Friday, April 6, 2018
Using AFEX CurrencyPass to Manage Staff Travel and Expenditure
Since a slump in 2009 in the wake of the financial crisis, the number of overseas business trips taken by UK firms has been on the steady rise. Far from dying out in the face of the global connectivity enabled by the internet, webcams, video conferencing technology and video camera enabled mobile phones, business travel remains an integral part of doing business.
Technology has its limits, however, and nothing can seal the deal like face-to-face meetings. Counterintuitive though it may seem, rather than technology replacing business travel, it could actually be fuelling it. International business relationships are more easily initiated and cultivated because of technology but they are still likely to involve a travel component at some stage. It's not surprising that new research from American Express found that one in three businesses it surveyed plan to increase their business travel budgets within the next three years.
Not only is business travel a growing industry, but the destinations being visited are becoming more varied. AFEX's analysis of official UK data has found that between 2010 and 2014, the number of business trips to the Eurozone fell by around half (56%), while business trips to Africa increased by 13%, the Middle East by 68% and travel to the APAC region nearly doubled (up 95%).
Despite its apparent popularity business travel presents headaches for both the traveller and for the employer. Given the changing profile of the countries being visited and recent terror attacks, it's perhaps not surprising that safety was identified as the number one concern among employers when it comes to business travel in the American Express survey.
But cost controls are number two and a perennial consideration since travel and expenses are among the highest controllable costs to firms (after wages & IT). It's also not just the obvious cost of the hotels, the flights and subsistence allowances. There are a host of background costs associated with the reporting and processing of travel expenses that takes up a substantial amount of time and effort, both on the part of the employee and the finance
team. Furthermore, it's typically an area that's prone to abuse and error that ultimately drains yet more costs and time. Recent figures from Cifas, the fraud prevention organisation, suggest that the submission of false expenses is one of the fastest growing forms of fraud, increasing 57% in the last year.
Smaller companies tend to have a tougher time when it comes to managing these hidden business travel costs and are affected disproportionately. Unlike the large multinationals that will often have dedicated corporate travel management teams, they're less likely to have resources, processes and systems dedicated to business travel.
It needn't be that way; even the smallest of businesses can take greater control and improve efficiency when it comes to managing staff travel and expenditure by being prepared and tackling as many potential problem areas before they arise. Below are five essential tips for any company to help when it comes to managing their business travel budget.
- 1. Get a travel policy in place if you don't have one
This doesn't have to be some extensive document littered with caveats and legal terms, but a simple document that clearly outlines what's permissible, what's not, what can be reimbursed and what's restricted, will help everyone involved understand where the boundaries are and what's expected of them. The document should also outline the correct procedures for making expense claims. Before an employee heads off on a business trip for the first time, take the time to walk them through the policy and check if they have any questions. It can save a lot of hassle and potential disappointment in the long run.
- 2. Keep things simple and safe for your employees (and don't leave them out of pocket)
Carrying cash around, or indeed traveller's cheques isn't as safe - or practical - as using cards. That said, it may be unfair to insist the employee uses their personal plastic to make payments while abroad. Not only does this potentially leave them out of pocket until they can be reimbursed, it makes the reconciliation process a more arduous process. Using a company credit, debit or prepaid currency card can make life far simpler and safer for all concerned. If your employees do end up using their own resources to fund reclaimable expenses, make sure they are reimbursed as soon as possible after they file their claim.
- 3. Make sure you're in control of your employee's expenditure
Enforcing staff spending limits is easier if you set a hard cap up front. This can be achieved by issuing a lump sum of cash or better (and safer), by using a pre-loaded card with a cap on it. If the employee needs more money, the card can simply be loaded with more cash.
- 1. Automate/simplify expense management
The majority of expense claims in the UK are still handled using manual paper-based methods despite the availability of numerous online and mobile tools that can help reduce the post-travel administrative burden. With some tools it's possible for employees to file their expenses on the go and upload scans of receipts, which is far easier and more reliable than trying to decipher a pile of faded receipts after they get back.
These tools also bring benefits to their managers who are able to access real-time reports and perform spending analysis to further help control expenses and reduce the risk of fraud. If you have corporate credit, debit or pre-paid cards or use a business travel company, international payments or currency service, it's possible they can give you access to these tools.
- 2. Make overseas expenses part of your FX management strategy
Where business trips are planned a long way in advance, you should consider locking in the exchange rates by buying local currency in the planning stage. This allows you to fully cost out and budget for trips in advance, reducing the risks of receiving a nasty surprise when the time comes and means you are not left to the mercy of the currency markets.