How to Establish a Corporate Travel Budget

Travel and entertainment costs are part of a company's overhead. During downturns, travel budgets are often among the first to be cut, because companies believe they can use videoconferencing and virtual meetings to cut down on travel. However, some travel is necessary for concluding deals and supervising global operations. Establishing a travel budget involves a few basic steps, starting with the travel budget from the previous year.

Instructions

1

Update your travel policy document, which should be posted on your company Intranet. The contents will depend on the size of the organization, but it should contain guidelines on which travel agency to use, the recommended airlines, and hotels and expense reporting procedures. Specify the consequences of non-compliance with the travel policy. Before you prepare your travel budget, ensure that this document is updated.

2

Start with the travel budget from the previous year. This will be your baseline budget. This should be in a software spreadsheet form, which will make the preparation of this year's budget simpler.

3

Survey the business units on their travel plans for this year. Business unit managers may not know the precise travel details for the upcoming year, because evolving sales opportunities and operational matters often require last-minute changes. However, they should be able to tell you if this year's budget is going to be higher or lower, and by approximately how much. For example, the sales department might request a 10 percent increase in their travel budget to pursue overseas market development activities. Enter the data from the business units to produce this year's travel cost estimates.

4

Analyze the return on investment from trade show and conference participation. This may involve estimating the number of quality sales leads generated at these events, and the free media exposure that your company received. Adjust your travel budgets for this year accordingly; for example, remove events that were not productive and replace them with new events, or reallocate the funds elsewhere.

5

Implement cost saving measures as required. Travel budgets must be adjusted as business and economic conditions change. Some of these measures include conducting webinars instead of on-site training, as well as using video teleconferencing and Web conferencing to stay connected with your global operations. In addition, reduce the number of people traveling on sales and service trips to the bare minimum. Schedule meetings with suppliers and potential customers at trade shows to cut down on subsequent travel costs.