A Cincinnati chemical manufacturer collects all frequent-flier points earned by employees traveling on company business and uses them for free business flights. It also tries to schedule out-of-town meetings over weekends, in order to take advantage of the reduced air fares offered when travelers spend Saturday overnight at their destinations.

Both measures may seem almost Draconian to business travelers accustomed to free-wheeling expense accounts of the past. But they are a sign of today's increasingly tight times, and in this slack economy, any firm that doesn't take such measures "is foolish," says Margie Crace. It is Crace's job to keep tabs on the travel expenses at Chemed Corp., the Cincinnati chemical firm. She also is president of the National Business Travel Association, an organization of 1,000 travel managers.

Across the country, companies large and small are scrambling to find ways to cut travel costs, says Crace, and most business travelers should expect to feel the pinch in one way or another.

"Everybody is out to contain costs," says Gloria Bohan, president of Omega World Travel, a travel agency with 55 outlets in the Washington area. "They are all looking for some kind of deal."

According to travel consultants and managers, companies have adopted such policies as:

Eliminating nonessential trips. "People are questioning, 'Do we have to take this trip?' " says Michael Hadlow, executive vice president of USTravel Systems Inc. of Rockville, one of the nation's largest travel agencies.

Through August of this year, business travel had decreased by 7 to 8 percent compared with the first eight months of 1989, says Scott Dring of the U.S. Travel Data Center. In contrast, all travel -- including vacation travel -- had increased by 3.3 percent.

Sending fewer employees than usual. Instead of dispatching two people to a sales meeting, a company may decide to send only one, says Brad Burris, executive vice president of Runzheimer International of Rochester, Wis., a management consulting firm.

Putting strong limits on the amount of money traveling employees can spend for hotels, meals, even tipping. This can mean staying in more modest lodgings than some travelers have been accustomed to.

Northrop, the large Los Angeles defense contractor, is considering a new expense account policy that puts its traveling employees on the same sort of strict per diem spending limits as U.S. government employees. For Northrop, this would mean a limit of $34 a day per person for all meals and incidental expenses in such large cities as New York and Chicago, according to Gerard Smith, the firm's travel administrator. In smaller, presumably less expensive communities, the limit would be $26.

Substituting long-distance phone calls and video conferencing for out-of-town meetings, when possible. "We encourage employees to look at the alternatives," says Andrew McCormick, a spokesman for IBM Corp.

Urging employees to plan ahead so they can take advantage of substantial advance-purchase bargains on air fares. In the past, travel managers considered such fares risky, because the cost of the ticket was non-refundable if the trip was canceled. But now they are looking for trips in which non-refundable tickets are practical. For example, many corporations send employees to branch offices on a regular basis where schedules are known weeks in advance.

Some companies are picking up the cost of a Saturday night hotel stay, says Runzheimer's Burris, if employees have a Friday or Monday meeting at an inviting destination. The company can save on the weekend air fare -- even after paying for lodging -- and the traveler gets a free day off.

Scrutinizing expense accounts more aggressively. Under Northrop's proposed policy, for example, bar drinks and wine with dinner are not reimbursable expenses. Nor are headsets for in-flight movies.

Requiring employees to rent smaller cars and to return them with full gas tanks to save on hefty refueling charges. The cost of gas represents about 12 percent of the total expense of renting a car, says Michael Woodward, vice president of American Express Consulting Services. But his studies show that 70 to 90 percent of the nation's business travelers fail to fill up before returning a car.

Asking employees to take fewer trips but to stay on the road longer. Firms see this as a way "to maximize what they accomplish while they minimize the cost," says Henry J. Brandt, marketing research manager for Official Airline Guides, which is making a survey of the business travel market this year.

Tightening guidelines requiring employees to travel at the lowest reasonable air fare. In the past, says Woodward, the "lowest fare" may have been interpreted to mean the lowest nonstop air fare. Nowadays, though, some companies require staff members to take a pair of cheaper connecting flights, if the company can save $100 or more on the ticket and the traveler is not delayed for more than an hour and a half or so.

