Travel costs often rank as one of the top five expenses businesses incur each year, with global estimates that businesses spend well over a trillion dollars annually on travel.
While the recent pandemic has shown businesses that it is possible to reduce the need with tools like video calls instead of necessarily needing to meet in person, there are of course times when it is absolutely necessary for businesses to have their employees travel.
As business travel begins to get back into gear, businesses are rethinking corporate travel plans and are looking for ways to track their expenses more effectively and reduce costs whenever possible.
It’s a pretty simple equation; reduce business costs such as travel expenses and increase profitability. That is why I found it surprising that almost 75% of companies fail to stay within their annual set budget when it comes to travel expenses.
Saving money on business travel-related expenses is possible but it requires careful planning and effort from all your employees.
While I may not have a large group of employees working under me (yet!) I do have to manage my own business travel expenses as a sole trader and use many of the strategies successful businesses utilize to track and reduce their travel costs.
Top Ways Your Business Can Track and Reduce Travel Expenses
Have a Business Travel Plan in Place
Most companies have plans for every aspect of their business, so it only makes sense to implement a strategic business travel plan. There is much to consider when setting an annual travel budget for your business including costs relating to flights, hotels, meals, and on the ground transport.
Without careful research and continual monitoring, things can easily slip through the cracks and travel expenses can balloon out of control. It’s up to business leaders to not only create an effective business travel plan, but then also make sure all its employees understand how the system works and why it is in place.
An effective business travel plan requires a team effort and weak links (aka unskilled or untrained employees) can see your plan struggle to be successful. Your business travel plan needs to obviously include an annual spend budget as well as set policies and procedures in place so your employees know what is expected of them when they travel.
Your travel plan needs to look at how you can carefully manage expenses relating to flights, hotels, transport, and meals. Your travel plan should also include a strategy to deal with travel emergencies or hiccups your employees may experience.
The goal is to be able to see what exactly your travel budget is being spent on and then finding ways to reduce those costs whenever possible.
Of course, plans don’t always go exactly to plan, so it’s important to be realistic and factor in a bit of flexibility to your plan.
Your employees are human after all and can make small mistakes when it comes to adhering to a travel budget, and unforeseen but necessary expenses can also occur.
Vehicle and Driving Expenses
Whether you provide your employees with a company vehicle or reimburse them for vehicle-related expenses they incur while using their own vehicle while working for your company, there are ways to reduce costs.
There are many benefits of using fuel cards for instance including tracking and limiting spending on fuel, making HMRC-compliant invoices and e-billing quicker and easier, and getting rebates or discounts on fuel.
Companies across the UK, Europe, US, and Southeast Asia seek guidance from professionals like icompario.com/en-gb/ who can help compare and save on fuel cards, motor fleet insurance, and GPS vehicle tracking systems which will allow you to track your employees driving performance including driving speed, drive time, and number of stops taken while working on the company clock.
Speak with your employees about ways they can reduce their fuel costs such as choosing more cost effective routes, possibly avoiding peak traffic times, and driving more fuel efficiently. If you are planning on purchasing company vehicles for your company, consider more fuel efficient vehicles or electric vehicles which may save money in the long term.
Lastly, make sure your business travel plan factors in and learns to reduce costs relating to other driving-related costs such as parking, tolls, maintenance, and insurance for company vehicles or your employees’ personal vehicles if you will be reimbursing them for any of these expenses.
Many businesses rely on flights to get their employees where they need to be whether it’s meeting with potential clients to discuss business or checking in with other company office locations.
Sometimes video calls just don’t cut it and you need to interact directly in person with other offices or clients. Businesses often use corporate travel agents or partner with an airline for their flight needs, but this may not be the most cost effective route.
By taking your flight bookings into your own hands and not being devoted to a single airline, you can greatly reduce your business airfare expenses. Basic employees, managers, and even heads of a business don’t need to always fly with the top-rated airlines and travel first-class.
Pro tip: Running my own business, I almost never fly business or first-class. Although I would greatly welcome the extra comfort, I need to treat flights like a business expense and decide whether it makes sense from a profitability standpoint.
Look to using budget-friendly airlines and actively seeking out flight deals for your employees. It of course pays to have flexibility in terms of when you fly.
Don’t be afraid to push for scheduling meeting times when flights are cheaper if it is unlikely to jeopardize important business dealings or have any other major impacts on your business.
Planning air travel well in advance or last minute can result in saving on airfare. Encourage or enforce your employees to only pack carry-on luggage when checked bags are not included on flights. Many business trips are short in duration so this should not be a huge hindrance.
