By Thore Vestergaard, MD of Commercial Cards, Allstar Business Solutions
Travelling overseas for business matters is expensive and can be frustrating. Even with huge advances in technology that is making conducting business overseas much easier, there will always be the need for face-to-face meetings.
In Europe there are around 44 million business trips made between countries within EU borders. In the United Kingdom, around £30 billion on business travel annually with more than £450 spent on average for each trip.
With such high costs, it is imperative that companies find efficient ways of paying for business travel, particularly important when companies factor in the administration cost, loss of efficiency and charges for using cash and some debit, credit and fuel cards abroad.
It also raises the question that when travelling abroad, do businesses adequately equip their workers with the right tools and policies? This article will look at the latest insight from Allstar Business Solutions for how businesses can more effectively address the issues of paying for foreign travel and managing expenses.
How to put in place a robust payment system for employees who travel
According to research from treasury and international payments specialist Centtrip, half of businesses ask employees to pick up the cost of booking travel before claiming the money back. And when these expenses are made abroad, there are additional fees that can be levied against purchases and exchange rate fluctuations to be considered. This adds up to a £1.7 billion bill that is footed by employees every year.
In Europe there are around 44 million business trips made between countries within EU borders.
With workers reliant on pay-and-reclaim systems that depend on paper receipts, they can’t afford to lose their proof of purchases. But losing receipts is easy to do, meaning they risk being refused an expense claim on top of the inconvenience and financial pressure of using personal cards to pay for expenses. This can be bad for businesses as employees lose productivity and engagement with the company.
We’ve outlined the following five steps that will help streamline your payment processes, ease the burden on employees, increase efficiency and gain greater control and insight into expenses.
- Dealing with foreign transactions and exchange fees
One of the problems with expenses paid abroad by employees and claimed back later is exchange rate fluctuations. Exchange rates can increase by the time employees make a claim. The claim which could be made days or weeks later, might use an entirely different exchange rate and could cost your business unnecessarily.
Another way it can cost a business is through Dynamic Currency Conversion, where the merchant offers to process a card payment in either GBP or in the local currency. If you opt for GBP, the exchange rate will be set by the merchant and their provider. Therefore, employees should always opt for paying in the local currency wherever possible. Paying on a card typically makes it easier to consolidate and submit expenses, as well as being more transparent for the business and employee.
- Understanding conversion
A core problem with exchange rate fluctuations is that it is awkward for employee and employer to manage and verify that the right amount is reimbursed. With a card-based solution, each purchase automatically has the relevant exchange rate applied for that day and time. It also avoids the employee needing to include the exchange rate commission costs as part of their expense claim, making reimbursement far simpler through being able to match receipts with the card statement.
half of businesses ask employees to pick up the cost of booking travel before claiming the money back.
- Using a fuel card abroad
In the UK, some businesses may have chosen a particular fuel card provider because the network suits their operational purposes. But that’s not to say that in other countries the same situation applies. Instead, it pays to be using a card that has universal acceptance from a trusted issuer such as Visa, which makes journeys less stressful, transactions will be reported back in real time, as well as converted at a transparent and competitive exchange rate.
- The power of control
Foreign travel can open up businesses to abuse. Some employees spend more freely with the assumption that because they are travelling on the company’s behalf, there are more relaxed spending rules.
Therefore, having a clear expense policy in place means less stress for employees when conducting business abroad and can improve the convenience and speed of getting things done. A good expense management system ensures electronic uploading of receipts that can be matched to transactions. It also allows businesses to put in place suitable controls on each card that allows businesses to correct any issues as they arise rather than for the problem to be noticed weeks later when receipts are submitted manually.
- Building a clear picture
By using an expense management system, companies can monitor spending in real-time to ensure policies are enforced, as well as utilising pre-transaction controls on categories of spend and spending limits. Businesses can also see what employees are spending abroad through digital receipts – the result is complete transparency.
Businesses can then own that data, using it to create insight reports to analyse expenses which allows them to see if employees or departments are overspending on hotel rooms or entertaining, and the data can be extracted and uploaded into accounting systems quickly and easily. This means that businesses are now on the front foot when it comes to keeping in control of business travel.
Some employees spend more freely with the assumption that because they are travelling on the company’s behalf, there are more relaxed spending rules.
Don’t let your employees pay an emotional toll
Travelling abroad can be stressful. From working in a foreign environment, often under time or schedule pressure and negotiating travel in unusual conditions. The International SOS Foundation looked at the impact of international business trips on employees and found that 45% experience an increase in stress levels while travelling for work.
As a result, it can hit a business’s bottom line when employees become less productive and disengaged if they feel stressed and unsupported. But, through effective expense management technology, businesses can put in place the supporting payment and expense claim solutions to ensure employees remain productive.