental — Economy or compact for single travelers, and no rental agency insurance — your company's non-owned auto insurance should cover that, at a much lower rate. Employee pays for traffic fines and parking tickets.

Meals — One of my clients recently said to me "Antonio [a field service employee] uses McDonald's, which is terrible for his arteries but wonderful for my budget." A reasonable budget, a cut or two above McDonald's in most places, is $10 for breakfast, $15 for lunch, and $30 for dinner, including moderate use of alcoholic beverages with dinner only.

Lodging — Take advantage of the rise of the business-traveler's hotels — Holiday Inn Express, Country Inn & Suites, Marriott Courtyard — by negotiating corporate discounts and specifying free in-room Internet connection. Extras for room and guest services (e.g. movies, minibar) are at the employee's expense.

Gratuities — 15–20% for meals, 10–15% for cabs, and don't forget $3–5 per day for chambermaids, especially for a multiple-night stay.

Own Vehicle — Beginning September 1, 2005 and subject to review after December 31, 2005, the IRS will allow reimbursement of 48.5¢/mile for business use of a personally-owned vehicle. At 500 miles a week, this can add up to $1,000 a month, plus parking and tolls. The simplest way of dealing with this is to provide a standard monthly car allowance, reported on Form 1099, and let the employee keep track of and report with his/her tax return the deductible expenses.
[See sidebar: Draining the Swamp ]

For our unattached bachelor son Will, corporate travel, especially to a place like Sydney, is mostly about life on the upside. He sees it as a great perq, and he's careful not to abuse it. The romance quickly wears off, however, for anyone trying to transit New York or Chicago en route to a few dull nights in Syracuse or Kansas City, especially when it means leaving family. For these road warriors, the best mileage is realized with an appreciative thank-you…

…and a timely reimbursement check.

For a copy of a well-considered small company travel and entertainment expense policy, follow this link to see that used by our client, Vanguard Sailboat Company.

Alligator Bites

From "The Gawker"
August 26, 2005:

First They Came for the Drinks Cart, and You Did Not Speak Out, Because You Were Not a Drinks Cart…

"Generations of Waspily distinguished Time Inc. editors are rolling over in their graves — or at least in their green golf pants — right now: The company is tightening its belt on expense reimbursements.

"Meals and drinks with contacts will not be reimbursed unless the contact is specifically the subject or source for a story. Meals and drinks with fellow Time Inc. writers — or even with outside media folks — will not be reimbursed. Staff meetings may not be catered. Flights, even international flights, may only be booked in coach class. And on late closing nights, staffers are now encouraged to travel home — this last bit is so horrible it must only be uttered only in hushed tones — by yellow cab.

"On the upside, $25 million to decorate the chairman's office is still fine."