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Articles 17th February 2023

Understanding Business Travel Expenditure

Business travel
Business travel

By Kevin Harrison, Managing Director, Good Travel Management

Two-thirds of employees admit they haven’t read their company’s expense policy. It’s often for several reasons like not knowing where the correct information is stored, knowing there is a policy but not checking if it’s been updated or assuming certain things are covered, when in fact, they are not.

Even if travellers find a great flight or hotel deal, they might still get in trouble for being out of policy if their companies require them to book through an official booking tool or with a designated airline or hotel.

To combat such issues, it’s important businesses clearly communicate expense policies in several ways….


Best practices for managing business travel expenses.

Firstly, and most importantly ensure policies are widely accessible in company-wide HR documentation and saved in an obvious place on the company server or intranet.

Organising team or department expense meetings or sending company-wide emails as reminders during peak travel months are good ways to ensure everyone stays updated.

A clear expense process ensures that employees are logging expenses in a timely manner, providing you with more accurate visibility. Expense forms, spreadsheets, and dedicated expense management software are all helpful options for employee expense claims. 

Travel expense management software often provides all-in-one multiple dashboards, making it easy to track spending for various departments, locations, projects, or specific employees.


How to calculate business travel expenses

Analysing previous spending and setting up projections will help you get a good idea of what your average spend will look like, when it comes to calculating potential travel budgets.

Examine your travel expenses from previous years too, to set up projections for a longer period. You’ll need to include additional factors that could increase or decrease spend like new employees joining the business, seasonality, or recurring expenses.

Categorising business travel expenses is also important, and you’ll need to set up foundational categories like air travel, ground travel, meals, accommodation, and miscellaneous. Retaining these groups will make it easier to predict your budget and find opportunities for cost control.

Again, this is where software or using a Travel Management Company can be useful, as many can run reports on amenities like hotels, to help you understand average hotel rates or lodging costs associated with certain locations for projects.


How to reduce travel costs

Peak seasons, particularly during the summer months and winter holidays, can increase your travel costs by 50 percent depending upon your destinations. Business locations may be quiet but travelling in general at a peak, so planning, well enough in advance is essential to managing transport and accommodation expenses.

Negotiating rates and making use of reward schemes where possible is also key. You can negotiate corporate rates with both chains and more boutique options, especially if your company frequently stays at these places and again a Travel Management Company will take the lead on this if you use one.

If you use a travel booking platform with an integrated expense policy, then be sure to work with one that has got the widest content and can cover more complex travel that may not be possible to book online.

Be warned, using generic, digital comparison sites is not always the best route. While the offerings online may appear cheaper, this does not mean better. There are often hidden extras, and your company may end up using unsafe or unrecommended travel vendors.

We recommend a blend of both on and offline bookings to ensure employees travel safely and cost-effectively and integrate all the costs into your expenses systems.

Most airlines, hotels, and car rental companies also offer reward schemes. So, make sure your company is collecting points and employees are using them when enough are collected.

Remember you might also be entitled to recover VAT on business-related accommodation, meals, conferences etc through their VAT return.