In today’s highly competitive global landscape, managing and understanding the intricacies of business travel expenses has become more crucial than ever. As companies prioritize face-to-face interactions once again, the need for travel and associated costs has increased. This highlights the importance of accounting and optimizing business travel expenses, which has become a key function of Corporate Travel Management.
Continue reading as Wego highlights several typical expenses related to business travel that your company may face while your employees journey worldwide.
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Business travel expenses
Business travel expenses encompass the financial obligations borne by individuals or organizations when embarking on business trips. These expenditures encompass a diverse range of items essential for facilitating business-related endeavors conducted outside the customary work environment.
Common types of business travel expenses
Below, we have provided a breakdown of several common examples that illustrate business travel expenses.
Transportation costs encompass the expenditures associated with arranging the mode of travel for employees during their business trips. These costs include:
- booking flights, trains, or buses for transportation to the destination
- acquiring necessary visas for international travel, if applicable
- renting a car or hiring a taxi for local transportation within the destination city
- parking fees and toll charges incurred during the trip
These expenses arise when arranging accommodations for employees during their business trips. The cost of accommodations may vary depending on the level of arrangement chosen by the company. Typically, higher-level employees are provided with more luxurious accommodations, resulting in higher costs, while employees at lower levels may have more modest accommodations with lower associated expenses.
Travel allowances refer to the various types of allowances granted to employees during their business trips. These allowances can include:
- daily meal allowances: Reimbursement for meals consumed by employees on a daily basis while on the trip
- daily necessities expenses: Reimbursement for essential items or services required during the trip, such as toiletries, transportation within the destination city, or internet access fees
- client meeting expenses: Reimbursement for costs incurred during client meetings, which may include expenses for meals or entertainment aimed at impressing clients
Please note that these allowances are subject to company policies, and the specific details and rates of these allowances may vary accordingly.
Business communication expenses encompass various costs associated with facilitating communication across different channels within a business. These expenses can include:
- phone bills and telecom charges: Costs incurred for phone calls, mobile services, and telecommunication services utilized for business communication purposes
- internet charges: Expenses related to internet connectivity required for email, web conferencing, online collaboration tools, and other digital communication channels
- postage and courier charges: Costs associated with sending physical mail, packages, or documents through postal services or courier companies
It should be noted that these expenses contribute to maintaining effective communication within the business and are vital for seamless operations and collaborations.
Conference or event registration fees
Conference or event registration fees refer to the charges incurred by a company to enable their employees to attend corporate events. These events play a crucial role in building awareness, fostering networking opportunities, and acquiring valuable knowledge. Therefore, these costs are often considered essential investments. Additionally, these expenses may also include fees associated with workshops, seminars, training sessions, or other educational activities offered during the event.
Companies may opt to provide travel insurance for their employees, aiming to safeguard them against unforeseen circumstances, such as emergencies, medical issues, or trip cancellations. Travel insurance offers financial protection and peace of mind by covering expenses associated with unexpected events during the trip. Typically, it includes coverage for flight cancellations or interruptions, medical emergencies, lost luggage, and various other travel-related risks. By offering travel insurance, companies prioritize the well-being and security of their employees during business travel.
Miscellaneous expenses encompass minor costs or gratuities that arise during a business trip. These expenses can include:
- tips: Gratuity provided to service staff, such as hotel staff, drivers, or restaurant servers
- small purchases: Minor items or services purchased during the trip, such as snacks, souvenirs, or personal supplies
Companies typically differentiate these expenses from personal expenses. The coverage of incidental costs is determined by the company’s policy, outlining what expenses are eligible for reimbursement and what expenses are considered personal and not covered.
Reimbursement methods for business travel expenses
Companies employ various reimbursement methods to compensate employees for expenses accrued during business trips. Here are several commonly used methods:
Per diem allowance
A per diem allowance refers to a daily sum of money provided to employees during their business trips. This allowance is intended to cover various expenses, primarily meals and other incidental costs incurred by employees while on the trip.
Corporate credit card
A corporate credit card is a card issued by a company to employees specifically for business-related expenses. This card enables employees to make payments without relying on personal cards or cash.
In addition to per diem allowances, companies typically establish a predefined limit on corporate credit cards. Once this limit is reached, employees are required to use their personal funds for any further expenses.
Once employees return to the office following a business trip, they have the option to request reimbursement for the expenses incurred during their travel. To initiate this process, employees typically manually record their expenses on a spreadsheet detailing the nature and amount of each expense. Alongside this record, they submit the corresponding receipts to the finance department for verification and approval.