Are You Accurately Tracking Your Small Business Travel Costs?
Small and mid-sized businesses are likely to let employees use cash and personal credit cards to cover business travel expenses, according to new research from the Global Business Travel Association. Even though 90% of business owners use corporate cards for travel expenses, 55% allow personal card and cash purchases and 22% allow company cash advances.
The concept is simple: employees pay for travel expenses using their own money, and then the company reimburses the costs based on receipts. However, this practice comes with a number of risks:
- Receipts are not always itemized, so you cannot confirm if the expenses were actually related to business travel
- It is difficult to set a budget and control costs in the cash/reimbursement method
- This process creates extra accounting steps that could be avoided with the use of a corporate card
- Employees who receive cash advances to cover their travels may take out extra money that is never reimbursed
The best way to accurately track travel costs is to use a corporate credit card. You can give employees their own card tied to the account, and shut it off at any time if you notice unauthorized transactions. A business travel account provides a central source for all of your travel expenses to provide spending at a glance.
But what about the fees associated with credit cards? These may be offset with rewards earned for travel expenses. For instance, the Capital One Spark Classic for Business card has no annual fee or foreign transaction fee, and offers 1% cash back on all purchases.
You can still treat corporate credit card purchases like you would cash reimbursements. At the end of the trip, look over the card transactions to confirm they are within reason. If you approve of the transactions, you can pay off the card just like you would pay back an employee who made cash purchases on a business trip. This reduces or eliminates interest accrued on the card and frees up more funds for the next business trip.
By using a business travel card to track expenses, you can have a clear view of where your money is going and who it is going to—protecting your business and your bottom line at the same time.