Managing business travel expenses can be complex. So we're breaking down everything you need to know. Starting from the very beginning: What are business travel expenses exactly?
Then, we'll take a deep dive into the challenges we all face with business travel expenses, like how to reduce costs and how to set a spending limit that works for your business.
So strap in and rev the engine and let's go!
What are Business Travel Expenses?
If your job requires you to travel somewhere other than your normal place of work – to visit customers or other company branches, for example – then the costs you incur during this trip are called business travel expenses. In other words, they represent money that you would not have had to spend if you were working at your usual workplace.
Travel expenses for business include the cost of whatever means of transport you use to get where you’re going – the most popular being the proverbial planes, trains and automobiles. The business travel expenses list doesn’t stop there, though, as overnight accommodation, meals and any equipment required to do your job away from home can also be included.
So, why is it important to know what qualifies as a business travel expense? Put simply, if you work for a company then you can reasonably expect that company to pay or reimburse you for any expenses you incur that are directly related to your business travel.
Why is tracking business travel expenses so important?
Keeping track of business travel expenses is important for companies and self-employed people. Why? Because these costs are generally tax-deductible and can be used to reduce the amount of tax they are required to pay.
Companies that require a lot of business travel will generally have a Business Travel and Expenses Policy. This helps them to keep track of legitimate travel expenses while making sure they stay at a reasonable level, which can be a fine balancing act.
‘How much can I claim for business travel expenses?’ – As an employee, that depends on where you’re travelling to and the specific details in your company’s travel policy.
If you’re self-employed or a company, this will depend on the specific regulations in the country in which you’re a tax resident. There are strict regulations governing self-employed and limited company travel expenses, so businesses must keep on top of this.
How to Track Business Travel Expenses
The more business travel expenses there are, the more complicated keeping track of them can get. For an individual self-employed person who travels a few times a year, it might be as simple as having a single account or credit card that you use for all your business expenses.
If you travel more regularly or are a company that sends multiple employees on business trips, then you probably need to consider using a travel management company or some sort of travel and expenses management software. Each of these has its particular benefits and your choice will depend on your situation.
Using a travel management company is a good solution for you if you don’t have the time and resources within the company to handle reservations, policies and expenses for your business trips. It essentially means outsourcing a business travel department that will take care of all the administration related to your business travel.
If you prefer to stay directly in control of your business travel and expenses, then travel and expenses management software is a great alternative.
Travel and Expenses Management Software
There are many different travel and expense management software providers on the market with varying degrees of user-friendliness and features. Most are designed for large companies that employ one or more
Travel Managers often require specific training to operate them efficiently. If you’re looking for the best business travel expenses app in terms of ease of use and flexibility and one that can be used by businesses of all sizes, then take a look at FREENOW for Business.
FREENOW’s business travel expense management software – or Admin Panel – is a digital solution for business travel management that puts you and your employees in control of your business travel through a simple, easy-to-use interface containing a range of flexible travel options.
With features like online booking tools, expense tracking and management of corporate and individual travel policies, a business travel app like that provided by FREENOW can make managing your business travel and expenses easier, more efficient and cheaper.
A Business Travel App that Works for You: FREENOW’s Admin Panel
FREENOW’s business travel app, Admin Panel, is one of the best travel expense tracking apps. It puts organising business travel in the hands of those who need it without adding any extra stress.
You or your employees can organise trips in a way that suits you while keeping synched in with a central management system. It keeps track of expenses and makes sure that your travel policies are being followed.
Expensing made simple – get detailed expense reports at the click of a button, centralise your payments and pay with one monthly invoice. Plus, large accounts can make life even easier through automated expensing via SAP Concur and Amadeus Cytric integrations.
Reduce costs – create and track individual travel policies and cost centres to ensure you stay in control of your spending.
Reduced your company's carbon footprint – FREENOW boasts one of the largest fleets of electric and zero-emission transport in Europe to help reduce your company’s carbon footprint. Its software can track each business traveller’s carbon footprint and provide detailed CO2 reports. This information can be used to set your sustainability targets and power your CSR strategy, enabling you to make adjustments to your travel policies to reduce your footprint.
