Business travel expenses by ExpenseOnDemand image

Business travel expenses by ExpenseOnDemand

Business travel expense management is all about controlling and tracking the costs of company travel. This can be a daunting task, as there are often many people involved in business travel and a variety of vendors that need to be tracked.

onMonday, 21 August 2023

Business travel expenses by ExpenseOnDemand

Business travel expense management is all about controlling and tracking the costs of company travel. This can be a daunting task, as there are often many people involved in business travel and a variety of vendors that need to be tracked.

Our guide to controlling business travel expenses will help you learn how to:

  • Consolidate your spending: This means using a single travel management platform to book all of your travel, from flights to hotels to rental cars. This can help you save money by negotiating better rates with vendors and by getting a clear overview of your spending.

  • Achieve oversight: With a single travel management platform, you can easily track all of your travel expenses. This means you can quickly identify any areas where you can save money or where there may be fraudulent activity.

  • Craft policies with high compliance: By having clear and concise travel policies, you can help ensure that your employees are compliant with your company's spending guidelines. This can help you avoid costly mistakes and keep your business running smoothly.

What are business travel expenses?

Business travel expenses are the costs incurred by a company when its employees travel for business purposes. These expenses can include:

  • Airfare: The cost of flights for employees to travel to and from their destination.

  • Hotel: The cost of lodging for employees while they are away from home.

  • Transportation: The cost of ground transportation, such as rental cars or taxis, for employees while they are away from home.

  • Meals: The cost of meals for employees while they are away from home.

  • Entertainment: The cost of entertainment for employees while they are away from home, such as tickets to shows or sporting events.

  • Supplies: The cost of supplies that employees need while they are away from home, such as laptop computers, printers, and phone chargers.

  • Other: Any other costs that are incurred by employees while they are away from home for business purposes.

What types of business travel expenses can employees claim?

Business travel expenses are the costs incurred by employees when they travel for business purposes. 

These expenses can include things like airfare, hotel stays, meals, and transportation.

Eligible business travel expenses typically include:

  • Public transportation: This includes things like bus, train, and taxi fares.

  • Hotel accommodation: This includes the cost of rooms, as well as any applicable taxes and fees.

  • Food and drink: This includes meals and snacks, as well as drinks like coffee and tea.

  • Bridge and road tolls: These are the fees charged to cross bridges or use certain roads.

  • Parking fees: These are the fees charged to park your car in a garage or lot.

  • Business phone calls: This includes the cost of calls made for business purposes.

  • Printing costs: This includes the cost of printing documents, such as presentations or proposals.

Not all expenses incurred during a business trip are eligible for reimbursement. For example, employees typically cannot claim expenses for personal items, such as souvenirs or clothing. They also cannot claim expenses for commuting to and from the office, unless they are travelling to a different city or state for work.

It is important to accurately track and report business travel expenses. This is because these expenses can be used to reduce a business's taxable profits. Employees should keep receipts for all eligible expenses, and they should submit expense reports in a timely manner. Employers should also reimburse employees for eligible expenses promptly.

Here are some examples of illegitimate expense claims:

  • Purchasing a novel at the airport

  • Buying new clothes for an important event

  • Claiming the cost of commuting to and from the office

Best practices for managing business travel expenses

Business travel is one of the hardest expense categories to manage because there are so many decision-makers, travellers, and vendors involved. Here are some important best practices.

Here are some ways to promote your company's expense policy:

  • Team or department expense meetings: During these meetings, you can discuss the policy and answer any questions that employees may have.

  • Company-wide emails prior to business trips or high-travel seasons: This is a great way to remind employees of the policy and to make sure that they have a copy of it.

  • Post it in your company forum or intranet: This makes the policy easily accessible to employees.

  • Include it in company-wide HR documentation: This ensures that the policy is widely known and understood.

How to promote your expense policy

  • Creating a video or presentation about the policy.

  • Hosting an expense policy quiz or contest.

  • Providing employees with a copy of the policy in their onboarding materials.

  • Including the policy in your employee handbook.