Encouraging your employees to push for flexibility when scheduling meetings that involve flights will often help you to save not only on flights but hotels as well since you can avoid peak booking periods.
Book flexible tickets that allow for changes with little to no fees if you expect meetings could likely be cancelled, postponed, or brought forward. There are also now websites that will automatically cancel and rebook flights when it finds a cheaper deal.
Also make sure your employees are using offsite discount airport parking when driving their vehicle to the airport to save on any reimbursement fees.
Business Travel Accommodation
Businesses often look to hotels when arranging accommodation for employees when they are required to travel, but it pays to be open to alternative accommodation options. Depending on the length of a business trip, it may be cheaper to book an Airbnb.
This route may also reduce other expenses such as laundry, meals, and parking since an Airbnb rental may come with a washer/dryer to save on overpriced hotel laundry services, kitchen facilities for cooking cheaper meals, and free parking which is getting harder and harder to find with hotels.
If you will be allowing your employees to book their own accommodation as opposed to booking it for them, make certain they know the limits in terms of budget.
Pro tip: You may have to set criteria as to what star hotel and room type they will be permitted to book. You will also want to set rules around making extra purchases such as the raiding the minibar or ordering movies and other entertainment.
Hotel room rates can vary greatly, so always compare rates online using hotel booking websites or encourage your employees to do so if they will be booking their own accommodation and getting reimbursed by the company.
If you visit the same hotel regularly and have a number of employees stay each visit, you may be able to negotiate better room rates with the hotel or at the very least sign up for hotel loyalty programs that will gain you free nights and extras such as free WiFi, breakfast, and lounge access.
It’s important to remember that although saving money on accommodation is important, you also need to factor in comfort for you and your employees when traveling on business.
Getting a good night sleep and being content can help your employees be more productive and effective in important business meetings.
Encourage or enforce your employees to also be smart with transport when they arrive at domestic or international locations.
This may mean taking Ubers as opposed to taxis and having groups of traveling employees travel together as a group in shared transportation as opposed to arranging separate transport for each individual.
Sometimes a rental car will be more practical, but there’s no need for your employees to be renting a Mercedes, unless of course they will be chauffeuring a potential big client around while on a business trip.
You may want to look at getting a company credit card that provides complimentary rental car insurance so you can decline the rental car company’s collision damage waiver coverage which will save you money.
Never prepay for a full tank of fuel or return your rental vehicle empty. Always have your employees fill up the tank just before returning it unless you wish to pay ridiculous fuel rates set by the rental car companies.
Lastly, encourage your employees to always use cheaper public transport or walk whenever it is practical. Not only will this save your business money, it will also help your company reduce its carbon footprint.
Limiting Other Expenses
Another area which I have already touched on briefly is business meal expenses. This may include daily meals for your traveling employees as well as paying for potential clients’ meals in a bid to win their business.
Make sure your employees fully understand what their daily meal allowance is and how much they can spend on a client if they will be given control of their meal spending.
If the company will be making reservations for employees and or clients, make sure to research menus online in advance so you can select restaurants that will cater to your business travel budget.
As I said before, booking accommodation with kitchen facilities can greatly reduce food and drink expenses as it rids the need to eat out for every meal. Not only are meals themselves cheaper, but you also save on gratuities and time.
When it comes to reimbursing your employees for their travel-related expenses, be sure to be specific about what is expected of them in regards to what they can claim and what level of documentation they will need to submit.
Requesting them to submit itemized invoices or receipts is a good way to make sure they aren’t trying to get reimbursed for non-business related expenses. You basically want to reduce the chance of there being hidden expenses.
Offering Incentives to Employees
Of course, you as a business leader will always be more concerned about staying on budget than your employees will, but you can encourage your employees to want to save the company money by offering them incentives for doing so.
Offering incentives to employees for staying on budget or better yet staying under budget when it comes to travel expenses will likely see them opt for cheaper flights, hotels, and transport if it means they may be rewarded with a portion of the savings or be awarded extra leave time as a thank you.
If you aren’t open to offering incentives, at least sit your employees down to discuss the importance of staying on budget when it comes to travel expenses.
Explain that a failure to stay on budget or reduce costs could result in less travel opportunities in the future or the company having to potentially make job/salary cuts to save money.
There are always ways to cut costs in every aspect of a business and travel is no exception.
These are just some of the ways businesses can save on their travel-related expenses whether your business has a thousand employees or you are a sole trader like myself.
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