The hidden cost of business travel expenses and how to reduce it

The hidden cost of business travel expenses and how to reduce it

By vat4u

Business travel is a huge component of corporate expenses. On average, travellers spend €162 on airline travel per day and the number is only expected to increase over time. However, what most businesses have trouble paying attention to is the hidden cost of business travel. Hidden costs refer to the liabilities incurred by a company, but are not recorded on a balance sheet. These costs raise business travel expenses and undermine the gains made from taking a business trip. In this blog post, we are going to discuss some of the hidden costs of business travel expenses.

The hidden cost of business travel expense

The hidden cost of business travel expenses goes beyond the obvious monetary cost. Instead, it focuses on the intangible cost to the company.

Time and productivity

Not working with a travel management company can save companies upfront business travel expenses, but they pay for it in other ways. Employees who are expected to book their own trips often waste time doing so, they are known to spend at least three hours of their day arranging travel, which hurts productivity making it a hidden cost. Furthermore, having to arrange their own hotel booking and travel once they land is another headache that is going to eat into working hours. Employees can easily spend those hours preparing for the meetings that will take place during the business trip and increase their chances of closing the deals.  

Providing care in unexpected circumstances

Providing adequate care is a significant business travel expense that tends to creep up on businesses. These are hidden costs because these expenses can expand significantly depending on circumstances beyond a corporation’s control, like terrorist activity, airline cancellations and strikes. Businesses are expected to and should take care of their employees during these situations, but it can drive up costs.

Employee Burnout

The extra work is a burnout for employees. Those who return from business trips will find extra work waiting for them at their desk and these employees would then have to take their work home to keep up with the workload that has built up while they were away. In addition, the business trip itself can be very stressful, even if it was successful. There are several problems associated with long trips, like jet-lag and adjusting to time-zone differences, which can take a toll on someone’s well-being as well as their ability to work. All these problems will lead to employee burnout, which, in the short and long-run, hurts productivity. 

The VAT rates in different countries

Those who spend on business travel also have to deal with VAT. The rates for value-added tax changes depending on the country in question, but there is no denying that paying taxes for food, accommodation, travel and tolls represent a significant portion of hidden business travel expenses.

How can a business mitigate hidden costs?

With the right steps, businesses can mitigate the hidden costs of business travel and maximise their gains. Here are a few ways this can happen.

Work with a travel management company

A travel management company can take the burden of arranging travel away from employees, saving time and reducing their workload. Travel management companies take on the burden of booking airline trips and hotel accommodation, which reduces the burden on employees who normally have to book the trips themselves. Furthermore, business travel firms can negotiate discounts and bargains that are not otherwise accessible to employees. Travel management companies can also save a lot of time and reduce the burden on employees when booking trips.

Recover VAT 

Value-added tax is an expense, but it is possible to recover the VAT with business travel expenses. By working with a comprehensive VAT management platform, corporations can recover a significant portion of their business travel expenses paid in VAT. The right VAT management platform can streamline operations to increase operational efficiency and can even hold information on compliance requirements to maximise your chances of success and minimise the possibility of VAT applications getting rejected. 

Minimise the impact of hidden costs 

Business travel expenses are a huge monetary cost, but most corporations fail to consider the hidden cost of business travel. However, by working with business travel management companies and VAT recovery platforms, it is possible to negate the negative effects of hidden costs in business and gain more value from corporate travel. 

Business Travel Business Travel Expenses Hidden Expenses
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