Five Tips for Setting Your 2023 Corporate Travel Budget
As the early years of the COVID-19 pandemic showed, video calls and conferences are helpful for ironing out details or attending to minor concerns. However, while virtual meetings are here to stay, significant undertakings, such as closing a deal, inspecting a manufacturing facility, or taking employees on a team-building trip, still require face-to-face interaction.
Whether domestically or internationally, travel is and will continue to be essential for businesses across all industries. In fact, a survey by Morgan-Stanley Research showed that in 2023, corporate travel levels are expected to not just recover but go beyond pre-pandemic levels.
The same research found that travel budgets are likely to increase, with smaller businesses leading the demand for business travel. The challenge, then, for small organizations is to set a travel budget that allows them to meet their corporate travel needs while staying in control of finances and protecting their bottom line.
Read on for five helpful tips on setting a cost-effective corporate travel budget for 2023.
How to Make a Travel Budget: A Guide for Businesses
Before setting a travel budget, it’s critical to ensure you’ve allocated a sufficient amount for your core business expenses. These include operational costs like payroll, rent, and business insurance.
A travel budget is essential, but you can temporarily make it smaller in lean times. Meanwhile, it’s harder to negotiate with the landlord over unpaid rent or skip paying your monthly premiums.
That being said, you can learn how to make a travel budget that works harder for you by following these tips.
Tip 1: Determine Your Company’s Travel Needs
Go over your company’s travel history and previous business travel spending to get a better idea of how much you need to allocate to your budget. Keep in mind that business travel spending involves not just airfare and accommodation. You’ll also need to cover the costs of things like:
Train reservations
Car rentals, gas, and parking
Meals and entertainment
Incidental expenses, like tips and business gifts
Indirect costs, such as the time spent researching hotels and flights
After finding out how often your employees travel, how long they’re away, and their average spend on trips, you should use this information to inform your corporate travel budget for 2023. You should also consider any changes on the horizon for your business.
For instance, are you planning on expanding to other states or countries? Will you be sending more employees to training conventions and conferences? The answers to these and other questions will help you set a budget that accommodates your business’s needs and is flexible enough for future growth.
Tip 2: Create and Communicate a Travel Policy
A travel policy helps guide employees on what to expect when they apply to have their business travel expenses approved. The ideal policy should be clear and detailed to avoid any room for misunderstanding and, thus, overspending.
For instance, it could indicate that the per diem rate that can be reimbursed for meals on a domestic trip is $257, and any amount over this rate should be paid for by the employee. However, keep in mind that travel costs can fluctuate wildly. A good baseline is the U.S. General Services Administration’s rates website.
Your travel policy should also clarify what is not covered under its terms. For instance, you might indicate travel expenses your company will not reimburse, such as minibar purchases. This helps ensure the trip stays within budget and encourages employees to be more responsible with their spending.
Tip 3: Set Reasonable Spending Limits
It’s important to set realistic spending limits, taking into account what your business can afford. Consider the return on investment (ROI) of certain trips before approving them. Is there a tangible benefit to your employee attending a meeting out of state? Is conducting the meeting virtually equally beneficial?
Tip 4: Look for Ways to Save
Negotiating with travel providers and agencies, as well as airlines and hotels, can help you cut down further on business travel spending. You could also encourage other cost-saving measures, such as booking in advance, choosing lower-cost accommodation options, and room-sharing. Other ways to save include:
Booking flexible fares.
Encouraging ride-sharing and using public transportation.
Choose accommodation with a kitchen so employees can cook instead of dining out.
Leverage hotel and airline rewards programs.
Schedule business travel for off-peak seasons.
Encourage employees to travel light to save on excess baggage fees.
Accepting complimentary meals, such as free breakfasts at the hotel.
A good way to incentivize employees to cut down on business travel spend is to offer rewards. These may come in the form of gift certificates, a cash gift equivalent to a percentage of the amount they had saved, or anything that could encourage employees to stick to the budget.
It’s also highly beneficial to hire an expert to help your business stick to your corporate travel budget. A professional in the travel and hospitality industry can draw on their network and connections to negotiate the best possible rates on everything from airfare to meeting room and equipment rentals.
Tip 5: Monitor and Track Expenses
Managing expenses, staying on top of per diems, and ensuring every charge is documented and reimbursed are some of the biggest hassles of travel budgeting. Missing receipts, reports submitted late, and unexplained expenses are frequent headaches for those in charge of managing and tracking a business’s corporate travel budget.
Fortunately, gone are the days when all this administrative and accounting work had to be done manually. To help you or your on-site accounting and finance staff, consider using apps that automate the process and decrease the time and resources you spend on it.
However, keep in mind that travel expense management software requires training to be leveraged correctly. There are also additional costs to subscribe to such apps. Be sure to assess the ROI of travel management software and consider whether hiring a corporate travel management company is a better solution.
A Travel Management Agency Specializing in Cost-Effective Corporate Travel
Setting a travel budget for 2023 results in more controlled spending and helps ensure stable finances for businesses. Following the tips outlined in this article will help you set a travel budget that is adequate for your travel needs.
CI Azumano is a corporate travel management agency offering tailored solutions to businesses. These include a business travel spend database that compiles all expense reports in one place, as well as a reporting suite that gives users a detailed view of how their corporate travel budget is being spent.
To learn more, contact us today.