From time to time, most business owners will need to do some sort of work-related travel. Whilst for many it may only be domestic travel, for others with an international presence there is often a need for a long haul flight to visit trade shows, suppliers, vendors or key customers based offshore.
The key focus for most when organising such trips is to ensure they get the best value flights and accommodation, with little thought as to how they can manage their spend whilst over there.
Beware spiralling travel costs
Most people consider the total cost of a return flight in economy plus seven nights’ accommodation at an average hotel to, say, New York, priced at around $5000 per person, as the biggest expense. However, when you factor in food and beverage, taxis and the odd indulgent purchase the total spend can be much higher, and of course it multiplies if there are a number of company representatives travelling.
The point here is that the total spend is hard to estimate, particularly when on the ground purchases are priced in a foreign currency and paid for by cash or credit card.
Use cards to curb currency charges
Business people that travel regularly and savvy travellers have caught on in recent times and become more aware of the benefits of pre-paid travel cards. Not only can the fees and exchange costs be cheaper but the currency can be converted in advance locking in the actual exchange rate, providing some certainty ahead of departure.
If there are any US dollars remaining on the travel card they can be used on the next trip or to buy goods from overseas websites, as an alternative to paying more via a credit card or PayPal purchase.
Make larger payments directly
Those looking for even bigger savings can often use an international money transfer service to pre-pay accommodation costs in a foreign currency. It is usually cheaper to pay for overseas hotels in the overseas currency as hotels can put a margin on the exchange rate when converting the Aussie dollars to their own currency. So rather than leaving the conversion of Aussie dollars to the hotel, take control of the situation and save even more.
Plan well ahead
If forecasts for a lower Aussie dollar prove to be correct and we see depreciation over the next 6-12 months then it may be a good time to lock the costs of some travel expenses away. People planning a trip next year may want to think about saving with a travel card, rather than taking the risk of loading the card just before travel when the Australian dollar could be weaker.
As an example: if you plan to travel to North America next year and convert Australian dollars into US dollars now, at say 90 cents, it could mean a saving of more than 10 percent should the exchange rate fall to around 80 cents as many are predicting.
Be warned though! For businesses involved in regular international trade, travel cards are not the best solution. For managing regular foreign currency payments, it's best to source an international payments specialist that can not only help save on transaction costs but also deploy risk management solutions that suit your business.
This story was first published in Smart Company.