How to Manage Travel Expenses
A lot has changed since traveling salesman jokes were as common as the cross-country peddlers themselves. Mass advertising, TV and radio, and now the Internet and Web conferencing technologies have given businesses new ways to get their message out and drum up sales. That's not to say that businesses today don't have to contend with travel expenses for staff. There are still plenty of client meetings, personal sales calls, and trade shows to attend, but there are better ways than ever to better manage travel expenses so that you can impact the bottom line.
"Managing your travel expenses is an important way to cut your company's costs," says Owen N. Wild, marketing director for Amadeus North America, a technology supplier to the travel industry. "Managing those expenses well is also important in ensuring that you get reimbursed fully and promptly."
The following pages will detail technologies that can help businesses avoid travel, how to save money when you have to hit the road, and tips for filing expenses.
Tools to Help Cut Down on Travel
With air travel and gas prices still sky high and growing concern about the impact travel has on the environment, more small and mid-sized businesses are using videoconferencing and online meetings in place of in-person visits. In fact, 42 percent of 610 business travelers and corporate travel managers responding to a 2008 poll by Business Traveler Magazine said they were exploring alternatives to business trips, including video- or Web conferences.
When videoconference systems debuted in the early 1990s they promised to revolutionize how companies conducted business. Things didn't exactly work out that way. Hardware in those early systems was full of glitches and transmissions traveling over too-slow computer networks resulted in choppy pictures that lagged behind audio feeds. Thanks to high-quality graphics, high-speed Internet connections, webcams and voice over IP (VoIP), videoconference systems, and Web-based online meeting services are miles ahead of where they used to be. Add to that companies looking to cut travel budgets -- and lower their carbon footprint -- and you have the perfect combination of factors pushing online meetings into widespread use.
"Videoconferencing is a whole different experience today than it was a few years ago, and it's more affordable, which is driving it down" to smaller companies, says Brett Shockley, CEO at Spanlink Communications, a Minneapolis communications reseller that markets videoconferencing and other communications networks to small and mid-sized businesses.
While some high-end videoconferencing systems run well into six figures, services exist for just about any budget. At the lowest end are services such as DimDim, a free, open-source, Web-based online meeting tool that lets up to 20 people share PowerPoint presentations, files and video without having to download software onto their desktop. Meatier versions of DimDim's software cost $99 a year for online meetings of up to 100 people and $1,999 a year for up to 1,000 people.
Even mid-sized companies are remodeling conference rooms to include expensive telepresence systems featuring wrap-around-style screens and HD-quality video from companies such Cisco and HP to avoid flying salespeople and managers to face-to-face meetings, says Spanlink's Shockley. Road warriors and companies that don't want to take on the burden of buying videoconferencing equipment themselves can rent videoconferencing rooms by the hour at FedEx Office, formerly known as FedEx Kinko's. The shipping and business services company has videoconferencing systems in 122 locations around the country, starting at $225 an hour.
Videoconference and Online Meeting Vendors
Here are some videoconference and online meeting services suited to small businesses:
• Adobe Connect Pro -- The Meetings module included in this recently upgraded Web conference and e-learning lets a user customize the look of their online meeting space, among other features. Connect Pro also has modules for presentations, training and events.
• GoToMeeting.com -- Citrix's videoconference service for small businesses was recently upgraded to include free VoIP and audio conferencing for PCs and Macs.
• IBM Lotus -- The venerable communications and productivity program includes features people can use to simultaneously send instant messages, share documents and launch Web confernces.
• Microsoft Live Meeting -- The Microsoft service lets people schedule, start or join audio or video online meetings from Outlook.
• WebEx -- Cisco purchased this online meeting pioneer in May 2007 and six months later introduced a version of the service for sole proprietors called MeetMeNow that's $49 a month and includes personal video conferencing and Web meetings that can be launched from Microsoft Office programs.
Cutting Costs When You Have to Travel
There are times when travel for business is unavoidable. In this case, there are several ways to cut down on travel expenses. Before you book any travel, know your company's policy on reimbursements, Wild advises. Having a good grasp of the policies at the outset will enable you to streamline your expense report process. Know up front what your annual travel budget is. That way you can pace your spending and not run out of travel dollars before the fiscal year ends.
The following are several ways that Wild suggests businesses can travel on the cheap:
Book in Advance. This is perhaps the most obvious and yet most commonly ignored piece of advice on managing your travel costs intelligently. Often hotels and airlines offer discounts for booking at least two weeks in advance; costs generally rise for last-minute arrangements. One caveat to this rule is if you think you may need to make last-minute changes to your flight, Wild says. You need to balance the price of a low fare ticket with the risk of having your travel plans change and possibly paying a higher airfare and/or change fee penalties. Another benefit to booking in advance is that you can avoid traveling during peak holiday times -- such as spring break or school holidays -- when everything costs more.
