How to Manage Passive Business Traveller Spending
Passive business traveller spending refers to expenses that result from unintentional decisions made by the employee. It includes taxes, fees and other costs that simply occur as a result of the person doing their job.
Although some of the spending might be unavoidable, if you aren’t managing passive spending, you might be building unnecessary costs and missing out on savings.
Why you should manage passive business traveller spending
You may have invested in automating the travel and expense (T&E) side of your organisation, but while this can make a complex, time-consuming process more efficient, it’s only part of the solution.
For your business to manage all spending, it needs to know what to look for beyond clear-cut T&E purchases, because passive traveller spending is a cost that is difficult to track and manage.
Managing the common risks of passive spending
Passive spending comes in many forms, but there are three common examples every business should be aware of:
- International sales taxes
If an employee purchases on behalf of the business while abroad, they’ll incur sales tax relevant to that region.
Solution: Sales tax and VAT can still be reclaimed, no matter where it was incurred. Make sure your T&E system captures tax information alongside purchases so it can be reclaimed.
- Out-of-contract mobile fees
Business travellers are thought to spend £855 million every year on roaming and Wi-Fi charges. If you fail to catch passive spend of this kind before it’s too late, the impact on the bottom line can be significant.
Solution: If foreign travel is a significant part of your business, invest time in finding tariffs that offer favourable roaming charges and educate staff on how to avoid racking up large bills.
- Payroll tax
If a particular employee travels for long periods of time, they may create payroll tax liabilities in different countries.
Solution: Check your T&E system to see if it’s capable of tracking payroll tax rules for every country travelled to.
How to ensure active spending doesn’t slip into passive spending
Regular business travellers operating under open booking policies will be used to booking their flights, rental cars and hotel rooms. They may do so using the company’s booking tool, but how do they avoid slipping outside of the policy?
Your T&E systems should provide easy, visual reminders that ensure travellers follow the rules and act accordingly. If checks are in place to stop bad spending before it happens, expected T&E costs will remain active, rather than falling outside of compliance.
The most common way for active spending to ‘go passive’ is during out-of-system booking where spend can’t be easily captured. There are three ways you can manage this form of active spending:
- Ensure duty of care remains the focal point of travel. Employees must be aware that if they choose to book outside of the system, their safety and security requirements will still need to be taken into account by the business. Where are they staying? How can they be a reached in the event of a crisis?
- Capture data from direct bookings to maintain cost controls. If a traveller books direct because a better rate is on offer, it’s still vital that the cost is fed back into your T&E system.
- Manage travel vendors by keeping a detailed record of out-of-system bookings. Track spend with each vendor and use that data to negotiate future discounts.
The importance of the audit
To manage all forms of traveller spending, you need to audit everything. That means tracking every purchase made (both in- and out-of-system), identifying employees who may be at risk of fraud and predicting expenses that might fly under the radar.
Only then can you keep a tight leash on passive traveller spending.