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How do you budget for travel expenses?

Behind salaries, business travel is one of the largest costs that businesses incur. Savvy business leaders are seeking ways to reduce costs using a number of strategies around budgeting and more sophisticated cost-saving tools.

Have a holistic view of travel expenses

To budget for travel expenses, it’s critical that businesses have a past, present, and future view of their travel expenditure. This will allow them to not only budget effectively but to make data-driven decisions based on the result of their analysis, including what changes should be made to existing or future budgets.

In order to do this effectively:

1. Create an understanding of what typical trip spend looks like in your company

This will allow you to set realistic and reasonable parameters around flights, food, accommodation, and transport allowances in your travel policy. Once the policy is defined, an automation software can make compliance seamless as the system can be configured to automatically restrict expenses that are outside of the policy – without the risk of employees overspending or the back-and-forth reconciliation with supervisors and accounting teams.

2. Obtain a view of all possible trips for the fiscal year and estimate spend based on how much travel is expected to close a deal or service a particular customer

This may vary by activity or team – perhaps the highest-performer on the Sales team has the flexibility to spend more on key profit-earning activities compared to a junior marketing team member attending an annual conference. Ideally, businesses will leverage an automation software that features customisable dynamic budgets that can allow for flexibility within the budget across teams, activities, or employees.

3. Develop a checklist of additional charges and be sure to include them in the budget

This can include costs like luggage fees and airport parking. These costs may seem minor but can have a massive impact – particularly around high-volume events like whole-staff retreats or gatherings. To compound the issue, these fees often occur outside of the standard booking system, making them more difficult to track and less visible in real-time. In this sense, an automation software that allows for these types of expenses to be submitted and managed on the go can ensure that Finance and accounting teams receive actual and real-time expenditure data.

What is the best way to understand your full budget for business travel?

The best way to understand typical trip spend, estimate future travel spend and ensure all expenditure is being accounted for is by using a travel booking software with automation capabilities that can budget dynamically according to the value of the trip and provide real-time insight into the current spend and the return on investment of travel. This allows you to not only review and analyse the historical data but also pipeline data – a massive improvement for Finance and Accounting teams who would then have the ability to accurately reconcile their numbers – rather than experiencing a delay in determining what was spent long after the fact.

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