For many businesses, travel remains a critical expense, whether for client meetings, networking, industry conferences, or sales opportunities. However, travel and entertainment (T&E) costs can quickly spiral out of control, cutting into profits. Consider taking these six proactive measures to keep T&E costs in check.

1. Set Clear Travel Policies

A formal, written T&E policy is essential. Without clear guidelines, employees may unknowingly overspend on flights, train travel, hotels, and meals. Establish limits for various categories of reimbursable expenses. For instance, employees should be required to book economy flights and stay in mid-range hotels instead of luxury accommodations.

In addition to cost limits, specify strict documentation requirements to help ensure compliance with financial reporting and tax regulations. Employees should submit receipts for major expenses, along with detailed reports explaining the business purpose of each trip. Digital expense tracking software can streamline this process and help prevent errors, omissions, and even fraud. Expense report misstatements — whether intentional or accidental — are a common issue that can inflate costs.

2. Encourage Cost-Saving Practices

Last-minute bookings often result in higher costs. Whenever possible, employees should book their travel arrangements well in advance to lock in lower rates. In addition, they should:

• Use corporate travel platforms that offer negotiated discounts
• Leverage rewards programs for airlines, hotels, and rental cars to accumulate savings over time
• Consider long-term alternative lodging, such as extended-stay hotels, Airbnbs, or corporate housing

 
Also, remind employees that in-person meetings, while valuable, aren’t always necessary. Video conferencing platforms, such as Zoom, Microsoft Teams, and Google Meet, allow businesses to conduct meetings at a fraction of the cost. When travel is necessary, employees should improve efficiency by scheduling multiple meetings within the same trip.

3. Optimize Daily Expenses

Beyond flights and lodging, ground transportation is another area where you can potentially save. Instead of renting cars for every trip, employees should consider ridesharing services, public transportation, or carpooling with colleagues attending the same event. Many urban destinations offer affordable subway or bus options that can be significantly cheaper than rental cars and taxis.

Meal and entertainment expenses should also be carefully monitored. Establish per diem meal allowances to prevent excessive spending and encourage employees to choose reasonably priced dining options. While entertaining clients is sometimes necessary, extravagant expenses should be limited to occasions where they provide a clear business benefit.

4. Identify Preferred Vendors & Issue Corporate Cards

If your business has a large T&E budget, you may be able to negotiate corporate rates with certain airlines, train services, hotels, and rental car providers. Many vendors offer volume discounts for loyal business customers. Communicate preferred vendors to employees and request that they take advantage of discounts whenever feasible.

In addition, requiring employees to use corporate credit cards (instead of personal ones) for T&E expenses offers multiple benefits, including expense tracking and fraud protection. Plus, the organization can earn cashback or reward points for future travel needs.

5. Monitor Spending & Enforce Accountability

Requiring timely expense reporting and reviewing reports regularly helps businesses identify cost-saving opportunities and address inefficiencies. Analyze monthly spending patterns to determine if employees are complying with organizational policies and whether adjustments are needed. Expense-tracking software can help spot irregularities and help ensure all costs are justified.

Accountability should be enforced at all levels of the organization. Managers should set an example by following T&E policies and approving only necessary expenses. Employees who understand that cost control is a priority are more likely to make responsible spending decisions.

6. Seek Professional Guidance

Every dollar saved on T&E is a dollar that can be reinvested in growing your business. So make cost-conscious behaviors a priority. Contact us to learn how to be more strategic about when and how money is spent on business travel. We can conduct a T&E policy and expense review to help ensure you’re optimizing your travel expenditures.