John Linney
When businesses want to open borders for international client relationships, they must take protective steps to safeguard their bottom line against extortionate travel expenses.
Globe-trotting has become the norm for small and medium-sized businesses. Over in the USA, global corporate travel spend has hit US$1.1 trillion and is expected to rise more than 8% this year. SMEs are keen to compete with corporate competitors and that means stepping out into a global market.
Around 80% of executives believe that travel and expenses are critical for increasing sales, and as such SMEs are asking more of their employees to travel to lucrative locations such as China, where exports have risen by more than a third. But, as the saying goes; when the cat's away the mice do play. Software firm Oversight Systems found that one in 10 people had violated their company's expenses policy more than once, and that for a company with annual travel spend of US$10 million, there was roughly $500,000 in spending that did not meet company policy. SME's pockets aren't nearly as deep, so ensuring employees can close the deal without flashing unnecessary cash, is imperative.
While face-to-face meetings with your clients should help to improve your bottom line, extravagant expenses are likely to put a serious dent in growth. As the year draws to a close and a handshake thousands of miles away is your ticket to a successful Q4 and 2016, there are ways to keep expenses under control, whatever your destination.
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Tracking expenses are important to businesses of all sizes ©Daisy Daisy/iStock
1. Set expense boundaries before employees leave home soil
Keeping control of employee travel costs is proving problematic for 80% of SMEs, who are still using traditional methods such as spreadsheets to manage expenses. But, times have changed. Buzz Aldrin only claimed $33 on his moon landing expenses — easy enough to manage in a spreadsheet — whereas an employee in 2015 may claim that back just for breakfast, and spend it again 10-fold on petrol, taxis and wining and dining the client.
Automated tools, such as expense management systems or various corporate cards help buyers to oversee spend and the final expenses sign off, even from the other side of the world. In addition, regular employee facing reports will cultivate honest communication between financial managers and employees, removing any question marks over what is and isn't an acceptable expense.
2. Don't surrender to expensive solutions
As employees flock from Europe to business meetings in America, Indonesia and Asia, the price of sundries, hotels and flights are likely to rise, so cost-effective options, such as low-cost carriers and budget hotels, could become a rarity.
Further afield, hotel prices in India, Indonesia and Hong Kong are expected to grow by 4.4%, 7.8% and 4.3% respectively in the coming year, so travellers might seek out alternative accommodation via Airbnb and the like. You might be surprised at what's available.
- Hong Kong: One night stay for £18
- New Delhi: One night stay for £7
- Jakarta: One night stay for £6
You want your staff to be on the ball when they meet your clients, so well-rested and comfortable employees should always come before cost (if possible). With some accommodation you can lower the cost of extras, such as inclusive WiFi and free parking.
Businesses may feel the hotel price pinch keenly in Q4 when employees are travelling to European cities laden with Christmas-themed markets. Encourage advanced booking as far ahead as possible.
3. Give your bank balance some breathing room
Consider how frequently a business relationship needs a face-to-face meeting. Video-conferencing could replace some meetings and incur a bi-annual, or even annual, get together. On these occasions, employees can treat the client to a more lavish meal or evening out with plenty of planning time to factor in potential costs.
- John Linney, corporate product director at FAIRFX