Shop for airfare bargains. There are many ways to find better airfares, but here are some that Wild recommends:
• Use the less obvious airport. "If you have the choice, you may be able to cut costs by using the "less obvious" airport," Wild says. For example, in Chicago try Midway vs. O'Hare. "Just remember that the airfare isn't your trip's only major cost -- factor in the cost of a rental car or taxi to get you to the airport."
• Surf the Internet. A number of websites -- such as Expedia, Orbitz, and Travelocity -- allow you to compare fares between airlines and pick the best deal that fits your travel needs.
• Be flexible. If you have flexibility in your flight planning, consider websites that use "predictive modeling." For example, FareCast.com tracks up and down patterns of certain airfares. It predicts when certain airfare deals will emerge.
Consider using a travel agent. Sometimes booking travel can divert your attention from the business. Travel professionals can find you the best deal while also providing expertise and assistance when you need it. Complex trips with several legs can tax both the time and expertise of most business travelers. Of course, some companies don't let you use an agent while other companies require it; chances are you may not have a choice.
Incidental costs. Depending on your schedule, you might be able to save money taking the subway, a bus, or shuttle, instead of a taxi or paying for parking. On the other end of your trip, figure out whether it makes more sense to rent a car, take a cab, or hire a car service to reach your destination. When it comes to eating while traveling, given that airlines rarely provide free meals anymore, you may be best off bringing your own. "I prefer non-perishables like granola bars and trail mix," Wild says. "Always buy a bottle of water after you clear airport security. Consider buying two -- the second bottle will become indispensable if your flight gets marooned on the tarmac."
Remember hotel cost-cutting rules. Avoid the mini-bar. Limit room service because there's always a surcharge and a 20 percent gratuity is often included. Also, be wary of the hotel restaurant, which can be as costly as the mini-bar or room service. If the hotel charges for Internet access, decide whether you'll really use it or whether you can get by reading email on your BlackBerry and using free wireless Internet where it's offered.
Filing Expense Reports
Encourage your employees to keep their receipts organized and file their expense reports in a timely manner. "I place all of my receipts, boarding passes, etc., inside a large envelope, which I clip inside a trip folder that holds every important document, including flight itinerary, directions to the hotel, and business meeting agenda," Wild says. "Write on each receipt what it was for ("Business breakfast on Nov. 10; guest John Doe w/O. Wild," for example). Don't take for granted that you will remember the details."
The travel expense reporting in business used to be a manual, time-consuming, and inefficient process for most small and mid-size businesses. Technology may hold the key to a smoother landing. For small businesses especially, where many employees wear several hats, finding ways to save the time associated with developing expense reports can be a godsend. Many smaller companies suffer through the travel expense process, perhaps using Intuit's QuickBooks or free services offered by their bank card. Often, those services don't go far enough. Dedicated on-demand travel expense services or software can help a small company do a better job. And on-demand services can even help companies that lack an IT staff.
Products such as Concur Expense, a Web-based travel expense solution, can run from $1,000-$5,000 in set-up fees, and from between $250/month to $5,000/month in service fees, depending on the size of the business and the number of users. ExpensAble offers several small-business options: its Enterprise on-demand product for 20 users or less for a $1,200-$3,000 one-time fee, or its Desktop software option at $700 per 10 licenses, and has off-line options as well, according to Dougherty. A third provider, CyberShift, also offers on-demand and licensed products, but does not make its pricing models public, according to spokeswoman Pamela Marshall.
Tax implications. In general, the expenses that you or your employees incur during business travel are tax deductible as necessary business expenses, according the National Federation of Independent Business, which publishes a tax guide. These expenses often include airline tickets, taxi fares, rental cars, hotel costs and certain other expenses. But be careful to keep a log, diary, or other written record to track these expenses, along with the business purpose, the NFIB notes. If you or your employees are combining personal travel with business, you need to make sure business expenses for the trip are pro-rated, so that you're not deducting the full amount of the trip -- although the full cost of airfare may be fully deductible.
Road Warrior Tips -- This website has travel tips for road warriors.
Travelblog.com -- This is a website where you can post and read travel blogs.
Travel Expense Calculator -- This online tool can help you generate travel expense reports.
Trip Advisor -- This website will let you find flights and hotels and read travelers' reviews.
Microsoft -- Features advice on travel and expense deduction strategies.