Traveling to meet the client is a part of any small business and expenses incurred during the client meetings or corporate meetings are simply unavoidable. Ideally, a single client meeting outside your place of residence would include to and fro air travel, taxi journeys and overnight stay in a motel or hotel. These inevitable costs are necessary to take your business to the next level of success.
However, a small business owner has to contemplate whether his travel expenditure is worth it? How to record the expenses incurred, maintain the records and later review the travel overheads to make a future forecast. We have put together a few pointers that can be used as a guideline to manage the business travel expense better and also ensure that every business travel is worth it and it benefits the firm.
Formulate a clear travel policy- This is the first and foremost thing that every small business should do. Putting a clear travel policy in place will help to keep track of the travel expenses and also effectively forecast and budget for the future. The policy should also mention what employees can and can’t make a claim. A lucid policy in place will reduce the confusion across all departments and the employees will also know where they stand and how much they are allowed to spend.
Filing Expense Reports- This is where expense report software comes into play. If you have not yet integrated an expense report management software, now is the time. Use this software to record the travel expenses as and when it occurs. These days most of the expense report software are compatible with mobile devices and desktops. This enables a business traveler to update his expense even while on the go.
Categorize the claims according to the seniority- Visibility of the expenses incurred is of paramount importance to the accounts department. Therefore, break down the claim amount into categories as per the privileges set so there is no confusion when it comes to managing the travel expenses. Ensure that all the employees across all departments are aware of the travel policy. Also encourage them to record their expenses in a timely manner.
Cut the right costs- This does not mean hunting for the cheapest deal in air tickets and accommodation. For instance, its enticing to find the cheapest flight. Imagine a situation where your employee misses the check-in or the flight is delayed or cancelled at the last moment. Last minute travel arrangements can hike the expense. Similarly, while booking a hotel, choose a good hotel or a motel with all basic necessities. Else you will find the staff is unwilling to travel or even if they go, there will be lack of motivation which can lead to low productivity. Look for value instead of inexpensive deals. If you have a business travel plan calendar, book the airline tickets as well as hotel rooms in advance. It will cost you less.
Tax implications- According National Federation of Independent Business, that publishes the tax guide, the business travel expenses occurred are tax deductible. This includes the expenses such as airline tickets, taxi fares, car rentals, accommodation costs and so on. Therefore, ensure that you as well as your employees record all the business travel expenses without delay. If you are using an expense report software and all the expenses are recorded on time, then managing your taxes will be much easier and simpler.
Managing the business travel expenses manually can be time consuming and complicated. It’s also stressful at times. Contemplate automating your expense management system.