Business trips may be unavoidable if you have overseas clients or offices in multiple locations. Or there may be international conferences that you want your employees to attend. With travel comes the hassle of booking transport, accommodation, paying for meals, and managing aspects related to the trip.
Well, the norm is for companies to pay for any business-related expenses and business travel is one such major expense. To make budgeting and paying for corporate travel easy, it is advisable to have a business travel policy in place.
A business travel policy or a corporate travel policy is a formal document that sets rules, guidelines, travel reimbursement process and other aspects related to business travel. It sets the tone for how employees should book, manage and apply for reimbursement for travel expenses related to a business trip. It must also include details on how managers should approve business travel.
A company travel policy will include a purpose statement, scope, authorization and reimbursement processes, and travel arrangements. It will include details on transportation including airfare, per diem meal allowance, accommodation, incidental expenses and any miscellaneous expenses that may arise on a business trip.
Usually, you may have a finance manager or a travel manager taking care of corporate travel. You could also hire an external travel agency. Irrespective of whether you manage business travel in-house or outsource it, having a comprehensive company travel policy regarding domestic and international travel can ease the process.
The objective of having a travel policy for employees in a company is to establish specific standards for corporate travel. It is essential to be prudent. A company-wide business travel policy will set the expectations for booking business travel for different levels of employees. It will provide the basis for employees claiming reimbursements, set a process for the same and make it easy for both travellers and travel approvers.
A travel and expense (T&E) policy is also required to help employees understand the legalities of business travel. It will also help with expense reporting and explaining to authorities how you budget and spend travel expenses as a business.
With a T&E policy in place, you will be able to budget better, monitor employee spending, and ensure that employees have a safe trip. It is also a good way to reduce overspending and limit fraud.
A comprehensive T&E policy should ideally cover all regular employees of the company. That should include top management and percolate down to interns, depending on who may need to travel. It could also include contractors, seasonal employees, part-time employees and all others who may need to travel.
The scope should include:
The repercussions of non-adherence to the company travel policy should be stringent for all.
If you are a company that has employees who need to travel regularly, then it is optimal for you to have a T&E policy for employees. It has a range of benefits, not just for the business but also for your employees.
There is a Duty of Care that all employers owe to their employees. If your employees are on business travel, you must ensure their safety and protection. Having a travel policy for employees with clear guidelines can make travel safe. For instance, you may mandate that employees fly with a carrier with the highest safety standards. Or, you may permit employees to use private transport late at night. That is a reliable place to work.
One of the biggest reasons to have a business T&E policy is to regulate costs. Research suggests that business travel expenses could grow to $1.7 billion by the end of the year. Businesses usually spend an average of 10% of their annual expenses on corporate travel. Without guidelines that tell your employees what an acceptable level of spending is, your business travel expenses could shoot up considerably. Employees may be tempted to go in for the most expensive option without appropriate guidelines in place. You don't want your employees spending on presidential suites and ordering caviar at company expense. In that case, you should consider enforcing a corporate travel policy that sets per diem limits on how much employees can spend on food, accommodation, local travel, client expenses, etc.
Having a clear set of guidelines on what is acceptable and what isn't when travelling for work makes the process easier for both employees and the company. Imagine if your employees had to clarify every small detail regarding their travel – what airline class is permitted, whether airport parking is a claimable expense or not, are Uber fares refundable, etc. A business travel policy makes it easier for your employees and saves time answering repetitive questions.
When you have a company-wise detailed business travel policy, the chances of employees taking you for a ride are lower. Since you set the upper limit on how much they are allowed to spend on each aspect of business travel, such as food or accommodation, they will be forced to stick to the budget or pay for the difference themselves. When you put the onus on the employee, they are less likely to overspend, on purpose or otherwise.
A well-designed and properly communicated T&E policy fosters an environment of fairness in the company. Managers can show no favouritism. The policy will set out the budget for employees and arrangements will be made according to that. When employees see that everyone is getting equitable treatment, it will foster a positive company culture.
A business travel policy will clearly state the budget for business travel. It will require employees to submit receipts and invoices to support their expenses. These can then be reconciled and settled accordingly. Having a T&E platform to settle business travel expenses will make the reimbursement process seamless.
Who should consider creating a business travel policy?
Whether you are a big business or a startup, you should consider having a company travel policy if:
When drafting your business travel policy, there are many aspects to consider. Your T&E policy needs to reflect your unique needs, including your company's and employees' needs. Some of the fundamental elements to cover are:
Set the basic standard of your T&E policy for business travel. Section your outline to include domestic and international travel separately. Budgets for different destinations will differ. Clearly outline who will be responsible for executing the policy at different levels. Will the travel manager handle sanctioning for everyone, or will other team managers be accountable for authorising business travel? Also, mention the timeline for making bookings. Encourage your employees to make bookings early to take advantage of cheaper rates. Apart from budgetary considerations, also look into business travel safety and security aspects. It will put your employees at ease while travelling for work.
