T&E Plus

Demand Transparency in Pricing Models

Why do some suppliers hide mark up or management fees?  My role has taken a forensic twist this week as I am on a quest to uncover actual prices, and mark up fees, at every level for our clients. 

 

When organizations hire suppliers to manage meetings, travel programs or entertainment assets (e.g. tickets/suites), management or mark-up fees are often charged throughout the process.  This is a normal practice in most supply chains.  However, let me be clear:  Many suppliers offer pricing transparency and some suppliers "pass through" the actual costs without adding additional fees.

 

Even when suppliers charge fees, organizations can demand transparency to show the "real" costs.  Let's discuss two scenarios:

 

1. Your organization hires a meeting management company, who hires a destination management company, who hires an entertainment company, who hires the entertainment.  At every step, there may be management, or mark up, fees charged.  Do you know how much the actual entertainment actually costs without going through all the other companies? Is it even feasible to contract directly with the entertainment?  What if you hire a travel management company who hires a meeting management company? Are there additional fees?

 

2. Your organization hires a ticket broker, who hires a logistics organizer, who contracts with hotels, transportation, and food and beverage suppliers, as well as another secondary ticket supplier to put together the "entertainment" package. Along each step, there may be additional fees charged.  Do you know how much the actual "package" costs versus what the broker is charging? 

 

Two diagrams that help describe this typical scenario are below:

 

 

 

 

 

How do these suppliers charge the organization?  There are numerous methods and probably more that aren't captured in this column. 

 

Per Person Cost

Supplier may charge the a) actual costs of all services, b) a management fee or profit percentage.  The supplier may charge the organization based on a tiered volume of participants.

 

Buffet choices or Menu Based Cost

Supplier may charge a) per type of service the organization requests, b) management fee or profit percentage.  The supplier may not take into consideration the volume of participants

 

Fixed Fee

Supplier may analyze the work required and estimate a fixed fee prior to the work being delivered. 

 

Time and Materials

Supplier may charge for all time and materials required throughout the project.  A not-to-exceed, or maximum hours allowed, provides benefits to the organization.

 

Cost Plus

Supplier will show the actual cost for the service plus a management or mark-up fee. 

 

We offer our clients numerous templates and contract language to reduce spend on management and mark up fees.  If you want help uncovering your actual costs, contact me.

 

Debi Scholar, CMM, CMP, CTE, CTT

 

Thank you for visiting the T&E Plus Blog on expense management, travel management, business meetings, events, incentives, strategic meetings management, entertainment, virtual meetings, tickets, hotels, airlines, ground transportation, T&E policy, plus more...

 

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Virtual Meeting Usage survey

If you have 5 minutes, will you share your perspective on virtual meeting usage in your organization? If you are not involved with virtual meetings, please consider forwarding this link to the people in your organization that arrange virtual meetings.

Virtual communications technologies enable enhanced options to meet with clients, colleagues, friends and family.

How are virtual communications used in your organization? Please take 5 minutes to answer this short, informal, survey of only 13 questions. YOUR ANSWERS WILL REMAIN CONFIDENTIAL.

LINK to SURVEY-->

https://www.surveymonkey.com/s.aspx?sm=1_2ftOYGkoi_2bP7Ze3K_2fkmRTg_3d_3d

 Thank you!

Debi Scholar, CMM, CMP, CTE, CTT

 

Thank you for visiting the T&E Plus Blog on expense management, travel management, business meetings, events, incentives, strategic meetings management, entertainment, virtual meetings, tickets, hotels, airlines, ground transportation, T&E policy, plus more...

 

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Conduct Rate Audits to Reduce Costs

Many suppliers add fees that go unnoticed by travelers.  Airlines add baggage fees, hoteliers add resort fees, car rental companies add fuel fees, entertainment tickets add service fees….the list goes on and on.  Seeking revenue boosts, suppliers create new fees.

 

Do you know how much your company pays for the "service" versus the "fees?"  What fees are negotiable?  MANY fees are negotiable - don't settle for status quo.  

 

Did you actually receive the correct fee that your company negotiated?  Possibly not.  Maybe you thought you received the $149 room rate or your travel management company guaranteed you the lowest airfare, yet, errors occur.

