How Much Should Your Business Spend on Travel Expenses?
Here’s a question with a surprising answer. Which is the most expensive city to travel to on business?
It’s Caracas, the capital city of Venezuela!1
It may be that travel for your business is more likely to involve Cardiff or Carlisle than Caracas. But when it comes to business travel, every business has the same questions. How much do we spend on travel each year? Where could we make savings? Is our T&E policy being followed? Are we compliant with HMRC guidelines?
Here are four ways small and medium-sized businesses can minimise cost and maximise compliance when they have employees who travel on business…
- Encourage Best Practice
The same things apply when booking business travel as booking personal travel.
The earlier you book, the more money you’re likely to save. Of course, there will always be last minute trips needed. But travel and accommodation for your annual industry conference, for example, can be booked a long way in advance.
There are lots of other ways to save money too. Budget airlines. Budget hotels. Travelling off-peak. But it is important to balance budget against duty of care. Is the hotel in a safe area of town? Will your employee be safe if they’re travelling late at night? These are some of the factors you have to consider and account for in your policy.
- Use the Right Tools
Employee expenses are the second largest controllable area of business spend outside of payroll, so consider what you can do to improve efficiency and cost-effectiveness, ensure compliance and create visibility.
Using tools such as Concur TripLink allows you to capture travel plans and spend, no matter where it happens. Your T&E policy can be applied automatically so you can be confident in your compliance. Travel details are stored in a single location so you can locate employees in an emergency, helping you fulfil duty of care requirements.
The solution gives you greater visibility compared to a paper-based system. You can group spend together and see at a glance how much you spend on hotels, taxis, trains and so on. Whether you’re a two-person business or a 20-person business, when you’re equipped with this information you can target cost reductions and negotiate discounts.
- Be Consistent
Your T&E policy should be a live document that everyone is able to access and follow. Remember that if you use an automation tool, your T&E rules are automatically applied, so there are no excuses and no spend can slip through the net that shouldn’t.
It should also be a document that applies to everyone. Travel policies are equally applicable to upper management and they should lead by example. If you’re concerned about HMRC compliance or have any queries, a great place to start is our guide on Cracking the Code to Expenses Compliance.
- Consider the Full Picture
When looking at employee expenses, the costs of travel, accommodation and subsistence are the obvious areas to look at. But there are hidden costs too. How much time was lost to travel in the working day? There’s the time taken to book the trip too – Carlson Wagonlit Travel estimates it takes 43 minutes to look into making a booking.
Once you have this information, you’re equipped to measure ROI on the trip. ‘Worth it’ will mean different things to different businesses on different trips. But when you have visibility into your spend, it’s easier to make that assessment.
Next Steps
When it comes to travel and expense, anything you can do to save money and maximise compliance is an important win for any small to medium-sized business.
If your business doesn’t have a T&E Policy, you can create a customisable expense policy template in just a few clicks with our expense policy builder.
And if you would like to automate business travel and take control of cost and compliance, find out more about Concur TripLink.
1 https://www.expertmarket.com/business-travel-costs
