Stay in the know. Subscribe to Currents
CurrentMoney

Business Travel is Back: How SMEs Can Leverage Demand as an Opportunity for Fiscal Control

4 Mins read

After a multi-year hiatus, the demand for business travel is back. A turbulent macroenvironment muddied by inflation and fears of an economic downturn add a layer of complexity to managing

rising travel costs. In today’s competitive business landscape, small and medium-sized enterprises (SMEs) face numerous challenges including financial constraints, limited resources, and fluctuating market conditions. However, by recognizing demand as a catalyst for fiscal control, SMEs can transform challenges into opportunities for growth and stability.

Corporate Travel Resurgence Amid an Unsteady Economy

A historically difficult cost to control, travel is typically the highest business expense for companies behind payroll and requires effective tracking and management. Travel plays a vital role in company operations, helping organizations solidify relationships, serve customers, and connect employees. However, without effective backend operations to track and manage travel expenses, companies may find themselves facing challenges, especially if they have to wait a month or longer to review travel expenditures. Real-time visibility into managed and unmanaged travel spend empowers a business to make better decisions. The ability to adjust budgets and spending in a timely manner when it counts can be a pivotal factor in achieving better financial control and seizing opportunities to save money.

Recent survey results from over 300 accounting and finance professionals from a wide range of industries validates the rise in travel spend and associated expense management challenges. Of the respondents, half expect business travel to increase in the next 1-3 years; just over one third are spending more than $250K per year on business travel and roughly 16% are spending $500K or more.

Despite this travel rebound optimism, 58% of businesses have outdated or no travel expense policies, making cost control needlessly challenging when it matters most. As businesses rethink and refresh their backend operations to accommodate the changing workplace, more dynamic planning and refined employee expense controls are required. Finance teams are increasingly leaning on technology and automation to help them keep track of spending across distributed workforces.

Complexity Arises from Outdated Travel and Expense Policies

In today’s fast-paced business environment, outdated travel and expense (T&E) policies can create unnecessary complexity and hinder operational efficiency. As companies strive to adapt to changing market dynamics and embrace digital transformation, it becomes crucial to evaluate and modernize T&E policies.

Though business travel is on the rise, over half (58%) of the SME survey respondents believe their organizations do not have clearly defined travel and expense policies in place. The lack of policies creates confusion about what counts as a business expense, what the spend guardrails are, and how to track expenses accurately. To effectively manage employee spending as the landscape for corporate travel continues to evolve, SMEs require more comprehensive T&E guidelines and user-friendly tools.

While the overall number of companies embracing digital technology is growing, SMEs still lag in replacing manual processes with more modern expense management solutions. Roughly a third of companies still manage expenses with some combination of spreadsheets, paper, and manual processes. This year employee time spent filling out expenses and collecting receipts was reported by 40% of respondents as their most significant challenge, with time spent creating and analyzing expense trends and data and credit card reconciliation rounding out the list. Perhaps as a result of these lingering pain points, nearly a quarter of respondents are unsatisfied with their existing expense management tools and processes.

To overcome the complexities created by outdated T&E policies, SMEs can use evolving business travel as an opportunity to re-examine their processes and leverage technology and innovation to streamline travel and expense management.

Navigating the New Normal: New Tools for a Hybrid Workforce

The world continues to adjust to the concept of hybrid work as business travel increases. According to the new research, most respondents (more than 50%) now work in a fully remote or hybrid environment. In tandem, while the pandemic forced a significant decline in corporate travel, companies are now adapting their travel strategies to align with the evolving needs of the hybrid workforce.

As businesses adapt to the new normal, it becomes increasingly evident that outdated technology and cumbersome processes hinder productivity, collaboration, and innovation. 24% of survey respondents shared dissatisfaction in current expense management tools with over one-third describing the processes of reviewing and approving expenses as “complex.”

Outdated legacy systems often involve manual, time-consuming processes that drain productivity and increase the risk of errors, while placing the burden of use on the employee. Lack of flexible controls and real-time visibility make them ill-suited for the new hybrid workforce. Today’s workforce demands streamlined, automated workflows to optimize efficiency. Embracing digital transformation allows organizations to automate repetitive tasks, make approval processes easier, and improve overall operational efficiency.

The takeaway: significant opportunity exists for companies of all sizes to address persistent expense management headaches, shorten their monthly close with automated solutions, and streamline cumbersome processes. By embracing automated solutions, organizations can not only alleviate the burdensome nature of monthly financial closures but also enhance their overall operational efficiency by streamlining these processes which, in turn, leads to a significant improvement in employee productivity. For SMEs in particular, it is especially noteworthy to recognize the substantial advantages that come with gaining better visibility and control over both managed and unmanaged corporate travel expenditures. Such measures can be incredibly impactful to the company’s bottom line, helping to optimize costs and drive financial success, especially as business travel continues to evolve.

Jeff Drummond, Vice President of Finance for Center, brings nearly 30 years of experience in finance and investing for high-growth technology companies, including software, networking, hardware, and services. Prior to Center, he held leadership roles at Wells Capital Management, Evergreen Investments, and Mentor Investment Group. Jeff is a chartered financial analyst from the CFA Institute and received his BS in business from the Robins School of Business at the University of Richmond.

Image by Jan Vašek from Pixabay

Related posts
CurrentManage

5 Space-Saving Ideas for Your Business's Storage System

2 Mins read
If you’re a small business owner, maximizing storage space effectively can be a game-changer for your operations. Efficient storage solutions not only…
CurrentTrends

Downtown Resurgence

1 Mins read
During the COVID-19 pandemic, the downtown areas of many of America’s largest cities took a big hit. Businesses were deserted as employees…
Current

Honoring All That Served

1 Mins read
Memorial Day stock image by MaHa1/Shutterstock