 

Do you know why it takes a meeting planner 60-90 days to pay an invoice?  It isn't because she or he is slow…often, planners are negotiating billing disputes.  Thousands of dollars can be saved by reviewing meeting invoices. 

 

During the preferred supplier selection process, negotiate fees.  Add service level agreements that contain penalites for supplier rate errors.  Individuals, unaware of what has been negotiated, should ask every supplier how to reduce the fees at the point of purchase.

 

What should you do? What was your contracted price versus what did you actually pay?  How many fees were added along the way?  How can you eliminate those fees going forward?

 

At the Corporate level, conduct rate audits in every category: airlines, hotels, car rental, entertainment suites/venues/tickets, parking, travel management company, meeting management company, corporate credit card, P-card, etc.

 

Rate audits will provide you with numerous benefits and action plans:

à Recover money from suppliers when erroneous amounts were charged

à Reevaluate the current suppliers' practices

à Recognize contract improvements

à Ramp up the service level agreements and add risk/reward clauses

à Review your spend, controls and risks regularly

 

At the Individual level, negotiate at every stage of your trip and ask for the lowest fare or rate.  Review your bills and ask for fees to be eliminated.

 

Read the Wall Street Journal article from yesterday to learn more about hotel fees:  http://online.wsj.com/article/SB124528364807225577.html

 

We conduct rate audits and recover significant money for our clients. Contact me for assistance.

 

Debi Scholar, CMM, CMP, CTE, CTT

 

Thank you for visiting the T&E Plus Blog on expense management, travel management, business meetings, events, incentives, strategic meetings management, entertainment, virtual meetings, tickets, hotels, airlines, ground transportation, T&E policy, plus more...

 

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TARP Recipients: Get those Policies and Controls IN PLACE now!

The U.S. Treasury Department has published the Troubled Asset Relief Program (TARP) Standards for Compensation and Corporate Governance.  While some changes may be made during this comment period, through mid-August, lawmakers expect it will pass.

 

Page 14 describes “a company-wide policy be put into place regarding excessive or luxury expenditures, as identified by the Secretary, and that may include excessive expenditures on entertainment or events.”  (see below)

 

Page 56 describes excessive or luxury expenditures.  It allows for reasonable expenditures on staff development, reasonable performance incentives or other similar reasonable measures conducted in the normal course of the TARP recipient's business operations. (see below) 

 

In addition, it includes six steps to be in compliance.

 

Policies, approvals, processes, control and compliance are all required…components that I have highlighted in previous blogs.  We have these templates in place NOW to help you.  Don’t loose sleepless nights trying to recreate the wheel.  Please contact me for assistance.

 

To see the entire document, navigate to:

http://www.treas.gov/press/releases/reports/ec%20ifr%20fr%20web%206.9.09tg164.pdf

 

 

Debi Scholar, CMM, CMP, CTE, CTT

 

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PAGE 14

Section 111(d) requires a TARP recipient’s board of directors to put in place a company-wide policy regarding excessive or luxury expenditures, as identified by the Secretary, and that may include excessive expenditures on entertainment or events, office and facility renovations, aviation or other transportation services, or other activities or events that are not reasonable expenditures for staff development, reasonable performance incentives, or other similar measures conducted in the normal course of the TARP recipient’s business operations.

 

PAGE 56

Excessive or luxury expenditures. The term “excessive or luxury expenditures” means excessive expenditures on any of the following to the extent such expenditures are not reasonable expenditures for staff development, reasonable performance incentives, or other similar reasonable measures conducted in the normal course of the TARP recipient’s business operations:

 

(1) Entertainment or events;

(2) Office and facility renovations;

(3) Aviation or other transportation services; and

(4) Other similar items, activities, or events for which the TARP recipient may reasonably anticipate incurring expenses, or reimbursing an employee for incurring expenses.

 

Excessive or luxury expenditures policy. The term “excessive or luxury expenditures policy” means written standards applicable to the TARP recipient and its employees that address the four categories of expenses set forth in the definition of “excessive or luxury expenditures” (entertainment or events, office and facility renovations, aviation or other transportation services, and other similar items, activities or  events), and that are reasonably designed to eliminate excessive and luxury expenditures.