You need to consider how your employees will travel for a business trip. For short domestic travel, you could consider trains or road travel. If an employee is taking their vehicle, outline whether you will be paying only for fuel or a driver. International travel may require sanctioning airline budgets. You should specify the budget for flight expenses or outline whether they are permitted to travel by business class or economy. Even while travelling locally at the destination they are at, you should specify whether employees are allowed to take cabs or whether they should stick to public transport. Even minute details such as what form of transport is acceptable while travelling to the airport or train station should be mentioned so that there is no ambiguity later on. In general, you should encourage your employees to minimise travel expenses.
If your employees need to stay overnight during business travel, you will need to provide accommodation. In the T&E policy, you must clearly state what accommodation you can provide. If your budget is large enough, you may be able to provide accommodation in a star hotel. As a startup, your accommodation may be within a budget stay. If you have your guesthouses, you could put up your employees there. Depending on your means as a company, you should define the accommodation arrangements in the corporate travel policy and communicate them to your employees.
To increase business travel safety, you may choose to insure your employees on business trips. If you have partnered with an insurance company, disclose this in your T&E policy so that employees only avail the services of the vendor you have sanctioned. If there is any aspect of travel you do not insure, disclose it in your policy.
In case of group travel, you may be able to arrange food for all employees through a caterer or a fixed menu. Setting a budget per meal or day makes sense for solo travellers who may be dining on their own. Having a per diem allocation for meals can be economical. This section should also include details about whose meals employees are allowed to pay for. For instance, if an employee is going to a business meeting, you may enable them to pay for the client. However, a personal meeting not sanctioned by the manager may not fall under the company travel expense. You must outline these clearly so that there is no confusion.
You may have a blanket policy for everyone, or you may choose to provide upgraded services to executive employees. For instance, you may allow senior management to travel by business class and book accommodation in star hotels. While this may seem like additional expenditure, it can also be a way to motivate your employees. If you plan on providing differential travel arrangements for employees, you should mention this in your T&E policy. It will make it easier for your budgeting team to allocate resources accordingly.
You cannot prepay all expenses. There may be expenses that might arise while on the business trip, such as sudden meetings with clients, an add-on fee at a conference, etc. You need to state what expenses can be reimbursed and what cannot. You could issue a corporate credit card to your travelling employees to make the process easy. Even while giving the credit card, you need to be specific about which expenses they will be able to claim. Aspire provides unlimited corporate cards that you can issue to teams that help reduce or avoid forex charges, integrates seamlessly with your accounting software and makes it easy to track expenses. We also have specialised reimbursement software that is a delight for employees, accounting teams and the entire organization.
It may be prudent to include a section on non-reimbursable expenses. For instance, if you don't specify that entertainment expenses are excluded from business travel budgets, your employees may assume it is allowed. That could lead to confusion later on. You may not reimburse costs such as using a hotel's spa, swimming pool, gym, minibar, room service, etc. Mention this in the T&E policy.
For extended business trips, you may allow your employee to travel with their spouse or children. However, you may require them to stay in the same room or accommodation you have provided. Suppose you are allowing your employees to travel with their families. In that case, you need to specify which family members they are allowed to take with them and whether you will be paying for their travel or sanction any additional expenses.
If your employees are going to attend a conference and there are registration fees involved, your T&E policy should specify whether you will be covering the expenses. Any other miscellaneous costs such as parking fees at an airport, excess baggage, laundry services while staying for extended durations, gifts for clients, tests and vaccinations required for travel under Covid-19 protocol, etc., should also be specified in the T&E policy. Leaving any expense uncovered could create room for doubt and increase your travel budget.
It is essential to outline a section dedicated to special circumstances such as missed flights, trains or buses, double bookings, lost tickets, surcharge fare on public transport, etc. You should outline every possibility and have a backup plan for employees to follow. Having these in your guidelines will eliminate ambiguity and a possible overcharging by employees.
Your business travel policy should include a list of pre-approved agents, vendors and partners you have tied up with for different purposes. For instance, you may have partnered with a group of hotels to avail corporate discounts. This should be stated in the company travel policy. You should also provide contact details, customer care numbers, discount codes, etc. wherever applicable.
For expenses that are not prepaid, you need to have a reimbursement process in place. This includes the reimbursement timeline, instructions on how to submit receipts and vouchers, which software to use while applying for reimbursement, who issues reimbursements, how long the reimbursement process will take, etc.
Your T&E policy should also include details regarding what to do in case of emergencies. You should provide a company helpline number as well as a local person of contact to lean on in case of emergency. For other issues and escalations too, you should provide a separate point of contact. Not equipping your employees with these details could leave them lost and confused in unexpected circumstances.
As you can see, there's a lot of detail to drafting your business travel policy. Here are some steps to keep in mind while creating a comprehensive business travel policy:
Before drafting your travel policy for employees, outline what the objectives are. You should be considering employee safety, cost management and a streamlined process; if you want your employees to have a self-serve option, you must design your T&E policy accordingly.
