Inflation has meant that business trips are increasing in cost. What does that mean in cash terms, and how can you limit the impact?
The UK has seen inflation in almost every area of life over the past year, and for businesses, that can mean incremental cost increases in almost every facet of their operation.
One such area is travel and expenses, but what does it mean in cash terms? We’ve sent an imaginary employee on a 500-mile round trip with an overnight stay to see where costs are really increasing – and also come up with some suggestions of where you can save money or improve cashflow.
Fuel
It will come as no surprise to anybody that the cost of fuel has risen in the past year. At the start of 2022, petrol was around 145p per litre, and diesel 148p, and even though prices soared during the year and have fallen since, at the beginning of April 2023 petrol had reached 146p, but diesel was still at 162p.
For our employee in a car or van doing 500 miles at 40mpg, it would have cost £84 in diesel at the start of 2022, against £93 now – a near 11% rise.
However, by signing up to Allstar, you have access to our Discount Diesel* network, low cost supermarket sites and the ability to purchase fuel at a reduced cost. There are other ways to save too: our Co-Pilot app helps drivers find their nearest fuel station helping reducing route deviation saving both time and money. As a fleet manager you can also search for the cheapest fuel using our UK Fuel Price tool.
Another alternative is to go electric. Using the Allstar One Electric card and Allstar Homecharge, drivers can charge at home, usually at a much cheaper cost. Although in this case, you’d have to factor in the initial outlay of buying and installing chargers – over time, if employees are on the right tariffs, there could be savings to be made.
Also, when drivers are out on the road, they can search, plan and pay for the cheapest and most convenient charging using the Zap-Map app.
Food and drink
For employees out on the road, coffee is nearly as important a fuel as petrol or diesel. But the cost of a shot of caffeine has increased too. In February 2022, a large cappuccino in Costa was £3.40 whereas by 2023 the price had increased at many locations to more than around £4. If your drivers are putting a coffee a day on expenses, over the course of a year, you’ll be paying out over £100 more for their caffeine fix.
And it’s not just coffee that has gone up in price. According to Menu Tracker, which reports on the price of cafés and restaurants, coffee and sandwich shops saw the average price of food rise by more than 7% at the end of 2022. That equates to a sandwich bought on the go rising from £3.50 to £3.75.
The cost of meals in restaurants has increased by nearly a quarter too, which means that an employee ordering themselves dinner for £30 at the start of 2022 is likely to be paying closer to £40 now.
Hotel rooms
If you’ve got employees staying overnight, you’ll likely be seeing costs rise for hotel rooms as well. According to data from RSM Hotels Tracker, rates increased by 13 per cent in the 12 months to February 2023, which was above the overall 10.4% rate of inflation.
Its research showed that the average daily rate for rooms increased to £128.94 throughout the UK and to £196.26 in London.
Totting it up and the small print
Without a doubt, as with most things, the cost of travel has increased and for our journey above involving 500 miles, coffee and lunch, dinner and a hotel, they could be paying around £30-40 more in total for a trip that would have cost around £240 in early 2022 – an increase of around 15%.
These figures are based on a diesel car and the overall costs is an approximate amount. Obviously, real-life journeys are dependent on many factors such as location, specific items purchases and timing. But this example shows that because of inflation, costs can quickly mount if not measured and managed.
How to manage costs
On the face of it, an extra £30-40 per trip might not seem a lot, but when that is extrapolated across the whole business and every employee, it can soon add up to a substantial amount.
By using Allstar Plus or Allstar Expense business payment cards, you can do a number of things to help. Firstly, with more time to pay, you release pressure on your cashflow and in being able to see the expenses as they come in, can adjust your own prices or invoicing to reflect your increased operational costs.
It will also help employees who are under stress from the cost of living too, as they won’t have the burden of paying for higher expenses and then having to reclaim them at a later date.
Crucially, with Allstar Online you will also be able to put in place controls for different areas of travel expenditure. When prices are on the rise, it’s easy for employees to lose track of what is a reasonable expense for certain items.
While you might not want to cap how much they can pay for a coffee, you might want more control over hotel room prices, for example. Our partnership with Roomex LINK also allows you to search for cheaper rooms with negotiated rates and put policies for spending in place.
In conclusion
Rising costs are fact of business life, and there are some you can’t control. But there are plenty you can, and it’s worth spending some time understanding where the big pricing leaps are happening, and coming up with a plan to control them. The old adage ‘look after the pennies and the pounds will look after themselves’ has never been more true, but a little help in the pound column from Allstar can’t hurt either.
*Savings on Diesel can be made at participating Discount Diesel sites on our network when the card is swiped.
Download article
Related articles
or call
or call