Business Travelers Feel Impact of Tighter Corporate Travel Rules, New American Express Survey Reveals

Poll of Hundreds of U.S. and European Business Travelers Shows That, Despite Crackdown, Expense Abuse Remains an Issue

* Nearly Half of 500 Polled Say Firms Have Adopted Tougher Travel Spending Rules from 2-3 Years Ago

* Many Believe T&E Expense Abuse Common; U.S. Business Travelers Most Likely to Favor Full Auditing of Expense Reports

* Cultural Shift? More Europeans Report Heightened Scrutiny of Expenses

* Regional Differences Revealed: More French Than Others Say Restaurant Costs Abused; Many Americans Also Cite Tips; Brits See Abuse of Hotel Upgrades

NEW YORK, Feb. 15 /PRNewswire/ — Business travelers, once the envy of office-bound workers everywhere, are dutifully paring down their lifestyle and conforming to increased corporate cost-control directives, a new American Express survey reveals.

A new study of more than 500 business travelers in the U.S. and Europe indicates that nearly half face tighter corporate rules governing how to spend their travel and entertainment (T&E) dollars, pounds and euros. Many travelers report being more careful than in the past about following their companies’ travel rules. However, the survey also suggests that padding corporate travel expenses is common.

“Increasingly, corporations are stepping up efforts to track and halt out- of-policy spending and tighten their grip on T&E,” said Mark Webb, Senior Vice President, Global Client Group, American Express Global Corporate Services. “Many of our corporate clients are mandating use of the Corporate Card as a way to track travel expenses because companies want a more complete picture of employee spending — enabling them to analyze expense patterns, monitor travel policy compliance and negotiate better rates with suppliers.”

Corporate Cost-Control Intensifies

The 2005 American Express Survey of International Business Traveler Expense Practices found significant evidence that companies are cracking down on T&E spending by tightening policies. In the poll, 45% said that their firms’ policies governing reimbursable business travel expenses have become either “somewhat” or “a lot” tougher over the past two or three years. And many business travelers are taking heed of the new directives. Nearly one- quarter (23%) of all respondents said that, compared to two or three years ago, they were either “somewhat” or “much” more careful in adhering to their firms’ T&E spending rules.

As companies step up their cost-control efforts, many business travelers are noticing a higher level of scrutiny of their expense reports. More than one-third (37%) of respondents said that, compared to two to three years ago, their companies are either somewhat or much more careful in reviewing travelers’ expense reports, for example, to check for non-allowable items.

“In this age of Sarbanes-Oxley scrutiny, companies want more visibility into T&E expenditures and practices, and they want more powerful reporting tools to help target out-of-policy purchases,” said Webb. “American Express, for example, offers reports highlighting the gap between in-policy compact car rentals (what the traveler reserved) and out-of-policy upgrades to luxury cars (what the traveler actually drove and paid for).

“In addition, automated expense reporting tools are useful because they kick out-of-policy entries back to the traveler and help companies raise compliance,” Webb added.

Business Travelers Believe Expense Abuse Common

Despite tougher travel policies at American and European companies, the survey reveals that many respondents believe falsification of charges submitted for reimbursement on expense reports is common. More than one-third (37%) of respondents felt it was “somewhat” or “quite” common for business travelers to submit an expense report with “one or more completely false or bogus charges.”

While survey respondents believe T&E expense abuse is common, they also say companies should take steps to crack down. Nearly three-quarters (71%) believe that companies should audit all expense reports that business travelers submit — to check for instances of “fraud, out-of-policy expenses and other potential misuse of funds.”

U.S. business travelers are most likely to believe in full auditing of expense reports, as 77% of those polled agreed that all expense vouchers should be checked, followed by 72% of British respondents, 70% of Germans and 64% of French travelers surveyed.

Europeans Feel La Difference

The survey also indicates tougher T&E rules are significantly impacting European business travelers. In a sign that European corporations are quickly adopting the cost-control mentality that has been an accepted practice in the U.S. for years, the majority of business travelers polled from France (56%) and Germany (55%) reported tougher T&E rules — versus much smaller proportions in the U.S. (31%) and U.K. (39%).

French business travelers take the lead in terms of adhering to tighter T&E policies — with 33% reporting that, to varying degrees, they’re more careful than in the past regarding spending. Meanwhile, 26% of those polled in the U.K., 16% of U.S. respondents and 15% of German business travelers indicated that they’re more prudent. Nearly half (46%) polled in France, a larger proportion than elsewhere, think that their firms now scrutinize expense reports more.

According to the new poll, European business travelers are likelier than their American counterparts to be questioned more frequently on specific expense report items. Compared to two to three years ago, nearly half (48%) of French respondents say their firms are confronting them more on specific charges submitted on expense reports, followed by 15% of British and 12% of German travelers.

In contrast, only 7% of U.S. respondents report more challenges on specific expense items.

Cultural Differences Revealed

It is widely known by business travelers everywhere that mealtime is often the right time to conduct business and close a deal. But whether they’re eating schnitzel in Berlin, snails in Paris or a cheese steak sandwich in Philadelphia, international business travelers agree that this window of opportunity to cement ties with clients is often where the most abuse occurs – - embellishing, hiding or falsifying reimbursable expenditures.

The restaurant category was cited as the most-abused T&E expense by 70% of French, 59% of German, 53% of American and 48% of British respondents. Tips, taxi and telephone costs were also cited as most abused T&E expenses.

“A corporate card provides the most accurate record of restaurant and other T&E charges incurred by travelers,” noted Webb. “It provides the controls and tools necessary to simplify expense management and drive savings to the bottom-line.”

About The Survey

The 2005 American Express Survey of International Business Traveler Expense Practices was conducted online in November and December 2004 by market research firm Synovate. A total of 500 interviews were conducted with business travelers in France, Germany, the U.K. and the U.S.; about 125 interviews were conducted in each country. Respondents were questioned on their beliefs about the extent of T&E abuse in general, not their own personal practices. In order to qualify, respondents must have taken at least one business trip during the previous year.

About American Express Global Corporate Services

Through its Global Corporate Services group, American Express provides expense management services to more than 100,000 firms worldwide through its corporate card program, corporate purchasing solutions and business travel. It is both the leading issuer of commercial cards and the largest corporate travel management company in the U.S., serving nearly 70 percent of the Fortune 500, along with tens of thousands of mid-sized companies. More information on expense management tools from Corporate Services can be found at http://www.americanexpress.com/corporateservices.

The American Express Company is a diversified worldwide travel, financial and network services company founded in 1850. It is a leader in charge and credit cards, Travelers Cheques, travel, financial planning, investment products, insurance and international banking.

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