A business travel policy should not be solely from the company's point of view. You should also consider your employees' needs. Ask questions like whether your employee will be comfortable in the accommodation you are approving, whether the meals budget will be sufficient, is it safe to take public transport in the location they are travelling to, etc. You could employ a professional travel manager to make these decisions.
An ambiguous T&E policy will do as much harm as not having a policy. Make sure to set clear guidelines on what is acceptable during business travel. From transportation-related expenses to paying for clients and gifting policies, outline every detail, so there is no room for doubts.
Write down your company travel policy in complete detail and make sure that every employee is aware of its existence. Doing this will ensure that they stick to the regulations. If you think an employee will need to travel, send the business travel policy across to them anyway. Also, make it accessible on your employee or HR portals so that employees can refer to it at any time.
Follow these travel and expense policy best practices to ensure you have an easy-to-follow T&E policy:
Your business travel policy should be comprehensive, but it should also be easy to understand. Avoid jargon and legalese in your corporate travel policy. If you have a lot of terms that are difficult to understand, include an index. That will make it easy for your employees to follow the travel policy and stick to it. If your policy is too complex, your employees may have difficulty keeping up and disregard the guidelines.
When drafting your travel policy, be clear and definite with the guidelines. Providing room for ambiguity can lead to your employees taking advantage, even if unintentional. If you have a comprehensive company travel policy that covers every aspect of travel, you are more likely to succeed with its implementation. Emphasise the importance of your employees sticking to your business travel policy and specify the repercussions of not adhering to the guidelines. To make the process smoother for your employees, you could create a detailed section with frequently asked questions. That will help make your business travel policy airtight.
For your corporate travel policy to be successful, you need to communicate it to your employees. Instead of burying your T&E policy inside another policy such as employee guidelines or HR rules, make it standalone. Integrate it with your travel booking process so that there is no chance they miss it. The policy should be easily accessible on your employee portals.
Don't limit your T&E policy to budgetary objectives alone. Frame your business travel policy keeping your employees' safety, requirements and preferences in mind. It is possible to arrive at a solution that answers all of these. For instance, you could permit business class air travel for business trips that exceed 12 hours. It will make your employees more comfortable and improve their productivity on the business trip.
A travel policy should always include a care plan. If your employees fall sick during the trip or meet with an accident, you should have a healthcare option available easily. The health insurance you provide may not cover healthcare expenses in specific destinations. Evaluate what is covered under the health insurance policy and see how you can top it up for travel. Travel insurance is also a must to ensure a safe and comfortable trip.
Whether you are a startup, a small-sized or a medium-sized company, you should consider making your business travel policy flexible. As long as you put broader rules in place, giving your employees some freedom to decide their travel plans can make them feel more at ease. Giving your employees the option to book their travel, choose from a range of accommodation choices, different insurance providers, multiple means of transport, etc. are ways to make your corporate travel policy more flexible.
Feedback and suggestions can go a long way in helping you improve your business travel policy. Make it a point to collect employee feedback on the positives and negatives of business travel at regular intervals. You could consider monthly, quarterly or half-yearly feedback, depending on how frequently you employees travel. If you notice similar problems recurring among employees, you could consider changing that aspect of your travel policy.
To keep up with the times, you should review and edit your travel policy from time to time. Consider the different issues that have cropped up with business travel and incorporate the changes diligently to make your procedure more effective.
You can use Aspire's Spend Management tool to track your travel expenses and employee reimbursements. Spend management will help you track all your company's business travel expenses in one place, all in real-time. Our one-click reimbursement process makes it simple to claim any expense, set limits on spending, store all receipts in one place and much more. By segregating your business travel expense spend from other reimbursement expenses, you can make travel expense management more accessible and streamlined.
Want to implement a Corporate Travel Expense Policy but still not sure where to start? Download our free travel policy template and begin your journey to create a robust business travel system!
Travel expense reporting is just as important as creating a comprehensive business travel policy. Following travel and expense reporting best practices can help you control your T&E spending. It has many advantages. You can understand how the travel expense budget is split. You can identify spending patterns and understand where most of the money is going. You can generate reports based on these analyses and involve the senior management to figure out how to handle the budget better.
Here are some travel expense reporting best practices to follow:
To scale your business and take advantage of new opportunities, you may need to send your employees on business trips. It would be best if you could put a business travel policy in place. A business travel policy will ensure that you have clear guidelines for travel, making business trips productive for you and effortless for your employees. It is also a way to ensure employee safety and at the same time, help you save costs.
If you are unsure how to create a company travel policy, use available pre-existing business travel expense policy templates and customise it to meet your requirements. Keep travel and expense policy best practices in mind before creating your business travel policy. Aspire's Spend Management tool can help you track your T&E budget and keep an eye on your travel and expense policy.