What SMEs need to
know about managing
travel expenses

For all the innovation around virtual conferencing and online meetings, there’s still nothing that can replace the value of face-to-face contact when growing an SME business. 

Travel expenditure often features among the highest expenses for an SME, after salaries, rent and IT expenses, because investing in travel is essential for the company’s growth.

In the world of an SME, time and money is tight so travel may not regarded as a priority, and they may not do enough travel to experience the ‘pain’ associated with getting it wrong. SMEs may also think that they’re not big enough to ‘manage’ their travel spend and that acknowledging it will make them spend more. 

But like big companies, they eventually realise that buying travel is nothing like buying 10 reams of paper from a stationary provider or a cartridge of ink for their printer. 

In addition to the minefield of rules that govern travel – from flight change fees to visa requirements – travel is highly emotive. You’re dealing with people’s time and comfort, and their productivity as a result may be impacted negatively. 

You don’t have to be a large company to reap the benefits of managing your travel spend, says Flight Centre Business Travel General Manager Holly Cairns. “Although an SME may not have strict travel policies in place, they are the ones who truly need that personalisation and an expert with to help develop their travel programme as their business grows. 

The perception among smaller businesses, however, is sometimes that their travel spend is not large enough to be managed. “A smaller company doesn't travel often enough to have the ability to have set contracts in place with the airlines, etc. By using a company like Flight Centre Business Travel, we have the global buying power and partnerships in place to be able to offer these rates to our small and media sized clients. A travel conpany like FCBT can help manage an SME's travel expenses better by providing reporting and some types of flexible payment options. For SMEs, keeping costs in check can be the difference between making a small profit, or no profit at all.” 

Among the benefits of implementing a travel policy are working with specific travel suppliers to reap loyalty rewards and leverage the buying power of a travel management company to gain better fares and rates. A travel policy also dictates what type of travel your staff may book, introduces approval processes and allows management to understand where that travel spend is occurring, how much it actually is and the value it brings to achieving the company’s goals. 

Understanding the return on investment for travel is key, explains Holly. Before you travel as an SME, you need to ask yourself critically: what will this trip do for my business? “If it is essential that you travel to meet a prospective customer or to close a deal, ask yourself what value this will bring to the company and how you can maximise your travel budget.

“If your business traveller is responsible for closing an important deal for the company, flying them on the red-eye the same morning instead of paying for a night in a hotel may be completely counterproductive and actually end up costing you money. It even has a name in the travel industry - 'traveller friction'. A top tip for businesses is not to skimp on travel to the detriment of their staff’s ability to perform. No matter what size your business, traveller friction could end up costing you a great deal more than what you think you initially saved,” explains Holly who has these tips for creating a solid travel policy.

Tips to creating a solid SME travel policy: 

  1. Ask yourself the following: What are your priorities for travel? Is it to save costs? Is it to reduce travel? Is it to understand where you’re spending money on travel?
  2. The next step is to define what you are currently spending on travel, who is spending it and on what.  What are the current travel behaviours? Do you do a lot of last-minute changes? Do you book long in advance? Is there a specific destination to which you travel often?
  3. Ask yourself what processes should be followed when booking travel and who is involved? Do you need to have someone in place to approve / pay for the business trip? What airlines / hotel providers do you tend to book with? What per diem policy do you have in place?
  4. Think about how you manage these expenses. Are your staff equipped with corporate credit cards? How are staff reimbursed for their travel and entertainment expenditure? Do you consolidate the expenses from various sources to get a true understanding of how much your travel costs?
  5. Get feedback from your travellers. Once you’ve devised and implemented your policy, ask your frequent travellers for feedback so you can keep improving it.

Flight Centre Business Travel have an easy guide to help you implement a clear and easy step by step guide to writing your company travel policy -contact one of our travel experts and find out how we can help you.