Does your business have a significant amount of travel expenses? As the new year arrives, it may become necessary to project out your anticipated expenses for the upcoming months. Here are a few tips to get you started.
- Were your company’s travel expenses highly erratic over the last year? Average out the prior months while leaving out both the highest month and the lowest month. This eliminates some of the less than predictable expenses while still giving you a rough, reasonable average.
- Get quotes on the expenses that you know you will have, such as travel insurance and corporate auto insurance. These expenses can change vastly year-over-year, so prior year estimates aren’t going to help. This is especially true if your company has grown significantly or if any high risk factors have been introduced.
- Look over your books line by line for any improperly coded travel expenses before you complete your projections. A large trip or two placed in the wrong area, such as in promotions, could skew your expenses.
- Don’t forget any large events that you already know that your company is planning. It may be worthwhile to estimate out the expenses for these events in an itemized list.
- If your company has grown substantially in the last year, it’s a good idea to assume that your expenses are going to grow proportional to your income. If your company has doubled income, for instance, it’s very likely that travel expenses may double as well. However, if your company has remained relatively static, your travel expenses may stay the same or even go down.
- Once you have itemized a list of your travel expenses, consider going over the list to look at areas in which you could improve. Projecting your expenses is a good time to prune the budget down.
- Contact the companies that you work most closely with and inquire about whether their rates will be going up in the coming year. This is a fantastic way to head off any last minute surprises.
- Always leave a substantial buffer to ensure that you have enough cash at hand in the event that there is an emergency or an expense adjustment. It’s always best to assume that you will spend more than you actually will.
There’s some good news ahead for companies tightening their travel budgets–travel expenses are unlikely to increase significantly year-over-year due to the lowered gas prices. This makes ground transportation an even more cost-effective method than it was before.Tags: Business travel, travel expense management