Keeping up with business travel expenses can become a full-time job. But let's face it. You've already got enough on your plate. Do you really have time to engage in corporate travel management, too? Probably not.
The good news is that business travel management doesn't have to be a resource drain. You can effortlessly keep up with business travel expenses with the right approach and tools. Here's everything you need to know.
Managing business travel expenses
Hitting the road or booking a flight for a business trip represents an important business activity. While you can conduct some business meetings digitally, some things just need to be discussed in person. However, it's vital that you've got a sound strategy for tracking travel-related business expenses so you can stay on budget while also seizing emerging opportunities to grow your company.
What is corporate travel management? (And how it impacts your business)
Corporate travel management oversees all aspects of business travel, including:
- Determining what airport or train station to use
- Keeping records to deduct business travel expenses
- Identifying ordinary and necessary expenses
- Deciding which business destination will provide the best return on investment
- Determining the actual cost of a trip
- Calculating the costs of hotel rooms, ferry fees, business meals, and transportation expenses
- Filing business travel deductions with the Internal Revenue Service
Managing business travel expenses is a complex process involving much more than just comparing hotel room or flight rates. You've got to accurately calculate business travel expenses to decide whether paying for a trip makes sense for your company.
That's not all. You'll also need to make sure your employees are reimbursed for personal costs incurred during the trip. Generally, you should cover or reimburse them for all business-related expenses, such as computer rental fees, dry cleaning, meal expenses, and incidental expenses.
You'll also need to create an expense policy that details what standard meal allowance you provide, what personal expenses aren't eligible for reimbursement, and other particulars. This way, your team members can budget accordingly when embarking on a trip for business reasons.
How corporate travel management works
Negotiating prices, finding deals on flights and hotels, traveler safety and risk reduction, and expense data management — are all part of the strategic plan for successful travel.
However, coordinating business travel can get pretty complicated because many variables and people are involved, from the financial team approving reimbursements to managers accepting itineraries.
That’s why some businesses turn to an outside corporate travel management agency. Outsourcing lets you get the benefits of professional management, like costs, time savings, and policy enforcement, without having to draw upon in-house resources.
Another option is to consider hiring from within and implementing travel management software. A dedicated travel management system can speed up planning and approvals while streamlining expense data management.
How corporate travel managers coordinate business travel
Corporate travel managers eliminate the hassle of planning a business trip. Here’s a glimpse of the job responsibilities for travel managers throughout the booking process.
Step #1: Create itineraries
A business travel manager will be responsible for taking this idea…
We need Beth and Bob to fly to Toledo to meet with Vanessa from Company X ASAP!
…and translating it into travel dates, flight times, hotel accommodations, an Uber allowance, and a table for three at a great local restaurant.
Step #2: Handle the approval process
Before booking flights and implementing the plan, someone needs to sign off on all the travel expenses. This person could be a team manager, someone from HR, or the finance team.
A business travel specialist might automatically send approval requests using a corporate travel management system. However, some specialists will use a manual process. Whatever system your company uses, you need to make sure it works for your business’s availability and travel demands.
Step #3: Book flights and accommodations
An experienced business travel manager has a process for booking overnight accommodation, flights, and other expenses.
This process might involve:
- Checking for the best deal on travel bookings websites
- Leveraging a network of travel agents, accommodation providers, and other contacts to negotiate lower prices
- Keeping an extensive record of all transactions for your expense reports
A good corporate travel manager will save your company money on travel expenses by finding the best deals and creating a great, manageable itinerary.
Step #4: Develop the business travel policy
A corporate travel policy outlines rules and expectations for employees. It covers acceptable spending limits, reimbursable expenses, safety best practices, and travel expense reporting procedures.
Here are some of the questions your company’s travel policy should answer:
- Does your company have a travel insurance policy that covers all employees?
- What are the spending caps for meals while traveling?
- How are expenses tracked?
- What safety rules should employees follow while on the trip?
By developing an ironclad business travel policy, your employees will know the reimbursement limits and the rules surrounding their company trip.
Step #5: Manage travel expenses
Your business has to track every travel expense for tax purposes. Known as T&E, business travel expenses are tax deductible if you can justify a company trip as beneficial to your business.
That means two things: First, employees can’t spend money on things that don’t somehow relate to the business, like souvenirs.
Take our earlier example with Bob and Beth. After a lunch meeting with Vanessa, they spend the evening breaking out of one of Toledo’s escape rooms to de-stress. The escape room visit didn't have any legitimate business purposes, meaning they'll have to cover the entire cost of the experience.
You need a comprehensive record of every business expense incurred on the trip. This includes ordinary and necessary expenses associated with securing travel and accommodations, actual costs of meals, and any other fees. Use this data to deduct travel expenses and reduce your tax obligation at the end of the year.
Four business travel and expense management challenges (and how to solve them)
Knowing what goes into the process is one thing – doing the job well is another. Here are some of the problems you might encounter when scheduling business travel.
