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Business travel is expensive, and without clear direction from management, employees aren't always focused on finding the best deals when traveling on the company dime.
This can drive a lot of unnecessary waste into the annual budget, according to Chris Dwyer, research director and vice president of operations for Ardent Partners, a Boston-based supply management research firm. "A lot of companies don't realize how much money they spend on corporate travel," he says. Small businesses spend 6 to 7 percent of their total budget on business travel, Dwyer says. "That's a significant line item, and you need to manage it strategically."
Here are several tactics to help international employers track and reign-in travel costs.
— Russell Keefe, CFO of Animoto
The biggest problem small companies face with travel costs is that they don't know what they are spending money on, and they don't collect the data necessary to ensure they are getting the best rates, Dwyer says. To reduce waste and better manage costs, he urges companies to create a travel policy that clearly defines:
· How much money employees are allowed to spend on a daily basis
· Items they can and can't spend money on (i.e. alcohol, room service or entertainment)
· Preferred services they should use, including certain airlines, car rentals and hotels
The U.S. Department of State offers common per diem rates for foreign travel, food and lodging in foreign countries, which businesses can use to set their own guidelines. Russell Keefe, CFO of Animoto, an online video creation service with 60 employees in San Francisco and New York, uses the per diem rates that the government puts out for U.S. travel. "They were designed for federal employees, but they are useful to set a baseline," Keefe says. His employees use the per diem rates for guidance on meals, entertainment and hotels, and if someone wants to go over that rate, they are expected to ask permission.
Business owners can also rely on the resources provided by a trusted online foreign exchange service to help keep travel costs down. For example, using a free currency converter can help employers gauge the buying power that employees will have as they travel to foreign countries. In places where their dollars go further like the Ukraine, Costa Rica and India, it may be reasonable to put a lower limit on the total amount that an employee can ultimately spend on the company's dime.
Companies should also consider investing in expense management software to track business travel spending and validate that employees are sticking to the travel policy, Dwyer says.
Animoto uses Concur software to manage its business travel spending. This tool allows employees to do expense reporting online and offers an option to photograph receipts and submit them electronically, which makes the submission process faster and easier.
"Expense reporting is the bane of the traveling employee, and it's an expense to the business, too," Keefe says. By streamlining that process through the software, his employees can complete expense reports on the road and be paid within a day or two of their return.
As employers receive requests for reimbursement, they can send money online to employees using a trusted online foreign exchange service. With an online FX service, money is sent through international bank transfers, making for convenient and transparent money transfers.
Companies can also use the cumulative data collected in the software to assess their travel budget to date, look for opportunities to negotiate rates with frequently used vendors and project future travel budgets based on past history. Keefe, for example, cut his travel costs by using his team's travel data to negotiate lower rates with hotels in cities where they often travel, such as New York and Boston.
The long-term benefit of having this kind of transparency over business travel data can really add up, Dwyer says. "Even if you only cut 2 percent of your travel costs, that could mean saving $20,000 to $100,000," he says. "For a small business that's a huge savings."
Example: 1USD = xx INR
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