As a small business travel manager or arranger, if you specifically run into issues with keeping your business travel within budget, it may be time to enact a travel expense policy as part of your broader business travel policy. Here’s why and how to do so, so that you can manage travel spend better.
Why Do You Need a Travel Expense Policy?
In most organizations, travel is the second largest controllable expense. A travel expense policy provides guidelines for your company’s business travelers on how they can spend the company’s or their own (with later reimbursement) money while traveling. The policy may apply to a range of typical business travel spending, whether that be airfare, hotel fees, car rentals, meals, hosting client dinners, etc.
If you’ve been a travel manager or arranger for any amount of time, you’ve likely noticed that, without a policy, managing travel spending can be difficult, if not impossible. Business travelers may struggle to stick to a budget. They may likewise follow haphazard methods of submitting expense reports. Your travel budget suffers as a result, meaning you’re not getting the ROI that you could from every business trip.
Luckily, a travel expense policy helps you manage travel spend better by putting very clear guidelines around what business travelers can and cannot expense, how they can submit expense reports and other facets of the business travel experience.
Top 5 Travel Expense Policies That You Need in Order to Manage Travel Spend Better
If you decide to build a travel expense policy on your own, what specific policies do you need to include within your overarching travel policy? Here are five considerations to help you manage travel spend better.
1. What can employees expense before, during, or after traveling?
Your efforts to manage travel spend better must start with determining what exactly your travel spend will include. As such, the most important information that your travel expense policy will cover is information on what employees can expense before, during, or after traveling. Do not use generic language such as “all business-related travel expenses” when clarifying what costs the company will or will not cover. Instead, specify all costs that the company will cover and all costs that the company will not cover.
For example, will the company cover all hotel expenses? Or only hotel expenses that are approved ahead of booking?
Will the company cover the costs of all meals during the travel dates or just meals during business hours?
Will the company cover the cost of checked luggage for short trips? Or are travelers expected to pack only a carry-on during shorter trips?
Will you cover travel fees that employees incur due to lazy behavior or poor planning? (If so, consider that the average U.S. business trip incurs nearly $1,000 in travel fees alone.)
Make sure everything is entirely clear and spelled out so your employees know what to expect.
2. What are the budgetary limits?
Beyond saying what exactly the company will cover, also be sure to include information on cost limits. You will likely want to put spending caps on categories such as flights and hotels in order to prevent excessive spending.
Of course, when deciding on your budgets and caps for each spending category, try not to be overly harsh or unrealistic. Travel can be pricey, especially if team members are frequently traveling on short notice or traveling to particularly expensive locales. Be reasonable with your caps.
3. How are expense reports processed?
Once travel has concluded, how will expense reports be processed? Detail what format expense reports must be submitted in. Better yet, provide team members with a template that they can simply use to input their information as needed. Spell out who will approve expense reports (Will it be you, as travel manager or arranger? Or will the manager of each team look over expense reports for approval?).
Additionally, consider how expense report disputes will be handled. If a report cannot be processed, what steps will the company take to remedy the situation?
4. Who is allowed to submit an expense report?
Beyond covering how to submit an expense report and how those reports are processed, also be sure to make it clear who may submit an expense report. Since all employees in your company (likely) do not travel, not all employees will need this privilege.
5. What are the consequences of non-compliance?
In some instances, expense report disputes are not a simple matter of confusion or a singular mistake. In some cases, team members do, unfortunately attempt to take advantage of the system and get away with behavior that falls into fraud territory.
Lay out exactly what consequences will arise for behavior such as this.
Tips for Ensuring Employees Adhere to Your Travel Expense Policy
Creating a travel expense policy in order to manage travel spend better and actually achieving business traveler compliance are two different things. How can you best ensure your travel expense policy’s success?
1. Make sure your policy is clear and concise.
Whatever you include within your travel expense policy, use language that will make the guidelines and parameters clear to your travelers. If you leave room for interpretation, you may find that employees do indeed interpret the policy to their own benefit — not necessarily to the benefit of the company. Traveler training will help with this.
2. Ask for feedback.
For your best chances of teams remaining compliant with your new travel expense policy, ask for feedback and truly take that feedback into consideration. Are employees saying that certain spending expectations are unreasonable? See how you can accommodate their needs.
3. Make things easy.
As you determine how employees will submit expense reports and receive reimbursement, try to make this process as easy as possible on their end. The easier a system is to use, the more likely employees will comply and the more likely you’ll actually be able to manage travel spend better.
Need More Help To Manage Travel Spend Better?
Putting together a thorough, comprehensive travel expense policy is easier said than done, but JTB Business Travel can help. Make the switch to managed travel now and get help with common business travel tasks such as these.
We can help you craft a travel expense policy that fits your unique needs and business goals, as well as help you ensure team members remain compliant. You’ll be able to both manage travel spend better and rest easy, all the while knowing you have JTB’s 100+ years of business travel management experience on your side.