 

Such written standards must:

(1) Identify the types or categories of expenditures which are prohibited (which may include a threshold expenditure amount per item, activity, or event or a threshold expenditure amount per employee receiving the item or participating in the activity or event);

(2) Identify the types or categories of expenditures for which prior approval is required (which may include a threshold expenditure amount per item, activity, or event or a threshold expenditure amount per employee receiving the item or participating in the activity or event);

(3) Provide reasonable approval procedures under which an expenditure requiring prior approval may be approved;

(4) Require PEO and PFO certification that the approval of any expenditure requiring the prior approval of any SEO, any executive officer of a substantially similar level of responsibility, or the TARP recipient’s board of directors (or a committee of such board of directors), was properly obtained with respect to each such expenditure;

(5) Require the prompt internal reporting of violations to an appropriate person or persons identified in this policy; and

(6) Mandate accountability for adherence to this policy.

 

Clearing the Path in Meetings and Events: Congratulations to the 2009 Changemakers!

CFOs gaze at their books seeking more ways to cut costs.  CPOs continue strategic sourcing efforts on products or services such as temporary help, janitorial supplies, computer technology and freight in order to squeeze another 15% cost reduction out of their suppliers.   With an obvious path and identifiable management, these commodities offer a conduit to reduced spend. 

 

With such an emphasis on control, centralization and cost reduction, why then, do some CFOs and CPOs look at me like a deer in headlights when I highlight disparate spending, decentralized contracts, unmanaged risk, and unmonitored resources in meetings?  Why? Because meeting spend is concealed in over 45 SIC codes.  Because meeting spend can be split between two or more general ledger codes.  Because meeting spend can be paid for by accounts payable, procure-to-pay, P-cards or T&E cards (sometimes all four methods are used for one meeting!)  Because meeting spend includes airlines, hotels, destination management companies, meeting management companies, audio visual, production, ground transportation, entertainment, décor, bands, speakers, printing, signage, off-site venues, etc.  Because meetings are managed by meeting planners, human resources, marketing, training and development, executive assistants, etc.  Because "we have a meeting management technology in place so we must be managing it properly."   Because the uneducated trust that the hoteliers and other suppliers' contracts "must" be adequate without making changes. Because meeting planning must be controlled if "we just cut the big meetings and travel."  Because there is no clear path.

 

The trailblazers, who pave the way in this complex environment, must be celebrated!  I honor the 2009 twenty Changemakers, as identified by Corporate Meetings and Incentives, who stepped up, peeled back the layers and improved strategic meetings management in their own unique ways.   Humbled when I learned that I was included in this honorable list last year, I understand and recognize their accomplishment. Many are my trusted colleagues, mentors and friends. 

 

Congratulations to:

Lee Ann Adams Mikeman, Debbie Andersen, Craig Addis, Lynn Averill, Kim Boriin, Terri Breining, Jeff Calmus, Louann Cashill, Patricia Kerr, Kari Kesler, Susan Lichtenstein, Kathy Lieberman, Rosemary Mueller, Donna Foppoli-Patrick, Angie Pfeifer, Marybeth Roberts, Tom Tolve, Tracey Wilt, Alice Woychik and Dan Young. 

http://meetingsnet.com/ 

 

Debi Scholar, CMM, CMP, CTE, CTT

 

Thank you for visiting the T&E Plus Blog on expense management, travel management, business meetings, events, incentives, strategic meetings management, entertainment, virtual meetings, tickets, hotels, airlines, ground transportation, T&E policy, plus more...

 

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Use an Airline Analysis to determine mix of preferred airlines

With American and Delta cutting capacity again http://finance.yahoo.com/news/American-Airlines-to-cut-apf-15506832.html?.v=3, it is a good time to take another look at your preferred airline contracts, determine which air carriers you should be using, and take a close look at those discounts.   When airlines cut capacity, then it may be tough for you to meet your contract requirements.  If that is the case, maybe you're using the wrong airlines.

