With UK businesses expected to spend over £45 billion on travel and entertainment by the end of 2019, managing your business’s travel costs is no light undertaking. In fact, travel and entertainment is often a company’s second largest controllable expense – second only to salaries and benefits. That’s why it’s important to do what you can to manage and control those costs.
Is travel really necessary?
Unsurprisingly, the simplest way to make dramatic savings on your travel expenses is not to travel. With the advances in digital communications technology – in particular, video-conferencing – it may not always be necessary to take expensive trips to meet colleagues or clients face-to-face.
While personal visits can still be extremely valuable – such as the initial meeting with a promising new client, or as a means to bolster relationships after a business catastrophe – many subsequent meetings concerning less crucial matters might be just as effective held virtually. As well as saving money, eliminating unnecessary business trips can also save time and reduce your organisation’s carbon footprint.
Make your expense guidelines transparent and specific
One problematic area of claiming travel expenses for employees is understanding exactly what is allowable and what isn’t. Does your organisation pay the bill for your employees’ taxi fares and their alcohol consumption? Or will they be strictly limited to claiming only airfares, hotel rooms, and dining with clients?Whatever your company’s policies, it’s important that you communicate your expectations and restrictions to your employees as clearly as possible.
Refusing to honour the reimbursement claims of an employee who didn’t fully understand vague guidelines can be both tricky and demoralising. It’s best to include training on the correct procedures and stipulations for filing expense claims at an early stage, perhaps even during employee induction immediately after recruitment.
Take full advantage of your repeat custom
If your company has a preferred chain of hotels or car services for employee use, you may be able to use this to your benefit. Some hotels can offer employee expense cards to their business guests, allowing your staff to charge all of their hotel bills directly to your company. Receiving one monthly statement from a hotel company could mean much more efficient financial processing than sifting through hundreds of personal employee receipts each month.
You may even be able to negotiate a special corporate rate, if you can guarantee consistent business for your preferred companies. For example, you might predict during your forecasts that you’ll definitely need at least 100 hotel nights for your employees over the coming year, which could be a very attractive offer to bring to a hotel company all at once.
Pre-approve to avoid complications
For trips planned well in advance, it can be useful to allow your staff to present you with the details of their intended trip before they book anything. Giving them the green light on their choice of plane ticket (economy vs business class), hotel room (single or deluxe) and taxi companies (standard vs limo) can give them the peace of mind to use their personal credit card without worrying about arguing their case for reimbursement at a later date.
Alternatively, a number of companies provide their travellers with pre-paid company credit cards, topped up with an amount determined by the company’s budget. As well as making it completely clear what that employee’s budget is, it also makes it much easier for them to keep their business spending separate from their personal spending, resulting in more accurate expense reports.
Tips for business travellers
ake the time to fully understand your company’s guidelines for allowable expenses, as well as the typical procedures to claim reimbursement. And if anything is still unclear, ask for clarification before you book anything, otherwise you might be left with the burden of a costly bill at a later date.Make sure you’re organised – a pile of receipts without notes could be meaningless a few weeks after your trip.
Whenever you receive a receipt, write a few justifications and reminders on the receipt itself – such as ‘Breakfast meeting with John Smith from ABC Corp’. Remember that your company has to be able to justify costs as business expenses in order to be eligible for tax deductions, and that means that you need to be able to explain your costs in order to claim them from your company.
Business travel costs can account for a huge chunk of your controllable expenses. But by making your organisation’s policies clear, negotiating for the best deals, and keeping accurate and organised evidence of your expenses, you can hopefully prevent those costs from spiralling out of control.