Challenge #1: Lost money from cancellations
Canceled flights and unused tickets can eat away at your budget and drive up the travel cost of a trip without yielding any benefits.
From January to July of 2022, the airlines canceled nearly 129,000 flights in the U.S., which was an 11% increase from 2019. The good news is that cancellation rates improved in 2023, dropping to 1.29%, a ten-year low. Sounds like a step in the right direction.
Still, you can't risk your entire trip being unraveled due to a cancellation. Here are a few tips to help you minimize your losses:
- Schedule flights with long enough layovers, so your employees don’t miss their connecting flights
- Stay in contact with employees while they’re traveling so you can help them address delays and other problems quickly
- Have a Plan B in place if a flight is canceled.
A corporate travel manager who plans ahead of time will prevent your company from missing important meetings and wasting money on travel.
Challenge #2: Making sure employees are compliant
Your corporate travel specialist created a fantastic policy for your business – everything is in there, and there’s no stone left unturned in terms of compliance.
Remember, business travel deductions are permissible only if money is spent on certain items, like business-related travel, lodging, and meals. But how do you get your employees to read the policy, let alone remember all the details?
You can take a few proactive steps to empower your employees to stay within your company policy’s boundaries:
- Make your travel policy accessible online
- Consider sending email reminders to employees before they travel, highlighting the essential points to remember, such as travel insurance requirements and current safety best practices
By ensuring your employees comply with company policies, you will ensure every trip adheres to travel expectations, and you stay within the IRS’s framework of tax-deductible requirements.
Challenge #3: Wasting time on paperwork
When there are too many requests and approval needs, and all you have is someone from your admin team fielding everything, your company might be bogged down with unnecessary paperwork.
When managing corporate travel, you must diligently ensure every detail is addressed. Approvals for costs, chasing employees for receipts, and contacting travel agents to find better deals can pile up to create a lot of busy work.
Instead of letting travel management get out of control from a resource perspective, use tools to automate or simplify tasks, such as booking trips and tracking expenses.
Challenge #4: Runaway travel costs
Incurring business expenses come with the territory of planning company or employee trips. Without proper planning, employees might overspend or incur nondeductible costs. However, you don't have to let these costs become a runaway train that busts your budget.
Create a detailed policy that outlines basic reimbursement rates, per-diems for meals, and other perks. This way, employees will know precisely what purchases they can and cannot make during a trip. Simplify meal expense tracking by giving your team members their per diems ahead of time.
Doing so gives them the freedom to budget their meal costs based on personal preferences. They'll also be able to splurge on a meal or two during the trip without overcharging the company credit card. If they burn through their meal allowance on a given day, they can decide to use personal funds to cover the difference.
You'll also need to set clear limits on spending for other expenses, such as taxis and ferries. While it's best to charge these costs to the company card, you also need to let employees know what is and isn't acceptable. For instance, if you authorize employees to order Uber rides with the company credit card, let them know whether they can book a luxury vehicle or if they've got to stick with a basic ride.
3 benefits of effective business travel management
With effective business travel management, your business can save money, save time, and get more out of business travel. Here’s how.
Benefit #1: Reduce costs associated with business travel
A dedicated travel manager --- or an outsourced business travel management company --- will help identify cost-saving opportunities. They'll capitalize on these opportunities by shopping rates, comparing hotel options, and choosing lodging accommodations close to meeting areas to minimize travel costs.
The best planners can further reduce your costs by using their industry contacts to negotiate lower prices with vendors.
This will your company save even more money (thus improving cash flow, which is a win-win).
Benefit #2: Save time with streamlined processes
Travel managers are planning pros. They have the know-how and processes in place to save time and plan important trips faster. Think of all the time you'll save by outsourcing these tasks to a dedicated travel management team.
Tech-savvy travel managers also use software and automation tools to reduce the risk of human error. That means fewer cancellations and last-minute itinerary changes. Eliminating these types of errors can make travel less stressful for your team members and allow them to focus on the task at hand, making strategic moves for your business. Sounds like a win-win!
Planning software doesn't just reduce the risk of human error. Some of the best solutions can also automatically feed expense data into your accounting software, resulting in a simplified reimbursement and deduction process.
Benefit #3: Improve business travel for employees
Another advantage of successful travel management is the business trip experience. Employees will enjoy the experience more if it’s well-managed.
By booking hotels close to the airport, ensuring employees stay in a safe area of town, and optimizing the trip experience by choosing the providers employees prefer, your company’s business travelers will have less stress while on the road.
That means they can worry less about navigating business travel logistics, rest easy, and focus more on the presentation, business meeting, conference, or other reasons for their trip. Ensuring your employees are prepared and relaxed will give your business more bang for its buck.
Take control of your business travel expenses with BILL Spend and Expense
Manage business travel better with expense management software from BILL. We offer small business travel management solutions and scalable tools to support your company's needs as it grows. You can set spending limits and manage all your travel expenses in one place. Request a demo today and ensure your business will never exceed your travel budget!
