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If you know that business travel is not without its risk and the potential for crisis, then you need to read this article. In this article we are going to talk about the management and containment of crisis as it relates to travellers and travel managers. The objective of this article is to share with you the collective knowledge on managing crisis and significantly improve your ability to identify and manage a crisis but also improve your business travel efficiency.

During this article I am going to discuss travel risk myths, crisis management, plans and options so you can immediately compare or improve your own travel risk management system for your travellers or travel management department.

Crisis by definition is something you didn’t have a plan for or something in which you are unprepared. Additionally, it can be a series of events that in concert create a crisis. Events or issues that occur, to which you have a plan and strategy, is merely an incident.

Crisis Management/Leadership

The first thing is to clarify what is the difference between crisis management and leadership. More importantly, which one is the more important?

Crisis management relates to the response to event/s that threaten your business, travellers or travel activity. The event leads and you follow with plans, decisions and actions.

Crisis leadership, on the other hand, is more about getting ahead of the events and issues to prevent, management and even contain the impact to your business or business travel activities. While management is a portion of the leadership demand, your actions and involvement lead the outcomes rather than a more passive wait and act approach with pure crisis management.

Crisis leadership is the less practiced of the two, but the most significant in terms of results and reduction in risk and impact. If you take nothing else away from this session, it should be that your focus should always be on Crisis Leadership, not crisis management.

Myths

There are many myths and half-truths about crisis, disruption and threats within the travel management sector. Much of this misinformation has originated from travellers themselves, media, travel managers, friends and family or so called “experts”.

For example, many travellers and planners are focused on terrorism. The reality is, you have a very, very small chance of being exposed or affected directly by a terrorist act. It doesn’t mean you should discount it as a threat altogether but it shouldn’t dominate your plans or processes if not a proportional threat to you and your travellers. Conversely, almost everyone overlooks motor vehicle accidents. Yet, they happen far more frequently, can have devastating affect on travellers and are the least common plan contained within company travel management departments.

Most every agency engages in the practice of allowing more than an average of 13.5 days for a corporate travel customer to pay for tickets issued. If the tickets are issued on a credit card, however, ARC (Airlines Reporting Corporation) does not draft your agency bank account; instead, the airline collects directly from the credit card company. This cash flow benefit is significant in an industry which operates on such a slim profit margin. And there is even more good news! Travel agents can deduct the commission derived from transactions directly from the authorized ARC draft amount. In fact, some agencies whose accounts are nearly 100% credit card do not have their accounts drafted at all; they receive a check every week for the airline commissions earned.

During the hours previously spent worrying about the Tuesday night bank balance, you can now look at the way in which the cc can help you better manage your business. If a significant proportion of your accounts were switched to ccs, could your employees spend their time more productively? After all, the need to process all those statements, or to have an employee research so many unidentified payments, or to post off the accounts receivable would be negligible. Furthermore, the complications of stringent internal cash controls are lessened.

The elimination of the statement-handling responsibilities yields even more profit to your agency. How many of your accounts still demand that an extra copy of the invoice be attached to the statement? How many hours per week are lost to this task? How many payments are delayed because an invoice copy is missing when the statement arrives at the customer’s accounting department (incidentally, this a classic manner in which corporations delay payments and, thus improve their cash float)? How much does it cost for you to print all those extra invoice copies and statements? Paper alone may comprise as much as one percent of your commission revenue.

By encouraging your clients to use credit cards you can:

1. Earn your own interest income on funds previously “invested” with the ARC on behalf of your clients;

2. Significantly improve your cash position;

3. Save dollars previously spent on forms and payroll;

4. Benefit from fewer complications and increased productivity/profitability.

The credit card benefits both the buyer and the seller.

All of the internal control benefits which accrue to the corporation that uses some form of credit card system lead to other ancillary benefits:

1. The corporation benefits from a significant cash float-the travel is paid for when the credit card bill becomes due.

2. A company which accurately reflects its financial position by accruing its travel expenses in the month in which they are incurred can demonstrate its aggressiveness in controlling the balance sheet (i.e., recognizing the expense, but not paying for it until a later date).

3. The client needs to issue only one, or at most two, checks per month for the bulk of travel related expenditures.

4. Use of a credit card reduces significantly the amount of cash a corporation has tied up in travel advances.