The Ultimate Business Travel Policy for Streamlining Business Travel Expenses

What are the 4 Different Types of Business Travel Expenses?

There are generally four business expense types, all of which should be budgeted and quickly reimbursed.

Types of Expenses

• Transportation: This is the cost incurred to get from the employee’s home or office location to the destination and back. This might include flights, trains, rental cars, taxis, rideshares, mileage, or tolls.
• Accommodation: The cost of staying in a hotel or other type of lodging while traveling for business. It could also include fees associated with short-term rentals such as Airbnb. Key services like laundry or gym access may also be included.
• Meals: Meals typically make up nearly 20% of business travel expenses. They include meals at restaurants or ingredients from grocery stores. Most companies carefully restrict meals, including maximum per-person limits, tip rates, internal vs. client meals, and alcohol.
• Miscellaneous: This includes any remaining costs, including WIFI access, meeting room rentals, conference passes, currency exchange rates, insurance, etc.

Budgeting

With the ease and low cost of virtual meetings, and with airfares rising 5x faster than the overall inflation rate (source), in-person meetings are now reserved for high-value activities like rebuilding relationships, collaborative planning, and fortifying teamwork and community. There is simply no tolerance for, “this trip could have been a Zoom call.” To anticipate ROI, balance both the trip’s expected costs and outcomes. If you had pre-pandemic travel budgets, assume you’ll need at least 30% more budget for the same trip in 2023.

Reimbursement Procedures

Reimbursements are extremely important for employees, because people like to get their money back as soon as humanly possible. Some companies even offer prepaid cards or corporate cards so that spending doesn’t come out of employees’ personal accounts. Make sure your policy outlines the reimbursement process and turnaround times. Also, highlight if reimbursements will be in the form of a paper check or sent via direct deposit. If you have automated processes via expense management technology, employees will be thrilled that reimbursements can be processed and direct deposited in as little as 24-hours.

Is Your Travel Expense Policy Comprehensive Enough?

• Finance/Ops: Controlling costs, predictability, and visibility are all top of mind. Pre-trip budgets are a huge help with forecasting, along with timely and accurate data for reporting.
• Human Resources: Employee satisfaction is a major driver, and a flexible travel policy is a big draw for talent acquisition. With the ubiquity of open bookings, they need to know where travelers are to maintain a Duty of Care standard.
• Travelers: Almost 40% of frequent business travelers said convenience was the most important benefit in a travel policy, followed by cost. And since many are loyal to specific carriers and want to maintain status or earn points, a solid selection of travel partners is critical.

Defining Clear Guidelines For Employees

The business travel policy should clearly state employees’ responsibilities. This may include ensuring that all required documentation is completed prior to the start of a trip (such as flight reservations and hotel arrangements), adhering to the maximum daily allowances set by the company, notifying management of any changes in plans during travel, etc. In your policy, be sure to cover if all line items require or receipt, or if only purchases over a certain dollar amount need documentation. You should also specify expense report due dates — usually within 90 days of an expense or on a monthly basis. Once you have guidelines in place, don’t assume your policy to be widely used if it’s a PDF on the shared drive! Instead, consider a modern travel management platform that supports in-app policy parameters, so employees can easily search for flights and accommodation that meet your requirements, and receive guidance as they’re booking.

Determining [Un]Acceptable Expenses

The heart of a travel expense policy is usually in determining what expenses are [un]acceptable. But avoid the temptation to create rigid, granular rules.

• What are the goals for implementing limits? What will improve across cost savings, reporting, and adherence?
• Don’t be vague — employees’ varied backgrounds and values can lead to drastically different interpretations.
• Provide real-world examples of allowable and non-allowable expenses. What travel and expense scenarios apply most frequently for your business?
• Keep it short — the longer and more nuanced your document, the more likely employees are to skim over it or ignore it all together.
• Consider quality of life for travelers. For example, a flight may be $30 cheaper but require two layovers or a red-eye.
• Can you responsibly encourage work/life balance, and set boundaries around [inevitable] bleisure travel?
• Beware getting too granular or rigid. A 50% tip on a $3 coffee is neither fraudulent nor wasteful.

Consider Employee Engagement

• Keep some savings: If employees book under budget, some employers reward this frugality by splitting the savings. An expense management solution that offers this feature makes it easier to offer this perk. ( On average, we see businesses trim 30% of their travel budget after implementing rewards.)
• Get reimbursed faster: Manually completing expense reports, sorting and attaching receipts, and submitting can be a lengthy process. If your new expense policy includes following an automated, digital system, employees can knock out expense reports in minutes and get reimbursed faster.
• Save time and hassle on expense reporting: In psychology, “negative reinforcement” means encouraging a behavior by removing something unpleasant (e.g., if a pill makes your headache go away, you’re more likely to take a pill next time, too). Making expense reporting quick and simple makes everyone’s day a little bit easier.

How to Implement a Travel Expense Policy?

Writing a clear policy that aligns to your corporate culture is… actually the easy part. Good data begins with your employees. It’s imperative they understand the policy and can easily adopt it.

Train and support employees

• Establish a generous schedule: Pad your timeline so you can thoroughly field questions and help employees adapt to the change curve. Some departments might need an extra grace period if they’re working through a crunch period. Once carefully considered, communicate a hard deadline to get everyone onto the new policy.
• Choose a training strategy: Consider learning styles, as well as new vs. veteran employees:
  • Hold a live training meeting. The immediate feedback and questions can help you fine-tune your policy for better clarity.
  • Record a short training video as a resource, especially for new employees.
  • Train one department at a time, starting with departments processing highest volumes of expenses.
  • Train department heads and supervisors, and listen to their advice on the best way to train their team.

  Incorporate Technology

  • Mobile and desktop apps: Mobile apps are a must for travelers in the field, and expense reports should get the desktop treatment they need.
  • Intuitive UX: A good tool inspires confidence through its usability. If travelers enjoy using it, they’re more likely to be compliant.
  • Saving incentives: More carrot, less stick. Rewarding employees who beat their estimates means travelers get what they want and stay within budget.
  • Support: 24/7 travel support lets business travelers focus on getting the job done instead of sweating the small stuff.

  Regularly Review and Update Your policy

  Review and adjust your policy every year, or when corporate or world events necessitate it. Re-engage your collaborative stakeholders, and ensure your staff is engaged, feels heard, and gets needs met.

  Conclusion

  Streamlining business travel expenses begins with a flexible policy that’s easy for employees to adopt. Rewards, in-app policy parameters, simple UX, and swift reimbursement all help drive compliance.

  

  FAQs

  • Why have a travel and expense policy? – Travel, payments, and expenses are often a company’s second largest expense. Business travel policies that are comprehensive, flexible, and clearly-communicated reduce expense processing costs, improve productivity, prevent fraud, and aid compliance.
  • What expenses are included in a business trip? – [Un]acceptable expenses vary by business. Generally they cover transportation (flights, trains, rental cars, taxis, ride shares, mileage, or tolls); accommodations (hotels or short-term rentals such as Airbnb); meals (restaurants, grocery stores, client entertainment); and other miscellaneous costs incurred while doing business (WIFI access, meeting room rentals, conference passes, currency exchange rates, etc.).
  • What is reimbursement of traveling expenses? – Reimbursements refund employees for expenses made while traveling. They are either in the form of a paper check or sent via direct deposit. Companies increasingly provide prepaid cards or corporate cards so that spending doesn’t come out of employees’ personal accounts.
  Control Spend with a Better Solution

  Learn more about how TravelBank can help your team manage expense, travel, and corporate cards on one intuitive platform.