Corporate Travel Payment Solutions – terminology you need to know
The world of corporate travel payment and expenses may not be everyone’s cup of tea, but if you work in the construction industry, employ contractors who travel on behalf of your company or have groups of workers staying in accommodation close to a job site…you might find the below list of payment and expense terms helpful.
An invoice account is a centralised billing system that is managed by your travel management company (TMC) and acts like a line of credit. An invoice account can be set up for eligible clients if they prefer to have their travel expenses, including flights, accommodation, ground transport plus travel ancillary costs, charged back to a TMC and then paid for via cyclical invoicing. Invoices can be issued weekly, every two weeks or monthly.
An invoice account is typically used by companies that prefer to manage their payment and expenses in-house via their TMC rather than dealing with a third-party financial provider. Quite often smaller companies will use an invoice account to better manage cash flow.
A chargeback payment facility can be established for customers that need a simple and streamlined solution for scenarios where individual travellers don’t have corporate credit cards and the business prefers not to make travellers pay for larger expenses such as accommodation costs on their own personal credit cards.
An example of this would be a construction and engineering company that employs contractors that travel on behalf of the company or if an organisation has groups of travellers staying in a hotel and they need a reliable chargeback facility for traveller expenses. Chargebacks are a great payment method to ensure hotel bookings are guaranteed and there are no bounce backs that leave a traveller without a room booking.
A TMC can also set up chargeback facilities that can be tailored for specific types of travellers in terms of spend limits and what’s included or paid for as part of the individual’s chargeback.
Companies can have a chargeback set up for hotel or car hire bookings when they are using an invoice account. The benefits of a chargeback facility is that all expenses are consolidated in a single invoice that is managed by your TMC.
Central travel accounts, lodge account or ghost card
A centralised travel account, lodge account and a ghost card all work in the same way.
These kinds of accounts are managed by a TMC and are attached to a client-owned credit card that is specifically designed for business travel expenses. The card’s details are given to the TMC to be used as a line of credit for all travel bookings. Travel costs, or costs for certain individuals or cost centres can be charged back to this centralised account, which is paid for by the client on a cyclical basis. Most of these accounts will accept charges for all travel related expenses such as airfares, hotel bookings and ground transport charges.
This payment method -:
- consolidates expenses
- provides enhanced data to clients
- are generally tax compliant
- don’t need a physical card.
Some customers that use these accounts will set up a hotel chargeback or link their accounts to a single-use virtual card.
Single-use virtual credit cards
While you won’t receive a physical credit card, a virtual or ghost card is a normal 14, 15 or 16-digit card number issued by a client’s bank. A virtual card carries an expiry date, the cardholder (ie company) name and a three or four-digit CVV or security code. Whenever your company’s virtual card is used, a single-use number is generated digitally at point of sale. A ‘virtual payment’ is then processed.
Virtual cards are especially helpful in industry sectors where there are frequent, recurring electronic transactions. Single-use virtual cards are often used for hotel bookings and expenses. They are particularly handy for contractors and are heavily used in the fly-in fly-out sector where workers don’t have company owned corporate credit cards. This payment method helps organisations take greater control of their travel program and overall costs.
Organisations use virtual cards to compliment a centralised travel account as it helps to consolidate bookings and expenses.
Enhanced data, which is also called level 2 or 3 data, refers to information provided with a credit card transaction that goes beyond the basic transactional details. For construction and or engineering firms enhanced data includes all the important details such as traveller name, company cost centre, cost centre name, traveller check-in and check-out date, booking ID plus additional details such as project or department codes.
Enhanced data requirements are generally different from client to client and will include whatever data an organisation needs to easily reconcile travel expenses.
Depending on the payment provider, enhanced data can include an additional four to 10 fields of data on top of general booking information. Clients that use a centralised travel account, lodge or ghost card will receive the specific enhanced data they require. Personal credit cards do not provide this level of information, which is why most companies prefer to use a centralised account.
An expense type is typically a term used by an expense management platform to determine the nature of an expense as it relates to a client’s specific travel and expense policy.
A travel allowance or per diem as it is sometimes known as, is a tax-free maximum daily allowance paid to a business traveller for a work-related journey. The lump sum is meant to cover the additional expenses a travelling employee incurs on a business trip. Many companies have policy rules for travel allowances and opt to reimburse travellers for their out-of-pocket expenses post trip, rather than paying the allowance upfront.
Travel payment is an often-overlooked part of the corporate travel process. We get it … it can be time-consuming and not all that exciting. But it actually plays a vital role in the bottom line of any company and when set up effectively by an experienced travel management company, can save your company valuable time and give you full control over your organisation’s daily expenses. And when it comes to a project that’s already in the red – optimising your travel and expense management processes could make or break your chances of meeting budget.
Need help optimising your travel and accommodation payment strategies?
Talk to the construction and travel sector specialists at FCM.