When you optimize cash flow, you’re able to take advantage of investment opportunities as they emerge.

Spending on travel is one of the largest line items in many companies’ budgets. Given the size of travel spend at most organizations, it can be difficult to properly forecast expenses and optimize cash flow.

That said, it’s getting easier in the modern age to forecast travel spending in an effort to optimize cash flow. CFOs need to use the proper tools and approaches for understanding travel-related expenses — so that they can ask for adjustments to travel policies and stabilize cash flow.

1. Look at Past Travel Spend

Any prediction of future spending begins with a look at historical performance. So, to forecast travel spend and optimize cash flow, look at what the company has spent on travel in the past.

Be careful to account for any circumstances that might have artificially increased or decreased travel spending in the past. You don’t want to base travel forecasts on data that isn’t necessarily relevant. For example, most companies significantly slowed their travel spending during the COVID-19 pandemic, which means that travel spending in 2020 and 2021 isn’t necessarily predictive of the future.

2. Analyze Internal and External Changes

Once you look at past travel spending, consider internal and external changes that may influence your travel spend in the future. 

For example, does your company have ambitious sales goals that will require more travel in the coming months? Or has your company effectively replaced in-person meetings that once required travel with virtual meetings? Those would be internal changes.

External changes might be increasing travel costs or an economic downturn that makes it more difficult to make the business case for travel. These external factors may influence how your forecast travel spending in the coming months.

3. Forecast for the Future

Now it’s time to forecast spending for the future. You have historical travel data, and you also have an idea of how the internal and external landscapes are changing. Use all of that information to make an informed estimate of what you need to spend to meet your corporate goals.

4. Adjust Travel Policies

You may need to recommend travel policy changes to a Travel Manager based on the forecast. The forecast may be reliant on limits to how much Travelers can spend on certain things (flights, hotel stays, rental cars, etc.).

You may also find during your analysis that out-of-policy booking has increased travel spending in previous years. This type of discovery may necessitate updates to the policy that mitigate non-compliant booking.

5. Use the Right Technologies

Everything listed above is more difficult without the right travel technologies. When you have in place a booking tool, an expense management tool, plus other platforms, you have access to all of the information needed to effectively analyze past spending and make a reliable forecast for the future.

At JTB Business Travel, we connect our clients to a suite of technologies that are available to help them maximize their spending on travel while also gaining a deeper understanding of their travel-related ROI.

Get in touch to learn more about how we connect companies to the right technologies for their travel needs.