My discussions with TSIA members on the topic of recognizing travel expenses has continued over the past week. And the discussions have revealed not one, but four potential models service organizations could potentially use to recognize travel expenses:
Now, based on the polling data from my previous entry on this topic it is clear that the most common practice is to pursue the first method. This means the vast majority of service organizations simply invoice customers for the actual travel expenses incurred and recognize those expenses as zero margin revenue.
Also, we know from the polling data that very few PS organizations are marking up travel expenses before passing them onto the customer.
However, the other three methods do provide interesting mechanisms to prevent travel expenses from diluting the margin profile of the services business. So, please let me indulge in one final poll on this topic. Of the four methods itemized above, which method does your services organization pursue to recognize travel expenses?
Tags: travel expenses