Entrepreneurs, business owners, executives, and employees of all levels will likely travel on work-related agendas. Unlike regular travel, business or company travel requires detailed management, tracking, and reporting of expenses. The responsibility of expense tracking is the responsibility of the business traveler, regardless of their place in the organization.
Some business trips involve simple reports, while others involve vendors. Expense management can become challenging when coordinating a group with a full itinerary. Planning meetings, conferences, and client visits could present a logistical challenge. Moreover, involving vendors like hotels, airlines, taxis, travel agencies, and other establishments in the accounting can result in dozens of expense reports.
While keeping track of every dollar spent can be daunting, you can handle your trip expenses using the right strategies and tools—planning results in manageability and efficiency. Here, we discuss tips on managing and tracking business trip expenses to improve oversight, consolidate spending, and achieve high compliance. These tips facilitate real-time automated reporting, making your business travel experience seamless and more enjoyable.
What Are Business Travel Expenses?
Business travel expenses are items an employee purchases for business purposes during out-of-office trips. Not everything the employee buys during the business trip qualifies as a business expense—it has to be verified to be so. Most businesses usually pay only for expenses directly related to performing work.
Business-related expenses on a trip include airline tickets, public transportation, rideshares, accommodations, food and drink, parking fees, bridge and road tolls, business phone calls and other communications expenses, and printing costs. In some countries, these expenses may be eligible for tax deductions.
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Contractors may also be eligible for business travel expense reimbursement or allowances. Examples of contractors include repair specialists, long-term agency partners, influencers or PR executives, resource persons, and many others.
In some agreements, employees are reimbursed for their business travel purchases by submitting expense claims. However, this practice is outdated and has been replaced with more advanced consolidation processes. Many companies may consolidate purchases with business travel vendors, paying the vendors directly.
In summary, business trip expenses can be divided into the following categories:
Transportation
Transport expenses include airfare, train tickets, rideshares, buses, and rental cars.
Accommodations
Business travel accommodations include hotel stays, Airbnb rentals, and other forms of lodging.
Dining and Meals
This category includes hotel breakfasts, lunches, dinners, and other meals necessary for the work trip and completing its agenda.
Entertainment
This category includes client dinners or other expenses incurred during business meetings where the executive or employee needs to meet with clients, prospects, or partners. Entertainment also includes costs of team outings and other leisure activities of the organization.
Miscellaneous Expenses
Under miscellaneous expenses, you report parking fees, tips, and other unforeseen yet valid expenses. All these expense categories require diligent monitoring to ensure accurate reporting and reimbursement.
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How To Track Business Travel Expenses More Effectively
Tracking business travel expenses is crucial for many reasons, including accurate fund allocation, simplifying tax processes, applying for tax deductions, and streamlining the company's bookkeeping.
The following are recommended tips on how to track these expenses more effectively to achieve more transparent and better-managed business operations:
Open A Digital Bank Account For Business Transactions
A business bank account, preferably online, helps pay for business expenses across the organization. Digital banking makes it easier to consolidate and track transactions from multiple vendors. In addition to the bank account, applying for a credit card for business trip expenses may be helpful.
Choose Your Accounting System
After setting up your business bank account, you can select the accounting system that best suits your business's needs.
You can choose between two systems: cash and accrual accounting. Accrual accounting involves recording revenue and expenses as they occur. Cash accounting only recognizes transactions upon the exchange of cash.
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Utilize Fintech Apps And Software
Whatever accounting method you choose, you must ideally record your transactions using accounting or business software. Business software helps ensure that each input is accurate and the record is up-to-date.
You can search which type of software best fits your organization—some are designed for larger companies, while others are suited for small businesses. The best ones allow you to create expense categories, make comparisons, and simplify approvals.
Automated purchase requests help track pre-approved budgets. Software with direct deposit reimbursements ensures high employee satisfaction.
Several FinTech apps have features specifically designed for business travelers. These apps let users capture receipts by taking a simple photo, scanning them via mobile phone, or even texting them to your expense management app, categorizing their expenses, and integrating them with corporate credit cards for a seamless experience.
These apps categorize expenses in real-time, saving valuable employee work hours and reducing the risk of manual accounting errors.
Leverage Advanced POS Systems In Coordination With Vendors
Businesses can work with vendors with advanced cloud-based POS systems to make business travel more accessible. It may be impossible to track every expense in business gatherings or events. However, businesses with POS systems can generate detailed receipts.
These systems let business travelers optimize their time, whether traveling by air or exploring the local sights and sounds while conducting meetings.
For example, if your team wants to sample local craft brews and holds a gathering at a local brewery, look for an establishment with a brewery POS system that records everything online and allows customers to pay via QR code. With such advanced systems, ordering takeout with two-way text messaging is possible.
With vendors connected to the web, you can arrange many ways to simplify your accounting on trips without having to lug around receipts and count physical cash at the end of every gathering. Many establishments now offer digital receipts via email or mobile apps, making it easier to keep track of expenses.
Connect Your Business Bank Account To Accounting Software
After setting up your business bank account and choosing your accounting software, you can connect both. That way, you gain additional oversight and better protect your company's vital financial information. Both must preferably be compatible from the get-go.
After establishing the connection, you can set up automatic data imports to ensure you are aware of changes to the business account. This is a time-saver for bookkeeping.
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Manage Your Receipts
You need to make copies of the business-related receipts on your trip to help track expenses during tax season. Such receipts are crucial in providing proof for tax write-offs and deductions. As mentioned, mobile apps already offer the capacity to create digital copies of receipts, reducing the need for physical storage and avoiding losses.
Choose apps with features that let you attach the receipts to your business invoices. Such capabilities facilitate automated expense reports to help with reimbursement.
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Hire A Bookkeeper
Even with numerous available digital tools, having an official bookkeeper helps you consolidate your business expenses and ensures you don’t miss anything. Bookkeepers can aid in thoroughly assessing your accounting. They may work as contractual hires or on a freelance basis.
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Take Note Of Tax-Deductible Expenses
One of the primary reasons for detailed expense tracking on business trips is to facilitate taxes and maximize business revenue. Tax-deductible expenses may include rent or fees for borrowing machinery, advertising and promotional materials, vehicle gas costs, repairs, and other regular travel expenses,
Make Business Trips Hassle-free With a Travel Expense Management Software
Business trips can be a fulfilling and enjoyable part of work. However, expense tracking can become a burden, reducing efficiency and giving you less time to focus on your main business agenda, like sales, team-building, meetings, or marketing.
By using a travel expense management tool, you can merge bank accounts and credit cards with a, minimize errors and streamline the accounting process, work with vendors to digitize and consolidate reports, and ensure you report all tax-deductible expenses.
With increased efficiency, you reduce tasks, ensure accounting accuracy, and lower taxes, thus saving your business time and money.
