Travel and Entertainment Budget — What Should my Company Spend?

As the saying goes, sometimes you have to spend money to make money. This is especially true when it comes to travel and client prospecting.

You also know that you have to draw the budget line somewhere. One of the biggest expenses for most teams is travel and entertainment. Since those expenses are generally attributed to revenue growth, they’re often overlooked as a necessary evil. However, not all charges are equal or, for that matter, profitable.

How do you establish a business budget that has the right spending limits and gives your team a template for how to spend on travel and entertainment?

The answer may well be in hidden in plain sight in your company expense reports.

Sorting through your last six months of travel and entertainment expenses should offer trends that can help you set spending parameters for your team. Dig through this data and you might be surprised about what you find.

For example, who on your team spends the most? Is that person driving more value than others? Who spends the least? Are they being sent to cheaper destinations or are they really maximizing the value of their spend?

Find the average spend for your travelers and create expected budgets tied to their role in the company and the type of travel they’re doing (for example, early client prospecting versus contract negotiation). Create a logical cap based on what should be spent against the expected value of a trip.

There is no doubt you need to keep your road warriors happy. They’re your front line with many clients and partners, and you don’t want them feeling like you’re too cheap. But, if you have employees spending even 10 percent more than the average of your other employees, you need to curb their habits.(Perhaps start by teaching them how to eat a little bit cheaper).

Use existing data to structure a per diem template that offers flexibility based on the cost of living differences in markets employees travel to. Even though they are both beautiful cities on the water, $100 does not spend the same in San Diego as it does in Cleveland. Let them know how you came up with this per diem so they understand how it fits the overall scope of the business. Document this in any handbooks or policies you have on travel.

Remember that the easiest way to implement an updated plan is to be clear about your efforts to manage expenses. Take time to share your updated travel policy and budgets, and make sure you have clear rules in place going forward.

Beyond your employee spend, your existing expense reports should also hold key vendor data for you. You may notice that your common travel routes put your team in the path of the same hotel chain or even the same restaurant family. Perhaps you can negotiate better corporate rates.

Having a hard time tracking expenses across employees or looking into your most common vendors? It’s time to automate your expense management. We can get you started today.


Originally published at blog.expensebot.com.