How to Establish a Corporate Travel Budget
急速PC28彩票As your corporation grows, you will find that you or your employees have to do some traveling on behalf of the company. Travel costs usually function as an investment—technically discretionary, but essential to long-term success—and a good investment must yield a good return. Preparing a travel budget means identifying guidelines about what your company can afford to spare in the short term, and how much of a return those “investments” need to generate to justify their expense.
Establish a travel budget only after you provide for your core business expenses. During lean times, you can dispense with corporate travel, but you can’t dispense with costs like rent and (some) payroll. You have to pay those costs first, whether through revenues or debt. Violating this rule poses an existential threat to your company, and you should never consider it unless it produces a tangible, short-term payoff.
Set an official travel policy to use as a baseline for approving travel expenses. One side of this coin concerns the costs themselves. For instance, an official policy should specify limits for per diem meal expenses. The other side of the coin involves the approval process. For instance, junior employees should have to obtain approval for travel from an authorized manager or executive.
急速PC28彩票Condition travel expenses on the value you reasonably expect them to add to your company. Use informed assumptions to make specific projections. An obvious example involves flying to another state to negotiate a contract with a prospective buyer that will yield a significant profit over time—far outstripping the cost of an airplane ticket, meals and a hotel room. A less intuitive example involves flying to another state to attend a conference about optimizing business practices in your industry. It won’t result in any profit by itself, but implementing those better business practices might help you grow revenue. You should expect some difficulty and guesswork in estimating the return on these kinds of expenses. Start out conservatively by avoiding large risks.
急速PC28彩票Collect data on the costs of the corporate trips your company approves, and analyze these data over time in relation to the value that each trip eventually adds to the company. This means everyone who travels needs to fill out an itemized expense report upon their return. Details make the difference. Strive to be able to draw as straight and clear of a line as possible between travel expenses and the value they deliver. Nothing helps you to make projections about the future as well as good data about the past. Building a knowledge base about what kinds of trips paid off and what kinds didn’t will help justify a more liberal travel budget in the future.
急速PC28彩票Track travel expenses and control these costs. Don’t force your employees to travel in poverty, but don’t give them a blank check either. Coach airplane seats, economy rental cars, and bargain hotel rooms won’t hurt the fundamentals of the trip.
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