By taking steps to promote your expense policy, you can help ensure that employees are aware of the rules and that they are submitting accurate and legitimate expense reports. This can help you to save money and to protect your company from fraud.

How to calculate business travel expenses

Whether your business utilises expense management software or relies on manual record-keeping, it is crucial to maintain a systematic approach and diligently track all financial documentation, ranging from invoices to VAT receipts. 

The management of expenses can significantly influence your tax deductions, which is why employing expense management software is strongly recommended.

Ensure to log the following details for each expense:

  • Business Purpose: Specify whether the expense is associated with a client account, corporate event, or any other travel-related reason.

  • Department: Indicate the department within your organisation that is responsible for the expense.

  • Claim Type: Categorise the type of expense, such as food, accommodation, flights, or ground transportation.

  • Amount: Clearly state the monetary value of the expense.

  • Vendor: Identify the vendor from whom the goods or services were obtained.

  • Date: Record the date of the expense.

  • Receipt or Invoice: Attach a receipt or invoice as supporting documentation for the expense.

Forecast Your Travel Expenditure

Examine your historical travel expenditure to establish projections for the next five years. Generally, CFOs and finance managers utilise a spreadsheet with separate columns for each upcoming year and rows for various expense categories. 

These categories may encompass accommodation, flights, ground transportation, and meals. 

When creating your projections, take into account factors such as the addition of new employees, recurring expenses, opening of new offices, seasonal variations, and other variables that may impact expenditure positively or negatively.

Ways to save money on your business travel expenses

Business travel expenses can significantly impact overall annual costs. Here are some strategies to effectively manage travel expenses in a corporate setting.

Evaluate the need for overnight stays

Consider alternative travel options, such as early morning or late-night flights or trains, to eliminate the need for overnight stays. 

This can reduce accommodation costs and allow employees to return home faster. When overnight travel is necessary, encourage employees to book affordable accommodations and explore cost-effective options like Airbnb.

Negotiate corporate rates

Establish partnerships with boutique hotels and hotel chains to negotiate special corporate rates. If your company frequently books accommodations with a specific hotel or chain, you may be eligible for discounted rates. Present data on your past stays and projected bookings to strengthen your negotiation position.

Align your travel policy with company needs

Ensure that your travel policy is integrated into the booking process and meets the specific requirements of your company. Customise the policy based on factors like employee seniority or purpose of travel. Building the policy within your booking tool enhances compliance and streamlines the process.

Compare costs from multiple vendors

Save time and money by using a software platform that allows you to compare rates from multiple vendors in one place. This enables you to find the best prices without extensive online searches. Platforms like Gett provide access to various taxi vendors and ride-hailing services, ensuring employees can choose the most cost-effective option while adhering to the travel policy.

Reclaim taxes

Maximise savings by recovering taxes on travel expenses. UK companies may be eligible to reclaim VAT on business-related activities such as accommodation, meals, transport, and conferences through their VAT return. Additionally, overseas VAT incurred during international travel can potentially be recovered, although the process can be more complex.

Utilise rewards programs

Take advantage of available rewards programs offered by airlines, hotels, and car rental companies. These programs often provide benefits like free nights, exclusive rates, or points that can be used towards future bookings. Encourage employees to participate and consolidate rewards if possible.

Consider off-peak travel

Plan business trips strategically to avoid peak seasons, which tend to be more expensive. Peak travel months, such as summer and winter holidays, can significantly increase costs for flights, accommodations, and ground transportation. Aim to schedule events and travel during less busy periods, like late winter, early spring, or late fall, to mitigate expenses.

Wrapping up: Business travel expenses

Travel expenses arise from various sources. Travel is undoubtedly one of the most challenging expenditure categories to manage. 

By implementing intelligent policies and providing clear guidelines, you can assist in curbing your expenditures.

Let ExpenseOnDemand Take Care of you Business Travel Expenses

ExpenseOnDemand; the UK's best expense management software helps to reduce the administrative burden of business travel expenses for your employees. 

‍ExpenseOnDemand can help you to keep track of your business travel expenses and make your life that little bit easier.

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