5 tips for reducing business travel expenses post-pandemic

As a business owner, maintaining tight control over your business expenses helps maximize your cash flow and profits. Managing your expenses also means you have the upper hand in knowing your key cash-out areas and understanding your spending limits.  One expense that most businesses struggle to manage is the traveling expense. You can use various tactics to rein in expenses and limit costs. Let’s discuss the five expense management tips for businesses.

1. Make a plan or strategy

Every business needs a clear road map detailing its activities and forecasting expenses with contingencies. If your business puts your employees in a position of traveling a lot, a plan (of no less than two years for small businesses) is important. The plan will show the business where revenue will come from, approximate expenses, and who’ll be responsible for certain travel spending decisions. This will also give the business a clear direction towards achieving its goals and attaining a business-wide financial plan.

2. Track expenses

Once you make a plan, your net activity is to track your business travel expenses. If an employee is attending a business conference and you’ve arranged workforce lodging support, tracking these costs will help you in future business traveling cost forecasts. You’ll also be in position to understand your business’s historic traveling expenses against the revenue they generated for future planning. How to track your business traveling expenses effectively:

• Digitize all your expenses and payment receipts using a receipt scanner
• Seek the support of accounting software to categorize and store expenses in one place
• Use a prepaid business card or dedicated business bank account for business traveling
• Separate personal expenses from business traveling expenses
• Link business bank account to accounting software to automatically record and import transactions
• Review business expenses regularly and generate expense reports

Tracking and categorizing business expenses will also help make your tax time manageable because you’ll already know what goes where and why the expenses are incurred.

3. Benchmark against industry

You can’t walk alone and succeed. You need to understand what others are doing in the industry and their average traveling expenses per month or year. Establish metrics comparable to your businesses and how other companies in your industry manage their expenses. This way, if you’re spending more money on traveling, you can find out why and try to reduce your expenses or minimize business costs.

4. Manage variable costs

Many businesses have more costs associated with traveling than the travel itself such as meals, arranged transportation, special arrivals, etc. Some of these costs can be limited or eliminated. Look at your business’s total travel expenses and how much revenue they generate. Costs that don’t support the business generate revenue and aren’t directly related to business support can be eliminated. This is a great move towards reducing general business expenses.

5. Invest in technology

The digital era has many technologies that can support businesses and reduce costs. Explore technologies that can help your business reduce costs, improve efficiency, and increase productivity. For example, the company can consider offering prepaid cards for employees traveling. This will enable easy tracking of the card’s expenses and understand the employees’ average monthly travel expenses vis a vee revenue generated. It will also support easy documentation because the card can be automatically connected to the business’ accounting software for recording transactions.

Endnote

Managing business traveling expenses can be difficult, as every business expense is always made towards profits. Having a plan, tracking your expenses, comparing your expenses to the industry, and using the right technology can help you manage your money effectively. As a business, limiting expenses often leads to better revenue growth.

24/06/2022