Cutting Business Travel and Food Expenses
Reducing Transportation and Living Costs on the Road
Aug 9, 2009
Employees can run up large bills by making poor decisions on the road. Beginning with the decision on whether to fly or drive to a nearby destination, costs can escalate quickly.
Driving or Flying?
If there is a reasonable choice between driving or flying, management should make the decision considering the difference in cost. This should include the airfare vs. the mileage reimbursement, but also the cost of airport transfers or rental cars versus parking costs.
The decision will vary based on how accessible the destination. Larger cities have more flight options and therefore, often lower fares.
Rental Cars at the Destination
A little planning can prevent extra expense after flying to the destination. There are often three choices.
- Hotel Shuttle
- Taxi
- Rental Car
Hotel shuttles are often the lowest price alternative, but can be much slower, if the shuttle is large and stops at many hotels. Taxis are usually more expensive for one person, but can be cheaper if there are multiple travelers going to the same destination.
Rental cars can actually be cheaper, although advance registration makes that more likely. They also provide more flexibility, but in large cities can be a hassle, and parking can be a major expense item.
Management should have policies in place that stipulate the lowest cost, depending on the situation.
Per Diem Expense or Itemized?
For food and other expenses, management has a couple options on how to cover employee’s cost.
Per diem, or paying a fixed amount to employee, who has to live within this amount. This varies based on the city visited. Many programs allow the employee to retain whatever they do not spend. This does not require employees to keep receipts and enlists employees in keeping cost down.
Paying for every item that is documented by a receipt, often up to a maximum daily amount. This requires close review of the receipts, to avoid excess payments, i.e., the paying twice for same meal for different people, or paying for lunches when that was covered at the meeting or seminar.
Younger, less experienced travelers love a per diem, since they are intimidated by the opportunity to travel and will most likely be frugal. People from smaller towns will sometimes underestimate how expensive big cities are.
CEOs and Directors are more likely to entertain, and will likely keep receipts to document it.
Alcohol is probably the most abused expense. Those on per diem will limit their use, but executives may feel it is required to keep up appearances, and will buy some of the most expensive drinks. It is at the businesses discretion how it can afford to spend on appearances, but employees that have had too much to drink can be both embarrassing and a serious liability issue.
However the company chooses to pay for travel, educating employees will save money and embarrassment later.
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