Identifying unexpected costs associated with Relocation Management Companies (RMC) is often overlooked during the proposal or renewal process. While direct costs for shipping goods, home sales, home purchases, temporary housing, and other in-policy services are straightforward, the interest associated with funding these costs can accumulate quietly and impact the overall spending of your relocation program.

The cost of funds can vary by RMC. Most RMCs offering expense management services charge a Prime Rate plus a 3% or higher interest rate on each invoice paid on behalf of the corporate client. The interest calculation begins from the processing date to the time payment is received from the corporate client. This approach provides the RMC with an additional revenue source and can be costly, depending on the number of invoices and payment terms.

Based on the number of invoices, expenses, and payment conditions, a single funding charge can significantly lower the fees associated with your relocation program. This one-time payment addresses all relocation costs directly rather than imposing interest charges.

Companies can gain better control over their relocation expenses by opting for a flat funding fee. This approach simplifies budgeting and forecasting, eliminating the uncertainty associated with fluctuating interest rates. Additionally, it allows for more transparent financial planning, making it easier for businesses to allocate resources effectively.

When considering the best option for your relocation program, it’s essential to evaluate the total cost of each method. A flat fee can often lead to significant savings, especially for organizations that manage many relocations. Furthermore, this model can enhance the overall experience for employees, as they won’t be burdened with unexpected costs or payment delays.