Whether you are operating a new (or new to you) business or have only recently decided to develop your corporate travel program, establishing a travel budget is essential. Budgets help you keep control of company finances, increasing company stability and maximizing your bottom line.
If you haven’t set an annual travel budget, now is an excellent time to contact your accountant or chief financial officer and create one. Once your budget is in place, you’ll have an easier time managing the average cost of business travel for your employees, leading to healthier company finances.
Consider the Past
Unless you have recently made radical changes in how your company operates, your first step in developing a travel budget is to look at previous travel expenses. Where are your employees traveling? What is the average travel budget for these trips? Once you grasp what travel has been costing your company, you can better predict what it should cost you over the next year.
Consider All Expenses
Travel is more than just airfare and hotel stays. You’ll also need to consider the cost of parking, car rental, gas, meals, and parking. Depending on the nature of travel, your staff may also need an entertainment budget and coverage for incidentals, such as Wi-Fi connectivity, tips, and rideshare/taxi costs.
Look to the Future
If you are like most business owners, you want your company to grow. That may mean expanding into new territories, increasing travel to areas you already serve, or sending individuals and teams to industry conventions and training. If you anticipate changes in how you do business or train your staff, you’ll need to anticipate an increase in travel costs.
Calculate indirect costs of business travel
The cost of business travel isn’t just a matter of per diem reimbursements, transportation, and lodging costs: There are many indirect costs as well. These include time researching travel options, negotiating and booking rates and fares, making changes to reservations, canceling bookings, and tracking expenses and reimbursements.
In fact, the issue of reimbursements can be a significant area of lost revenue. Collecting expense reports, matching with receipts and credit card statements (which can sometimes go missing), and handling payments can represent a significant amount of work for your accounting department.
Monitor possible changes
Travel costs, particularly in areas known for business or pleasure tourism, can be dynamic. This means that room rates and plane tickets can vary wildly in cost depending on demand. For example, you may be able to find a room for $100 for a Wednesday night at a Las Vegas hotel only to see the rates increase to $400 per night two days later due to a large convention coming into town that weekend. If you know that prices are likely to fluctuate, you’ll have to budget more carefully.
Getting Help with Your Budget
CLC Lodging offers pre-negotiated hotel rates and other benefits like travel policy compliance tools that can help you control travel costs and establish reasonable budgets. Get in touch with us today to learn about our services and how we can help you develop effective travel policies and budgets.
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