If you are moving more toward the "cheap seats" then negotiate higher discounts in those fare classes.  Why have high discounts in business class or first class if you can't book those seats?  

Of course, it goes without saying...make SURE your employees are using your preferred travel management company and online booking tool to capture all of your airline spend.  If your employees are booking outside of policy, then you're losing valuable opportunities to increase your discounts with airlines because they don't have your marketshare.

If you want help, contact me.

Debi Scholar, CMM, CMP, CTE, CTT

 

Thank you for visiting the T&E Plus Blog on expense management, travel management, business meetings, events, incentives, strategic meetings management, entertainment, virtual meetings, tickets, hotels, airlines, ground transportation, T&E policy, plus more...

 

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Debi Scholar, CMM, CMP, CTE, CTT

 

Foreign Corrupt Practices Act (FCPA) - Are you in violation?

Travel and Entertainment (T&E) audits may uncover erroneous spend, but sometimes the money spent on the "receiver" may not be monitored for excessiveness.  And, when that "excessiveness" appears to be in the form of a bribe, you or your company may be heavily fined. 

The FCPA does not allow any form of cash, gifts, vacations, meals and entertainment to foreign government officials that may be viewed as a bribe to receive business.  A foreign official, per the definition, includes a very wide scope.   According to William Bosch and Jonathan Drimmer, contributors to Hotel News Now, the FCPA is the Justice Department’s second highest law enforcement priority after terrorism.  Currently, there are about 100 companies subject to open FCPA investigations and many more against individuals.  They cite numerous companies that have already been fined millions of dollars in their article -à http://www.hotelnewsnow.com/Articles.aspx?ArticleId=1338&print=true

 

Should you review your T&E policies?  Maybe review the controls you have in place so that you're not fined?  Please feel free to reach out to me.

 

William and Jonathan have three more articles coming on this interesting subject. For more information from the Department of Justice FCPA, please visit:  http://www.usdoj.gov/criminal/fraud/docs/dojdocb.html

 

Debi Scholar, CMM, CMP, CTE, CTT

 

Thank you for visiting the T&E Plus Blog on expense management, travel management, business meetings, events, incentives, strategic meetings management, entertainment, virtual meetings, tickets, hotels, airlines, ground transportation, T&E policy, plus more...

 

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How will you BUY your tickets?

In the corporate T&E spend category, entertainment assets, also known as "tickets," are difficult to control and monitor without the right systems in place. Most people complain about ticket scalpers yet when the demand is high for a sporting event or concert, many of those people buy from the secondary ticket market. Some of the secondary ticket sellers are considered scalpers.

Now, according to TicketMaster, Miley Cyrus will try their new ticket scalper-less purchasing system. Instead of receiving tickets ahead of the event, it will be a validated "paperless" system. The credit card used to make the purchase will serve as the customer's ticket. To attend the show, the customer just presents the credit card used to purchase the ticket(s) and a valid, government issued ID (such as a driver's license, state ID or passport). The gate attendant will swipe the credit card and since all the seats are assigned to a single credit card, your entire party must enter the venue at the same time.

More information is here--- http://www.ticketmaster.com/mileycyrus/faq.html?ac_link=miley09_custom_splash_faq

Can this paperless system be used for SuperBowl tickets? The Stanley Cup? The Kentucky Derby? The Indianapolis 500?  If the system works, how would the corporate buyers obtain their tickets? By standing in line? Interesting thoughts…

There are always interesting pros and cons and many who like to share their thoughts….what is your opinion of this new system? 

Debi Scholar, CMM, CMP, CTE, CTT Thank you for visiting the T&E Plus Blog on expense management, travel management, business meetings, events, incentives, strategic meetings management, entertainment, virtual meetings, tickets, hotels, airlines, ground transportation, T&E policy, plus more... Follow me on Twitter ...http://www.twitter.com/debischolar and on LinkedIN at http://www.linkedin.com/in/dscholar

REQUEST to all Internal Auditors: Please review Meetings & Events

Dear Mr. and Ms. Internal Auditor: Do you know where all the meeting and event contracts are in your organization? Do you realize how many EAs, HR staff, Marketing support staff and leaders who sign contracts that do not include the proper language to protect your company? In fact, do you even know where the contracts are located? Have you checked to make sure that the Certificates of Insurance are in place for the unique events that occur such as boating excursions? Do you know who is collecting the hotel or card reward points for all the spend? And, if these planners are collecting points, do you know what they do with those company-earned points?   Do you have your licenses to ASCAP and BMI in place? Do you know if you're paying too much in commissions to meeting planning companies?

