Business Travel and Expenses Challenges
29th October 2018
HR and Finance managers looking after company travel policies, travel expense budgets and meeting costs face many challenges when it comes to running an efficient business or P&L. Often value for money and impact on the balance sheet are considered less, in lieu of itinerary changes and arguments around first class/economy class, or the grade of hotel room that’s best to book. With businesses predicted to reach a global annual travel expense of $1.6tn annually by 2020, it’s no wonder finance managers are keeping a close eye on this sector.
There are however, several challenges and opportunities for streamlining and improving business travel and expenses. According to Trade Finance Global.
In addition, there are several loyalty programmes which many hospitality companies and travel agencies offer, which is an important consideration for business travel programmes.
- How do I think about improving the travel experience for my employees?
- Is it more efficient to ensure my employees are happy and well relaxed or focus solely on the bottom line?
- How will dynamic pricing strategies help manage internal values?
- Are our travel agencies offering a value-add?
- How do I manage a budget in a world of huge volatility in travel prices?
- What about varying airline prices?
- Am I insured, and are my employees protected in the case of cancellations or other events
It’s often advisable to speak to HR consultants or expense reduction specialists to ensure that you’re getting an overview of the market, pick the right travel programme and get a forensic view of operations within your business, versus the market.
What about finances?
For treasury managers, the cost of meetings, travel and accommodation are considerable for any company.
There is an additional complication, however. Paying in different currencies (e.g. USD or EUR) can have its challenges. With the current volatility that we see in FX markets, often it can be + or – 10% to buy travel in different currencies, which can have a significant impact on the balance sheet, especially when travel is a significant cost base on a balance sheet.
It’s important to consider hedging, FX strategy and treasury risk mitigation when thinking about travel management, not just the cost of accommodation or flights, nor just the wellbeing of employees, but also the volatility of currency. Understanding the market is incredibly important. Often there are opportunities to buy in bulk when times are favourable, but it’s also important to introduce controls and policies to reduce unwanted spending.