Business travel: How CFOs should handle rising expenses this year

From CFO Daily News: As business travel kicks back into gear, you’re likely seeing that the types of expenses employees incur are going back to normal. But costs may be higher than they were before the pandemic.

Most CFOs noticed a big shift in expenses during the pandemic. This is according to a blog post from TripActions, a tech company focused on streamlining corporate travel.

Instead of flights, lodging and meals, employers reimbursed employees for work-from-home expenditures such as office furniture, internet costs and printers.

During the first two quarters of 2021, however, that started to change. COVID travel restrictions began to lift, and workers started taking business trips again.

That’s reflected in TripActions’ top four business expense categories for the first two quarters of 2021:

  1. Accommodations
  2. Car rental agencies
  3. Restaurants, and
  4. Gas stations.

In the first quarter of 2021, the top 10 business expenses were equally made up of travel expenses and other unrelated business expenses, including computer software and books.

However, six out of 10 of the top business expenses in the second quarter were related directly to travel.

For the second quarter of 2021, airlines and air carriers was the fifth most reimbursed business expense. That’s a big jump from ranking 14th in the previous quarter.

Expenses rising for travel

Many of your peers are spending more on these services than they did before the pandemic began. To keep travelers safe, more execs have been updating their T&E policies to allow for more expensive flights and accommodations, according to an AirPlus poll of corporate executives across the globe.

Almost half of survey respondents are now letting their business travelers book first-class train tickets and business-class airfare.

And they’re prepping their annual budgets for these increases. Almost 60% of execs surveyed said they anticipate costs for accommodations and transportation to be much more expensive than they were before COVID-19.

To offset this, it’ll be key to remind employees to choose cost-effective transportation and accommodations when possible. Employees’ safety and health must still remain top priority as they return to business travel.

Other factors to consider

Along with rising travel costs, continue to watch out for miscellaneous expenses, which TripActions used to designate expenses workers didn’t know how to categorize (including work-from-home expenses).

These expenses decreased from the fifth most common reimbursement request in the first quarter to the 10th most common request in the second. But they’ll likely continue to be significant as workplaces adjust to the new normal.

With that in mind, it may be a good idea to update your existing policies to account for some of those miscellaneous expenses workers will want reimbursement for down the line, which may continue to include costs related to telework.

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