Keeping track of employee expenses is often challenging, time-consuming, and tedious, as well as a huge headache for your financial department. Travel expenses, among the rest, are considered to be one of the most difficult expenses to manage. These are costs incurred during business travel.
Client meetings, overseas collaborations, and international networks are crucial enablers in the business world today, and have been for a while. Teams that engage in such work are frankly the ones that keep the revenue flowing and seal deals. 90% of employees themselves agree that business travels are crucial for the efficient growth of the company.
The Global Business Travel Association recorded a total of 1.33 trillion dollars spent on international travel, an expenditure projected to rise to 1.7 trillion dollars in 2022! According to another report, an average of 1,425 dollars is spent on each traveling employee.
Clearly, efficient investment in travel expenses and formulation of efficient strategies regarding management is imperative to reap the benefits.
Step 1: Before the Expense is Incurred
As the saying goes, prevention is better than cure. It is always advisable to address potential challenges before they evolve into something bigger.
How will the employee pay?
Quite obviously, two ways in which an employee can spend money on a business trip are:
From their personal spending account
Using the prepaid company credit card
While the former is a well-opted choice for small and medium enterprises, it creates much work for the financial department. It is time-consuming and keeping track of all invoices and tax receipts further complicates the process.
Prepaid cards provide business owners control over employee expenditure and offer financial spending to the employees(to some extent). It's a good way of ensuring that the mobile team is sticking to the budget.
Choose an Online Platform
Avoiding extra paperwork and physical invoices is always a better option. Employees may be busy and stressed on their trips and can get side-tracked, especially when spending company money. Platforms like Salt offer high-quality and trusted tech for businesses to manage multiple accounts globally. It will ensure effective tracking and managing of funds.
Encourage Employees to use Travel Expense Trackers
Business comes first in the minds of busy employees when traveling abroad for important client meetings. They may forget to update insignificant expenses, which potentially mount up to a significant amount at the end of the trip.
Encouraging employees to rely on a travel expense tracker to fill in their expenditure regularly is clearly quite helpful for the employer. Journey entries such as these will ensure smooth management facilitated by the employees even when they are on the run to grab the biggest client.
Have a Travel Policy in place
Costs are cut down significantly when the employees stick to their company's policy on business travels-lay out a clear plan for expense requests, approvals, and reimbursements so that employees have a clear idea.
Employees contribute to fiscal responsibility for your organization when they know and understand your company's travel and expenditure policy like the back of their hands. As a result, there will be more accountability and, as a result, more responsibility when it comes to spending.
Step 2: Cost-Saving than Cost-Cutting
Rather than cutting down on costs, you can deploy more efficient practices to minimize costs. As mentioned earlier, business travels are crucial for a company's growth. But the company should not drain out their funds on this expense alone.
Travel
Employees generally travel by flight internationally. Apart from flying in economy class, there are other ways air travel expenses can be cut down.
Book early and book in bulk
Partner with Airlines to enjoy discounted airfares
Travel light to avoid excess baggage fines
Travel expenses don't end after reaching the destination city. Opting for rental service for the entire duration of the stay or signing up with Uber corporate is a great way of traveling cheaply in the city. Also, public transportation over cabs minimizes costs most effectively.
Accommodation
Book in advance to avoid overpriced rooms
Always prefer tried and tested hotels
Compare prices of different hotels to choose your preferred one
Specify the dos and don'ts (E.g., room service is a big don't)
Meals
It's better to prepare a budget for meals, as they can get quite expensive. You can encourage your employees to carry out route research and pan out affordable restaurants and expensive ones if they need to organize a meal with the client.
Step 3: Reimbursement
When employees use their own money or the company's money, they have to provide expenditure records for availing reimbursement. Having a very clear reimbursement process, be it paper forms, spreadsheets, or expense software, will irrevocably reduce the mountains of emails and set expectations for employees who may be waiting on expense reimbursements.
Setting up service level agreements with employees will help you acquire the information quickly and prevent employees from sending follow-up emails inquiring about the progress of the claim.
It is advisable to request the staff complete a pre-trip expense prediction before their vacation; this will push them to think about their spending. Other tips are:
Types of receipts and invoices — The format of proof should be clear—for example, a tax invoice in PDF or a physical receipt.
Timeline for filing expense claims - Ensuring that all expense claims are submitted within five working days of the end of the business trip will benefit both the company and the employee.
Expense reimbursement period — the firm must investigate the claim before reimbursement. This period of time is generally 15 to 30 days.
Setting up online reimbursement, wherein employees receive their reimbursed money directly in their bank accounts, ensures efficient management of funds after approval.
Cutting down extra expenses and ensuring maximum efficiency is the main motive of any firm. The methods mentioned above will help you efficiently manage travel expenses which are inevitable in any company today. Salt, India's trusted modern banking platform, now works across fifty countries globally to ease the financial workload of businesses. Visit the website now to explore more!