Mobility Budget – when your employees are using FREENOW’s app for business travel, you can also give them a benefit that rivals having their own company car. They get a monthly budget to spend on their personal travel, whether that’s commuting, nights out or holidays.
How to Set Expense Limits
Although often a vital part of your business operations, travel expenses can easily get out of hand and end up costing you more than they need to.
The way to avoid this is by drawing up a Travel Expenses Policy that clearly states which business travel expense categories are included and sets key spending limits.
Here are some tips on setting expense limits that are fair to both the company and its travellers:
- Air travel – most business travellers accept travelling economy for short-haul trips.
- Ground transport – encourage travellers to use the most cost-effective and time-efficient means of transport.
- Accommodation – give employees their choice of a standard room in a hotel with a certain star rating or set a maximum price per night.
- Daily allowance – set a maximum allowance per day, allowing your employees to choose how much they spend on each meal.
- Alcohol – most companies specify that alcoholic drinks are not included unless part of entertaining a client.
- Tips – adjust your policy on tips for individual countries, i.e. where tipping is expected, such as in the USA, cover the standard amount, if not already included as a service charge in the bill.
- Entertaining – most companies manage this by setting a limit or range per client.
With FREENOW’s business travel software, you can easily draw up your travel policies and make sure they are adhered to.
Simply set your travel rules and restrictions via the Admin Panel. You can limit travel by location, vehicle type, payment type and more, customising your account to fit your business needs.
Average travel expenses for a small business
Business travel is big business. Thousands of people travel for business each year and even small companies are keen to cash in on the global economy. Yet, business travel is not cheap and small businesses need to carefully assess whether the investment is worth it.
The average cost of business travel can vary enormously depending on the destination. When it comes to flying, jumping between European cities can cost between €200-500 if you’re flying scheduled or as little as €10 if you’re happy to fly budget and wait for the deals. If you’re looking at long-haul business class, though, you can expect a four-figure price.
Mileage rates for car journeys also vary from country to country, ranging from €0.19 in Spain to €0.53 in Finland. The variance is even more extreme when it comes to taxis, with a 3 km journey ranging from less than €1 in Delhi to over €20 in Zurich.
Transportation costs aside, the average daily spend in Europe is around €400-500, while somewhat cheaper in the USA at around €300-400. The cheapest places for business trips are in Asia, with Delhi scoring one of the lowest again at around €200 per day.
How to Reduce Business Travel Expenses?
Business travel can be extremely profitable for a company – it wouldn’t be such big business otherwise! Taking the time to make certain you’re not spending more than is necessary is sure to make it an even better investment. So, here are some tips to help you reduce your business travel expenses:
Draw up a clear and comprehensive Business Travel and Expenses Policy.
Encourage trip flexibility to take advantage of the best travel deals.
If you’re registered for VAT, don’t forget to claim the VAT on your travel expenses.
Encourage the use of public or shared transportation where possible.
Offer incentives to travel-savvy employees to encourage them to make savings.
Use a Business Travel App like FREENOW for Business to get the best rates and stay on top of your spending.
Business travel expenses list
If you’re still wondering which costs fall into business travel expenses, here are some business travel examples that you can claim as tax-deductible expenses:
Travel by aeroplane, train, bus or car between your home and your business destination. (If you're provided with a ticket or you're riding free as a result of a frequent traveller or similar programme, your cost is zero)
Fares for taxis or other types of transportation between:
- The airport or train station and your hotel
- The hotel and the work location of your customers or clients, your business meeting venue or your temporary workplace
- Shipping of luggage and sample or display material between your regular and temporary work locations
- Using your car while at your business destination. You can deduct actual expenses or the standard mileage rate, as well as business-related tolls and parking fees. If you rent a car, you can deduct only the business-use portion for the expenses
- Lodging and non-entertainment-related meals
- Dry cleaning and laundry while away from home
- Business calls while on your business trip. (This includes business communications by fax or other communication devices.)
- Tips you pay for services related to any of these expenses
- Other similar ordinary and necessary expenses related to your business travel. (These expenses might include transportation to and from a business meal, computer rental fees, car parking, etc.).
In conclusion, embracing modern tools like the Admin Panel from FREENOW for Business Travel is not just a smart move, it's strategic for managing business travel expenses effectively. Find out how our Business Travel can transform your processes here.