Companies and startups have been accelerating customer acquisition and increasing business travel spending. But most organizations find it challenging to meet business travel requirements and manage business travel programs due to the lack of experience and expertise. They overcome the constraints and challenges by outsourcing corporate travel management to travel management companies.
Your travel management company can leverage the increase in business travel spending to drive revenue growth by providing travel management services and solutions. But your travel management company, like other enterprises, can increase revenue only by optimizing your budget or spending plan. The budget will make it easier for you to forecast the company’s financial position and financial results for a specific period.
It will help you maintain a positive cash flow by estimating revenue and expenses for a set period. But you need to ensure that the budget is prepared and optimized based on accurate and reliable financial data.
Also, you must explore ways to leverage new-age technologies while optimizing your travel management company’s budget. Hence, it becomes essential to adopt budgeting best practices for various enterprises, including travel management companies.
9 Budgeting Best Practices for Travel Management Companies
- Involve Employees in Budgeting
Many business owners and entrepreneurs believe that budgeting is a solitary activity. They do not involve employees in the budget-making and optimization process. You should remember that some changes made to the budget will impact your employees directly. Also, employees make it easier for you to make realistic budgets by giving inputs and sharing ideas.
Hence, you must involve employees in the budget-making and optimization process. Before making the budget, you must consult with marketing, finance, and other teams. Likewise, you should get the budget reviewed by various teams before its implementation. When employees get involved in the budgeting process, meeting expectations and controlling costs becomes easier.
- Overestimate Recurring Expenses
Global inflation is predicted to remain high in the medium run. The high inflation will increase the cost of business travel products like flights and hotels. Hence, your travel management company will increase revenue by leveraging the high inflation.
But inflation will increase your company’s average cost of doing business. You can cover the cost escalations only by overestimating key and recurring expenses. The overestimation will help your business maintain a positive cash flow while shielding itself from high inflation rates.
- Identify and Define Financial Risks
Like other enterprises, travel management companies cannot plan their financial future accurately without considering several financial risks. You can optimize the budget only by identifying the financial risks and assessing their impact on your travel management company. It is always important to identify short-term and long-term financial risks by gathering information from diverse sources. The understanding will help you determine the funds required to eliminate these risks and provide superior travel management services to clients.
- Follow Industry Standards
While optimizing the budget for a travel management company, decision-makers often believe that industry standards and budgets are mutually exclusive. But industry standards help you determine the average cost of providing travel management services to corporate clients accurately. Hence, you can decide the funds required to cover the cost of doing business. Also, you refer to industry standards to decide what percentages of revenue should be allocated to each type of expense.
- Explore Ways to Control Costs
While optimizing the budget, you can cut and control ongoing costs in several ways. You can easily control costs through the automation of several routine tasks. In addition to controlling costs, automation creates opportunities for your company to deliver superior corporate travel management services.
For instance, you can curtail human resource costs by travelers with self-booking tools. Likewise, you can control costs by delivering information to customers through AI-powered chatbots. However, you need to ensure that your choice of cost-cutting options does not impact travel management service delivery and customer experience adversely.
- Automate the Budgeting Process
You can save both time and effort by investing in budgeting tools. The budgeting tools will enable you to create, record, and track budgets in minutes. You can use the budgeting software to automate important financial activities like profit and loss statement creation and cash flow report generation. At the same time, the budgeting tool will help you track expenses and forecast revenue based on up-to-date financial data. You have the option to automate the process using several free budgeting tools and software.
- Collect and Unify Financial Data
Big data has changed the way travel management companies make budgeting and forecasting. Your organization must create a large pool of expense data using an expense management solution. In addition to collecting and unifying real-time expense data, expense management software enables you to generate a variety of reports in minutes. You can generate custom reports to make informed budgeting decisions based on real-time data.
- Leverage Financial Data Analytics
Data analytics helps you draw out actionable and meaningful insight by analyzing raw financial data. Your company can streamline monthly budgeting and forecasting efforts by investing in financial data analytics. The data analytics will analyze large volumes of expense data automatically. Also, they will share meaningful insights that you can use to understand spending patterns, prevent overspending, and meet emergencies.
- Review the Budget Regularly
You cannot optimize a budget by keeping it static and consistent. Instead, you should focus on keeping the budget dynamic and flexible. The flexibility helps you finetune the budget according to growth and revenue patterns in the future. Also, it will make it easier for you to accommodate new expenses and cost fluctuations. Your travel management company can get a realistic view of its financial position when you revisit the monthly and annual budgets regularly.
Enterprises from various sectors create opportunities for your travel management company by increasing corporate travel spending and outsourcing corporate travel management. But your company cannot increase profits simply by focusing on client acquisition and retention. In addition to providing superior travel management services and solutions, you must optimize your travel management company’s budget by adopting many best practices.