When to Set a Relocation Budget
When a company is relocating an employee, there are many expenses to track and logistics to coordinate to make it happen. When creating relocation policies and benefits on behalf of the company, there are many aspects of relocation to consider. This can include buying and selling a home, moving the employee’s household goods, and short-term housing in the new location.
With all of the complex movements required for a successful relocation, it can take time to know when to begin the budgeting process for the relocation. Should it happen before the position is posted? Before the employee is made aware of the opportunity? When does the company find the best prices for relocation services? While there isn’t a definitive answer, there are several mobility industry standards to consider when determining when to budget for the employee’s move.
The Right Time to Set a Relocation Budget
Typically, the best time to set a relocation budget is once the offer is extended to the candidate, especially if the company is working with a relocation management company. The primary reason is that the relocation company can work with the candidate to discuss their questions or concerns about the move. Allowing a relocation company to assist in the interview process can ensure the employee has their needs covered while the company is not overspending.
For example, an employee may have multiple cars that must be shipped to their new destination. After speaking with the candidate, the relocation company can then report back to the company on the potential costs and services needed to relocate the employee and their family.
If the company’s policies only cover the cost of transportation for a single vehicle, that information can be communicated back to the employee. Policy restrictions play an essential role in helping companies control costs. However, some organizations may agree to an exception to their policy to assist the employee with their move and ensure acceptance of the relocation offer. These changes will impact the total cost of the relocation.
Alternatively, the second-best time to start relocation budgeting is once the candidate accepts the job offer. Now that the employee understands that he or she is moving, the relocation team can work with them on what to expect and allow them to get the most out of the relocation benefits offered by their employer.
How to Calculate for Relocation Costs
When planning for relocation costs, there are many things to keep in mind, specifically costs like:
- Real estate costs, such as buying and selling a home
- Moving of household goods, cars, or pets
- Travel expenses
- Storage facilities
- Temporary housing in the new location
- Taxes
Once all foreseen costs are accounted for, the relocation budget can be managed by the relocation provider. It is recommended that companies work with a relocation management company that utilizes relocation technology and software that can include real-time tracking of employee moving expenses. This helps companies not only stay on budget but create or renew budgets for future relocations.
One of the first steps in calculating relocation costs is considering real estate expenses. This includes the costs associated with buying or selling a home. It’s important to factor in any fees or commissions involved. Additionally, if you’re renting a new place, you’ll need to account for the security deposit and any upfront rent payments.
Next, you’ll need to think about the cost of moving your household goods, cars, or pets. This can vary depending on the distance of the move and the amount of items you need to transport. It’s a good idea to get quotes from different moving companies to compare prices and find the best deal.
Travel expenses are another vital factor to consider. If you’re moving to a different city or country, you must account for the cost of flights or other transportation methods. This includes not only your travel but also any family members or pets that will be accompanying you.
Sometimes, you may need to utilize storage facilities during the relocation process. This could be necessary if there is a gap between when you move out of your current home and when you can move into your new one—research storage options in advance and factor in the monthly cost.
Temporary housing is often required when relocating to a new location. Whether it’s a hotel, rental property, or corporate accommodation, you’ll need to budget for the cost of staying in a temporary home until you find a permanent residence. Remember that these costs can vary depending on the location and duration of your stay.
Lastly, remember taxes. Depending on the country or state you’re moving to, additional surcharges or fees may be associated with the relocation. Researching and understanding the tax implications beforehand is essential to avoid any surprises.
To effectively manage the relocation budget, it’s recommended to work with a relocation management company that utilizes technology and software for real-time tracking of expenses. This allows companies to stay on budget and make informed decisions when creating or renewing budgets for future relocations.
Working with the Best to Setup Relocation Budgets
By considering all these factors and working with a reliable relocation provider, you can ensure your relocation costs are accurately calculated and managed. Planning and being thorough in your research will help you avoid any unexpected financial burdens during the relocation process.
Global Mobility Solutions (GMS) is here if you have questions about developing relocation budgets. Our team can support your employees in getting the most out of their relocation benefits while your company can stay within your relocation budget. Our team understands that moving multiple employees every year can be challenging, so our tailored global mobility solutions can help any company of any size seamlessly move any number of employees.
Contact us today online or call 1.800.617.1904 to speak with one of our qualified team members.
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