Woodward notes that in the past year and a half, the airlines have moved to eliminate most of the last-minute type of discounts -- such as the three-day advance-purchase fare -- that many business travelers were able to use.

Travel expenses are an obvious target for cost-cutting companies Business travel and entertainment make up the third largest "controllable expense" for U.S. companies after salaries and data processing, according to American Express.

At the same time, the cost of travel has surged in the second half of this year. The primary reason is higher air fares due to increased fuel costs brought about by the Iraqi crisis. The drop in the value of the U.S. dollar abroad also has added to the budget woes of firms in the international market.

In 1991, overall business travel expenses are expected to jump by 20 percent, according to a recent report in Travel Weekly, an industry trade paper. Most of the increase will be due to higher air fares, but "marginal" increases are expected in the cost of lodgings, car rentals and meals.

In Woodward's term, the current economy is "squishy," and companies are of two minds about the expense of business travel. "Quite frankly," he says, "the idea of not taking trips is on the minds of a lot of companies." Other firms, however, take exactly the opposite view. They see opportunities on the road if competitors have curbed travel.

An essential step for any company attempting to control travel costs, says Woodward, is to establish a company travel policy, adhere to it and review it annually. In a recent survey of 1,600 U.S. firms, American Express found that only 56 percent had a formal, written policy. The rest used informal guidelines or had no policy at all.

A travel policy should reflect the company's "culture." Some corporate chiefs may want to impose strict spending limitations, while others may feel able to give their employees more flexibility in their spending patterns. And the policy should spell out what is required while allowing for exceptions.

As Woodward explains, a firm may insist its employees stay in a specific hotel where it has negotiated good rates, although employees may prefer the hotel across the street where they can collect frequent-stay points. On the other hand, a sales manager should be allowed to fly first class if he or she has the chance to occupy the seat next to a valuable customer.

One recommendation will find little favor among business travelers. American Express advises companies to tighten receipt requirements. It suggests that employees produce receipts for all expenses over $10, although for federal tax purposes many companies require receipts only for items over $25. The $10 limit, says American Express, "will considerably reduce the possibility that some employees might inflate receipts."

Designating a travel manager is another way firms can get a hold on travel costs. In today's economy, "we're looking at everything," says Smith, who has been Northrop's travel manager for three years. His job requires him to monitor spending practices regularly, but he also is always looking for special deals.

Some employees, departing sunny Los Angeles, have been known to charge the company for scarves, hats and coats after they were dispatched to a cold-weather destination on the East Coast. Such clothing will not be reimbursable if company officials adopt Smith's proposed new travel policy.

Northrop employs about 40,000 people, says Smith, about 10,000 of whom travel -- 4,000 of them frequently. Smith has used this immense buying power as a leverage to negotiate special deals in the principal cities where Northrop does business. Companies with a strong travel policy and an aggressive travel manager, he says, "realistically could cut {travel} expenses by 25 percent."

He has been able to obtain rooms in upscale hotels such as a Hyatt or Marriott, he says, at a price that the average traveler might pay to stay in a Days Inn or Holiday Inn. He generally picks two to four hotels at each destination, and with rare exceptions Northrop employees are obligated to stay in them. Special rates also have been negotiated with air lines, car rental agencies and shuttle bus firms serving airports in several cities.

Any employee who wants an exemption to Northrop's travel policy must get written permission from the company president or a handful of specified executives. As a result, says Smith, "the average engineer at Northrop doesn't look for exceptions."

Maggie Crace at Chemed acknowledges that collecting frequent-flier miles from employees is "a touchy situation," but her firm has been doing it since 1984. The company spends about $1.8 million annually on air fares; she figures about $100,000 is saved when employees use accrued mileage for business purposes. She is surprised more companies don't collect mileage.

Perhaps they will, if the economy continues to weaken and air fares keep climbing. For the business traveler, the road ahead is likely to be a bumpy one.