by Jessi Burg
When you think of business travel, what comes to mind? The concept dates back as far as the Silk Route or the medieval trade fairs of Europe. While ancient forms of travel have certainly been improved upon, we should remember that today’s business travelers come from a long line of innovators of centuries gone by.
Are you considering adding a travel budget into your company policy? This can be tough, particularly if employee travel is new for your organization or if you don’t know the going rates for food and accommodations. Business travel isn’t just for your employees, either – oftentimes you may find yourself traveling as well.
Networking, industry events, in person sales or meetings, and conditional quality checks are only a few of the reasons that companies might send staff members on professional journeys in today’s modern world. We’ve seen an uptick in business travel over the last couple of years, and it doesn’t show any signs of slowing down.
The key to creating any successful travel budget is to break it down per diem, or per day. A per diem is a set allowance for lodging, meal and incidental costs incurred during official business travel. Companies are not required to provide per diem for their employees, but it allows the company to write off the business travel as an expense when done correctly within the government’s guidelines.
Conveniently, the IRS provides guidelines for what should be spent for lodging and meals based on location, time of year, or other various situations. Most companies follow these guidelines, so use them to get an idea of what per diem is available to you in those different situations.
Make a note of what types of expenses are excluded from a per diem but are still considered a travel expense, such as any cost of transportation (flight, train, taxi, Uber, rental car), WIFI fees, laundry costs, or luggage fees. Seek guidance from your company on how much you’re allowed to spend for these, as they may be reimbursed afterwards. Make sure you fully understand which expenses are covered during a business trip so that you know what to cover with your per diem, what will be reimbursed, and what your employer won’t pay for.
When you do research, make sure you’re taking these things into consideration:
- Is there an entry fee/ticket cost for the main event? If so, what all is included with this cost?
- What will your hotel/lodging fees look like? Is there a hotel associated with the event where you can get a discounted rate?
- Will you be flying or driving?
- What types of goods do you need to bring with you? (For example, think about what types of necessary equipment you need if you have a booth, exhibit of your products, presentation tools, or company swag.)
- Who is included in the business travel? Is it just you, or will other staff members be traveling as well?
- Is it necessary to rent a car? Or will Uber/Lyft be the main form of transportation?
- What is the going rate for a rental car or Uber/Lyft in the city you are traveling to?
- What is the limit for meals?
- What does the cost of food and accommodation look like in the city you are traveling to? How will this impact your limits?
Make sure to research the city you are going to to give you a more accurate idea of what things will cost.
You are traveling to Austin, Texas for an industry trade show. You plan to fly out on a Wednesday night, and return on a Saturday night. You might research:
- “The average cost of a meal in Austin, TX”
- Most convenient form of transportation in Austin, TX
- “The average cost of an Uber in Austin, TX on a weekday in the summer/winter”
- “The average cost of an Uber in Austin, TX on a weekend in the summer/winter”
- Rental car prices in Austin, TX
- Average hotel prices in Austin. TX in the off season (or not, depending on what time of year you go)
The time of year and the season you choose to travel to a given city will impact prices, so make sure to take that into account. The two most important numbers to keep in mind for your per diem are the nightly lodging allocation and the meal allocation. And don’t forget about partial travel days because on those days, your per diem is a percentage of the full day’s rate.
Many companies use a travel service for calculating and booking flights and hotels, as there may be discounts or a corporate rate to take into consideration. This can be helpful for lodging per diems, or for keeping flights within your company’s allocated budget. For lodging, it may also allow you to pay for the expense directly through your employer rather than paying for it yourself and getting reimbursed.
You will also want to calculate what constitutes success for a given business trip. Add up your per diem, travel costs, incidentals, and anything else you include in the budget for business travel, and that is the minimum return on investment you need to see in order to pay off the trip. You naturally want to make more than the minimum though, because if you’re going to plan and pay for you or your employees to take business trips, you want them to be worth it.
Doing research and tracking the events that are worth the funding is an important metric in deciding where you are going to travel, when, with who, and all of the details that follow. Getting familiar with government guidelines and determining your maximum allocations will make adding a travel budget to your company so much easier. Millions of people do it every day, and you can do it too! Happy traveling!
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