#Budget2019: Helping SMEs stay on top of their travel budgets in 2019

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Corporate travel spend
3 min read

2019 is shaping up to be a positive year for Small and Medium Enterprises in South Africa, with Minister of Finance Tito Mboweni pledging several interventions to boost the development of this vital sector.

Delivering his budget speech, the Finance Minister revealed R481.6-million had been allocated to the Small Enterprise Development Agency to expand the small business incubation programme. The allocation of funds is an answer to calls to assign more support to the development of Small to Medium Enterprises (SMEs).

The minister called for cheaper data costs and has committed to working with the relevant parties to ensure that is achieved. Making data more affordable and accessible will surely drive economic and SME growth and open doors for struggling entrepreneurs.

The R19.8-billion allocated to industrial business incentives will not only benefit the national economy as a whole, but it will yield opportunities for local industrial SMEs and create job opportunities.

Still, the economic outlook has weakened since the 2018 Mini Budget, with GDP growth now projected to rise from 1.5% to 2.1% in 2021 compared to 1.8% for 2019 and 2.1% for 2020 forecast last February. Consumer inflation is expected to average 5.2% in 2019, up from 4.7% in 2018.

It is going to remain vital that corporates keep a handle on their company budget. Business travel is a significant part of any company’s expenditure and finding ways to cut costs in the travel space will be key in 2019.

Andrew Grunewald, Brand Leader Flight Centre Business Travel, warns against slashing budgets to make travel-budget ends meet. He insists: “Reducing travel costs doesn’t mean limiting employees to unreasonable per diems and putting them up in shady roadside motels. Instead, as with most solutions, balance is key.” And, “By getting a little more granular with travel policies and meeting employees halfway, unnecessary spending can be prevented.”
Surefire strategies to maximise your travel budgets in 2019 are:

Get a clear view of your company’s travel spend

“You can’t hope for savings if you don’t understand the scope of your total travel spend, from significant expenses to smaller items that can add up to substantial amounts, such as extra baggage fees and airport parking,” says Grunewald.

By defining procedures for Travel and Expenses (T&E) management, businesses will be better positioned to analyse costs and see if budgets are accurate. That will help to identify who is spending what, on what, and help to identify travel trends and savings opportunities.

“Without a T&E management protocol, businesses have no meaningful way to benchmark spend,” Grunewald maintains.

Update your travel policy to ensure productivity

Once you have a clear view of your spend, ask yourself if your business is getting the maximum value for its spend, says Grunewald. “It is vital to ensure your company travel policy is up-to-date.

“Do employees regularly fly to Europe on a premium carrier or stay in high-end hotels in cities such as Paris? It could be time to identify high-volume destinations and negotiate better rates with preferred suppliers. By partnering with FCBT, businesses can benefit from the company’s global buying power and existing contracts,” he adds.
That policy can outline guidelines for travellers on when to book their travel, too. Grunewald says companies could save up to 21% of their travel spend “simply by booking flights in advance. Business travellers can pay up to 200% more for airfares purchased one day out from travel,” he reveals.

Reel in rogue spenders

Some travellers feel entitled to claim for every cost incurred as a result of a business trip.

Grunewald says: “Establishing clear guidelines for travel expenses can help alleviate a great deal of discontent. Clearly state which T&E items the business will cover and stipulate what travel and entertainment expenses would be for the employee’s account. Include guidelines about expense claims, required supporting documentation and the deadlines for those claims. Stipulate the consequences for employees who do not comply with these policies.

“Companies generally use one of two methods: a fixed, per diem allowance to simplify record keeping or what is known as a reimbursement system where travellers provide receipts and request a refund,” he says.