Payment cards Should your business choose central billing or corporate plastic? BCD In Motion, September 2007 Travel buyers worldwide are split over whether to pay for air transactions through a centrally billed lodge card or individual plastic cards for travelers. The BCD Travel Client Benchmark Survey 2007, published in July, illustrated just how important a role payment cards play in managed corporate travel programs. Eighty percent of respondents said their organization has a consolidated card program, and 57 percent mandate use of the card for reimbursement, up from 50 percent in 2006. However, though there may be widespread acceptance of the value of having a card, no consensus emerges on another crucial question. This is whether it is better to pay for airline tickets through a centrally billed card lodged with the organization's travel management company (also called a lodge card), or through individual corporate cards. The survey reveals a split in opinion, although there is a noticeable change from last year. The percentage of organizations saying they book air through individual corporate cards has fallen from 62 percent to 56 percent, while those using central billing have climbed from 32 percent to 40 percent. These figures need to be understood from a geographical perspective and the degree to which the U.S. is a driving market in corporate travel. Mario Kriebel, senior director, card program for BCD Travel, confirms there is a swing towards central billing in the U.S., owing to the increased presence of AirPlus, which is primarily a lodge card product. In Europe, he sees no sign of such a trend, with central billing already the dominant payment form for air in countries such as Germany. In fact, if anything, Kriebel has observed a move in the opposite direction, mainly because of the influence of low-cost carriers. It is difficult to book budget airlines through a lodge card because their reservation systems normally require input of the three- or four-digit security code found on the back of a plastic card to complete the transaction. As to which method is better, Kriebel says there is no simple answer. "There is not one solution which fits all kinds of clients," he says. "We have customers who are happy to charge everything through a corporate card and others who prefer to put flights through a centrally billed card." Centrally billed cards – the case for One of the main arguments in favor of lodge cards is that they offer more data than a corporate card. This is because the travel management company (TMC) can add more information about each transaction, such as cost centers and purchase order numbers. Central billing also helps indirectly to improve data quality, because mandating use of the card increases the number of bookings made through the TMC, thus ensuring more management information is captured. It is also generally easier to build links from centrally billed cards to accounting systems such as SAP. The other beneficiaries are travelers, especially frequent flyers. Central billing keeps flights out of the expense reclamation process for them, thus reducing their administrative burden. Centrally billed cards – the case against Critics say lodge cards make travelers less accountable because the expense of a flight shows up on a central account rather than a card in their own name. It also means travelers can lose sight of the cost of travel, as BCD Travel discovered when it conducted an experiment on its own employees. "For a period, we asked them to book their air fares with a corporate card instead," says Kriebel. "They never see the details of a booking when they use central billing, so they were surprised to see how much tickets cost. It made them think more about whether their trip was worthwhile or not." Individual cards – who pays? If companies choose individual corporate cards instead of central billing, they have a choice whether to settle directly with the card company or make their employees pay and then claim reimbursement. Once again, there is a geographical split on this issue. In the U.S., the company usually pays, whereas in Europe it is usually the individual. This is because it is often accepted practice in Europe for employees to use their card for private as well as business transactions. Employee pays Employers are not exposed if their employee misbehaves with the card. However, if it is the employee who pays, it is essential their company has an extremely efficient reimbursement system so they always receive back their business expenses quickly. Employer pays This avoids the risk of employees not being reimbursed in a timely fashion, which could potentially affect their credit rating. It also minimizes the risk of late payment charges and encourages organizations to tackle non-compliant spending more quickly. Joint and several liability "We think the best solution is joint and several liability," says Kriebel. "Under this arrangement, the traveler is responsible for private expenses on the card, and the company is responsible for business expenses. It is difficult to argue why a traveler should be liable for business expenses, or their company for private expenses." The card providers Citigroup and American Express also recommend joint and several liability as the best method for settling corporate card bills.           Home | Business Travel | Demo Room | Reservations | Contact Us Travel Management Program | Groups & Meetings | Club Getaway ©1997-2007 Atlas Travel International. All rights reserved.