Mr. and Ms Internal Auditor, I know that you are already reviewing T&E expenses for fraud, but how many meetings and events include fraud?  How many meetings and events are paid for by individuals who are not following the meeting policy? 

We welcome your skills, your audit expertise and ask that you review the meeting and event a) process, b) sourcing, c) RFPs and contracts, d) Certificates of Insurance, e) licenses, f) compliance, g) points and ethical behavior, and h) payment methods. It is OK if this is the first you've heard of this … it is complex and many meeting planners don't want your intrusion. Oh, and by the way, please don't think that small meetings, such as $5K-$10K, are exempt. Not only are those contracts hidden and voluminous, but they also have just as many risks as their bigger brothers.

So, where do you go for help?  I recommend reaching out to someone who knows about Strategic Meetings Management Programs.  Managing meetings across the enterprise has only been a discipline for the last 7-10 years.  If you want guidance, please contact me. For whitepapers on the subject of Strategic Meetings Management Programs, please go to www.nbta.org.

Debi Scholar, CMM, CMP, CTE, CTT Thank you for visiting the T&E Plus Blog on expense management, travel management, business meetings, events, incentives, strategic meetings management, entertainment, virtual meetings, tickets, hotels, airlines, ground transportation, T&E policy, plus more... Follow me on Twitter ...http://www.twitter.com/debischolar and on LinkedIN at http://www.linkedin.com/in/dscholar

Saving money AND greenhouse gas emissions by virtual meetings

AT&T saved more than $100,000 in travel costs and saved 62 metric tonnes of greenhouse gas emissions from avoiding air travel when they brought 21 customers from 15 countries together using telepresence. They were "able to be more productive and improve our work life balance by avoiding the need to travel, as well as reduce the impact on the environment," according to Will Thomas, customer chairman of AT&T's Asia Pacific Regional Advisory Council.  http://www.reuters.com/article/gwmCarbonEmissions/idUS81594076720090604

 

Virtual meetings will only become more complex and popular.  Let me help you be successful...

 

So, let's say you're ready to make the switch to Virtual Meetings.  Do you know the right technology to use?  Do you know which technology to use based on the type of event?  If you want help answering these questions, contact me.

 

Three pointers that will increase your chances of a successful virtual meeting:

 

1.  If you are expecting participant interaction, rather than participant multi-tasking, keep the participants engaged throughout the entire session.  We design virtual meetings sessions that keep the participants engaged, interested and online until the end of the session. The key is involving the participants using multiple methods throughout the session.

 

2.  Test, retest and conduct dry runs of your online virtual meeting so that you are prepared for everything.  You should have back up plans in case everything goes down. Our checklists and critical delivery plans enable you to smile and "never let them see you sweat."

 

3.  Provoke interest before and after the virtual meeting.  There are numerous ways to drive interest - it may be via email, a pre-call, blogs, twitter, or even snail mail.  Allow your users to interact and share thoughts with each other through organized social networking. Most people have good ideas and can contribute to the virtual meeting…allow them to interact with the virtual meeting speakers and with each other.

 

We've "been there, done that" now since 1998 when our technology trainers started delivering virtual classrooms to leverage resources and reduce costs. I'm proud to have had the best trainers and virtual meeting deliverers in the industry for years.  

 

Don't  feel as if you must manage it without help or do it alone.

 

Debi Scholar, CMM, CMP, CTE, CTT

 

Thank you for visiting the T&E Plus Blog on expense management, travel management, business meetings, events, incentives, strategic meetings management, entertainment, virtual meetings, tickets, hotels, airlines, ground transportation, T&E policy, plus more...

 

Follow me on Twitter ...http://www.twitter.com/debischolar  and on LinkedIN at http://www.linkedin.com/in/dscholar