March 3, 2016 by Jorge Watts

Forecasting Realistic Travel Costs

budget-travel-piggy-bank

A travel budget may not be part of discussion on revenues but will definitely be part of costs allocation and defense. Profits and cash flows will figure into the money that’s left over after capital expenses. The travel budget will be part of the operating expenses.

Yearly budgets are divided into 12 months. Blank columns next to cost estimates will be filled up with actual cost results as the year progresses. Costs to be incurred in Perth airport transfers is an example of costs estimate.

Writing down the travel costs will be estimates at best. But it is important to be accurate still. Erring on the side of being conservative will be good in the long run. Keep close tab of past numbers and actual figures and do a percentage on top of it as increase in the cost component.

Research for Realistic Numbers

Do the necessary research too to get better deals. Research will be always be part of the business. Doing it for travel will not be an exception.

Do the total costs and expenses. Once you are done with the cost estimates you can come up with figures on how much it will cost your business to recover your costs. This is taken against the potential earning from the new market or business given the reason for doing the business trip.

It can be tricky as in most cases there will be variations due to inflation, price increases, and other factors. Fixed costs can be on insurance or hotel costs as a corporate account. As they are those expenses that remain the same fixed costs are easier to plug into your travel  expenses as they most likely remain the same over the period of time.

Drafting a Travel Budget

If you did write the previous year travel costs drafting a budget for the current need will be easier. Projections would form the basis of your estimates. Coupled with the actual expense figures realized it will a more than good estimate.

If you’re a startup business, start by estimating the basics mentioned.

If you are in the business for a while, taking your company’s most recent financial statements in using those as basis for targets. The reason you start with previous numbers is because this information will drive the rest of your estimates for business costs, travel expenses, and operating expenditures.

Taking into consideration those factors will affect your cost projections but worrying too much if it’s accurate will be too much. As the basic tenet of budgeting is that the figures will never turn out to be exactly right. A realistic approximation will be the next best thing.

In calculating operating expenses, a good place to start will still be the financial statements. Itemize the list of fixed and variable expenses incurred the previous year including allowances for travel, rent, postage, research, utilities, taxes, etc. If you’re just starting out, you’re going to have to brainstorm to make sure you anticipate and factor in all the costs you will incur most possibly.