Purchasing.com reported this week that American Express expects businesses to cut travel & entertainment (T&E) expenses in an attempt to contain costs in 2009. With the current state of affairs in the economy, it’s no shock to see companies looking for ways to cut back. And with significant spending on the T&E category, it’s certainly ripe for the picking.

But, is less travel really the right policy? After all, face to face meetings, and yes, even entertainment often help the business and the bottom line. Who among us hasn’t improved a relationship or driven a deal forward after finally hanging up the phone, getting on a plane, shaking hands and diving into the business at hand? Wouldn’t better spend management of T&E enable useful business travel to continue while still driving cost savings?

A long, long time ago, when I was in sales and the company I worked for was looking to cut spending, travel was one of the first things to go. Managers were unlikely to approve travel for anything that wasn’t fairly certain to lead to revenue - say a 75% or greater chance of closing. Sales managers didn’t want to be on the hook to their superiors for T&E expenses on opportunities that didn’t close. But looking back, that hardly seems smart. Those deals were likely in the bag often times anyway, whereas competitive situations that were often lost to competitors may have been pushed into our Win column with a little face to face nurturing. It sure would have been nice, for the company’s bookings and my commission checks, if we’d have simply spent our T&E smarter, enabling us to travel a bit more…and closed a few more deals.

My point is, at a time when businesses are struggling for revenues, spend management of T&E that enables a company to use every $ to its full potential is not only smart, it could also help the bottom line and even be a competitive advantage. And when you consider that T&E is a category that is among the Top 5 Categories to Source right now, there is an opportunity to stretch those dollars even further.

Justin Fogarty is Managing Editor of Supply Excellence. For any questions or feedback on the blog or its contributors, Justin can be reached at jfogarty[at]ariba.com.

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