With careful planning and research, you can come very close to creating the ideal business travel and events budget for your company. Below are six steps that will help you calculate your company’s business travel budget.
Create a Business Travel Policy
If you do not yet have a clear written business travel policy, creating one should be your first step toward building a business travel budget. The goal is not to restrict employees with a rigid set of rules. Instead, a travel policy should help you prepare for unexpected situations and ensure consistency for employees traveling on business. A clear set of travel guidelines will help prevent confusion and unnecessary overspending.
Here are a few things to include in your business travel policy:
How far in advance should business trips be booked? The earlier, the better, as this allows you to take advantage of lower airfares and early booking discounts for conferences or exhibitions.
Which suppliers should you work with? Conduct a tender to select a business travel service provider so you can benefit from lower prices and the advantages of working with an experienced travel management company. Cost and time savings, special hotel rates in Ukraine and abroad, employee safety, and convenient cooperation are just some of the benefits.
What does the traveler’s daily allowance cover? Meals, of course. But what about alcohol? Morning coffee? Client entertainment? Shared transportation?
What expenses are not reimbursable? Dry cleaning? Parking fees? Prepare a clear list of approved and non-approved expenses to ensure a consistent reimbursement process.
How should expense reports be submitted? How long do travelers have to submit their expense reports? When will they receive reimbursement?
If you have a well-defined business travel policy, it will be much easier to identify deviations from it and understand where your travel budget is being spent. In addition, it will help you manage the process more efficiently.
Review Your Upcoming Business Travel Calendar
The easiest trips to plan are recurring annual events. Are there conferences, exhibitions, training sessions, or shareholder meetings that your employees attend every year? Start by planning those first.
You should also find out whether company management is planning business trips within Ukraine or abroad. For example, one department manager may be planning to send the entire sales team to a specialized training seminar. Make sure you are aware of all potential business trips involving your company’s management or employees.
Try to estimate the cost of each trip per traveler. Review last year’s data to see how much the conference cost previously. Also, don’t forget to check what else is happening in the destination city during the same period. If your annual exhibition coincides with a major music festival, airline ticket and hotel prices may be significantly higher. Be sure to account for this in your budget.
Of course, planning trips you already know about is the easy part. But how do you budget for business trips that have not yet been planned?
Review Previous Business Travel Expenses
To understand how many trips are spontaneous rather than planned in advance, review last year’s travel data. How much was spent on recurring conferences and exhibitions? How much was spent on regular business trips and unexpected travel?
Try dividing last year’s travel expenses into categories. For example, perhaps 30% went to planned conferences and training, 40% to business trips, and 30% to last-minute travel. Since you have already estimated your planned trips, you can use last year’s breakdown to forecast this year’s overall travel budget.
Your business travel policy should include an accessible way to review travel expense data. Use this information to establish an average cost per traveler for different types of business trips. Conferences, client meetings, and business visits may all require different budget levels.
Consider Future Business Goals
Analyzing previous travel expenses is an excellent way to estimate a realistic budget. However, just because your company spent a certain amount on business travel last year does not mean you should allocate exactly the same amount this year.
If your company plans to expand aggressively or acquire many new clients during the first quarter, you may need to increase your sales travel budget. Does that mean the overall travel budget should also increase?
Before presenting the final budget to management, make sure you have a clear understanding of your company’s strategic goals.
Monitor Business Travel Expenses
Having a budget is important, but only if you monitor it throughout the year. As a travel manager, you should regularly track travel expenses. In many cases, this means negotiating priorities with the rest of your team.
Manager A wants to send the company’s top salesperson to an expensive conference in Dubai that could result in a major contract. Meanwhile, Manager B wants to send three new employees to another city for training. Management supports both ideas, but the budget only allows one of them.
When faced with budget limitations, it may be reasonable to postpone the training until the following quarter. If business performance is strong, management may later decide that both trips are important enough to approve additional funding. Either way, you will know you have done everything possible to protect your travel budget.
Include a Contingency Budget
If your company allows it, try to allocate a small contingency budget for unforeseen circumstances. This fund should be reserved exclusively for urgent business trips that cannot be avoided. It does not mean employees can overspend or ignore travel policies. Instead, it is a separate budget line reserved specifically for emergencies.
At first, preparing a business travel budget may seem like a lot of work. However, once you have a solid travel budget in place, the rest of the year becomes much easier. It will serve as a practical guide when setting priorities and making informed decisions about your company’s future business travel plans.