Travel and entertainment are some fun activities people can indulge in. Due to the nature of these activities, people often need to spend more, even after budgeting. Depending on the travel arrangement, this results in dire financial consequences to the individual or company.
However, this doesn’t have to be the case. There are strategies you can implement to help keep your travel and entertainment budget in check:
Using Automated Solutions
Today, there are automated business expense management systems to help with all your business travel and expense needs. This software can help with your flight and accommodation booking per your budget. They also help sync your cards to facilitate payment and enable you to track your spending. The best part is that all these works are automated, making it easier and more manageable.
You can also use other automated systems such as online portals for employees to submit their claims and receipts electronically. In doing so, you can reduce the time spent processing paperwork. You’re also less likely to commit errors with a computerized system, and this increases accuracy.
Its tracking and reporting features can help you identify loopholes in your organization’s spending habits and address them appropriately. For example, you can identify potential areas where you can achieve cost savings without sacrificing quality services. It could involve anything from analyzing negotiated rates with hotels over time to investing more heavily in airfare discounts.
Lastly, increased visibility into your spending allows you to know who’s making what purchases and when. You can therefore prevent unnecessary overspending before it happens.
Creating Budgetary Limits
An excellent budget should be based on the company’s projected income, expenses, and objectives for the period in question. It also has to factor in potential changes in those projections over time like exchange rate fluctuations. When budgeting, think ahead. Don’t set aside the money budgeted only—put aside some extra to allow room for unforeseen expenditures. It also ensures business travel and entertainment plans aren’t halted because of insufficient funds.
A suitable budget removes ambiguity about how much money is allocated toward each business trip expense and event. It also eliminates overspending and unnecessary costs.
Further, employees are less likely to find themselves in a situation where their reimbursement isn’t approved due to a lack of funds. Once established, this budget control plan also guides the monitoring and evaluation of actual spending.
Establishing Clear Rules And Policies
Another practice you can use for your expense management is developing specific policies and guidelines for the team during the trip. Based on your budget, outline what activities are approved and their allocated money. Also, detail the procedures and terms of conditions like pre-approval requirements and reimbursement.
Setting clear rules around reimbursement actions is critical, as it helps reduce confusion. It also ensures everyone involved understands what they’re expected to do when submitting an expense report, including:
Submission timelines
Documentation requirements
Itemization limits per transaction
Maximum amounts allowed per expenditure and other applicable details
These directions help streamline processing times while minimizing discrepancies between submitted reports and approved claims. They also guarantee accuracy in payments made by the organization’s finance departments.
Make the policies clear to every team member before travelling so that they can make informed decisions. Having clear policies and procedures helps everyone know their role in travel and entertainment expense management.
Providing Training And Education On Policies
Companies need to provide training and education about policies and procedures related to managing travel and entertainment costs. You can also provide in-person or online sessions focused on understanding applicable rules, best practices, and other relevant topics.
Training helps everyone involved know what expectations have been put in place. With this knowledge, they can mitigate risk, and misappropriation of funds and other similar issues are eradicated.
Implementing A Travel Approval Process
Businesses also need to consider implementing a travel approval process. Start by identifying an individual or team responsible for reviewing and approving any requests related to business trips.
It’s important that you establish a clear chain of command with defined roles and responsibilities for bureaucracy and to ensure compliance. For example, while one person may find a travel approval necessary, the next may not. This ensures that only the essential travel and entertainment expense requests are approved, facilitating effective expense management.
A travel approval team also helps your organization stay on top of business travel expense management trends. For example, they may know when to book flights depending on ticket prices or discounts. Planning business trips in alignment with discounted rates helps you save costs.
Utilizing Credit Cards And Payment Solutions
Another way to ensure more accurate tracking and control of team member spending is providing them with credit cards. Cards allow you to monitor spending and set limits for different categories in real time.
Corporate credit cards also provide additional protection against fraud. They come with additional security measures like two-factor authentication, making unauthorized access to the account harder. These cards can also help take advantage of rewards offered by certain suppliers such as airlines or hotels.
Developing Internal Auditing Systems For Compliance Checking
Auditing systems are also not to be overlooked. This is particularly if your organization wishes to comply with industry standards and regulations. It also helps avoid misuse of funds by detecting inconsistencies quickly. These issues are addressed in time before they can escalate.
A regular review ensures that policies are up-to-date and team members’ spending habits are monitored closely. Technology solutions are also checked to ensure they’re working as expected and appropriate corrective actions are taken if needed.
Understanding The Laws And Regulations
Organizations must stay updated on all applicable travel and entertainment costs laws and regulations. This is especially vital for tax laws and other international payment procedures. Before initiating corporate travel or entertainment events, businesses must also be mindful of any restrictions that may apply in different countries. For instance, check for currency exchange rates, liabilities, or limits on covered expenses.
Summary
Travel and entertainment costs are significant expenses for many organizations. As such, when not managed efficiently, they can pile up and affect the profitability of your enterprise. You can avoid high costs by implementing the above eight expense management practices.
The post Best Practices For Travel And Entertainment Expense Management appeared first on Enterprise Podcast Network – EPN.
