Last Updated on: November 14, 2024 at 9:54 am
A recent business travel industry report has indicated that business travel costs will likely increase in 2023 as the rising demand for hotels, flights, and other travel-related expenses pushes prices up. This makes it even more crucial for organizations to estimate their travel spending as precisely as possible.
In order to maximize the cost-effectiveness of their business travel strategy, businesses must have a clear picture of how much they’re spending on each trip, for each team, and on each period. Only by knowing their business travel cost with accuracy can they make those decisions aimed at cutting spending, maximizing efficiency, and boosting ROI.
In this article, we will dig into ways you can estimate your travel expenses more accurately and effectively.
In this article, we'll take a look at:
The analysis of past spending is an invaluable tool when it comes to getting a better picture of your business travel cost. By looking at previous expenditures and trends, a travel manager or finance department can better analyze both total corporate travel costs and expenses incurred on specific trips or by particular groups of representatives and employees. With this information, they can create more accurate budgets and forecasts for future business trips.
Data-driven insights also allow businesses to identify patterns and commonalities in their travel costs. For example, they can assess which airlines have the best average fares over a long period and which destinations tend to be more expensive overall. For trips covering short distances, analyzing historical data can also be helpful to compare the cost of different travel options (e.g., local flights vs. high-speed train vs. car rental).
Lastly, a good assessment of past travel cost data helps budget creators plan for unseen expenses such as cab rides, food costs, tips, carsharing apps, etc. These are all costs that may not have been considered at first glance.
With these insights, businesses are better equipped to accurately estimate their travel costs ahead of time so they can ensure that their operations run smoothly without busting the budget. This information is also crucial when determining which actions the business can take to reduce travel expenses.
When forecasting business travel expenses, it’s important to exclude discounts from your estimates.
The most obvious reason is that discounts are never guaranteed unless they result from a clear partnership deal. On many occasions, discounts may seem tempting and give the illusion of saving money, but they can prove costly if you don’t consider the added expenses associated with them. For example, some airline sites offer discounted fares for booking multiple tickets at once. But these tickets are usually nonrefundable and come with strict restrictions on changes and cancellations. As such, they can add extra cost to an already expensive business trip if you need to make a last-minute alteration or cancel the whole trip.
Likewise, discounted hotel rates may come with hidden fees at checkout or require users to become members of a specific program before concluding the transaction. Moreover, cheap rooms may offer fewer amenities than more expensive ones, resulting in additional costs for items like towels, cleaning products, or internet access.
Ultimately, discount offers should be used as another option when booking trips instead of the main form of expense management when forecasting business travel expenses.
Business travel expenses should be adjusted to the importance of the trip, as specific trips may require more attention and resources than others. For example, a business trip for an important meeting or presentation should have priority when budgeting, as the potential results may have long-term implications for the company. Additionally, it may warrant a higher spending limit to ensure all requirements are met and any necessary business meetings and discussions occur.
Similarly, if the organization’s representatives are travelling to visit a client or partner, they may need to accommodate a larger travel party and additional costs such as meals and transportation.
By assessing the importance of each trip ahead of time, businesses can better manage their travel budgets and maximize the return on their investments by ensuring that all allocated resources are put towards trips with the highest potential returns.
TruTrip provides highly customizable tools that allow you to set different budgets for different trips, teams, or departments, thus ensuring that the trip’s importance justifies a higher business travel cost.
It’s crucial to be very rigorous when tracking primary business travel expenses, such as airfare (taxes included), lodging, ground transport, and daily allowances for food or incidental costs. The reason for this is that even minor discrepancies can add up over time and end up costing you more than anticipated. Additionally, these costs can serve as a basis for calculating the total cost of a business trip and, therefore, must be recorded as accurately as possible to avoid any financial surprises.
Furthermore, tracking primary business travel expenses will help businesses identify areas where they are overspending and develop strategies for making adjustments. For example, airlines may offer different tiers of fares that include additional in-flight amenities or discounted rates for frequent travellers, which could save companies money without sacrificing the quality of their trips.
Finally, tracking these expenses with high precision can help businesses spot irregularities or fraud in their travel programs quickly so that corrective action can be taken before it results in significant losses. By being very rigorous when tracking these primary expenses, businesses can ensure proper accounting and compliance with company policies while staying within budget constraints.
There are many ways in which TruTrip can help you get a much more accurate picture of how much you’re spending and take effective action to cut unnecessary costs.
TruTrip’s reporting and analytics tools can provide detailed insights into your organization’s spending patterns on a global level and for specific teams, departments, and destinations. Not only will this give you a reference for creating more precise budgets for future trips, but it will also help you identify each anomalous business travel expense so that you can quickly investigate its causes and use this information to avoid a future reoccurrence.
Another great TruTrip feature is the ease with which you can customize business travel policies, set different budget limits for different trips or teams, and determine which expense requires approval from travel management.
Finally, a travel management company can assist with compliance monitoring and auditing corporate travel expenses. This allows your company to remain transparent and compliant with its policies and those of any relevant governing bodies.Experience superior expense and travel management tools by signing up for a free trial or booking a demo today.
TruTrip streamlines booking, management, and reporting for hassle-free business trips.