Travel and expense management can often be a complex and challenging area for businesses to navigate. With multiple stakeholders, including finance teams and travel managers, each vying for their say in budget allocation and expenditure, establishing a clear travel policy becomes crucial. This policy serves as a set of guidelines to ensure that travel-related expenses are managed efficiently and per company standards.
Regardless of a company’s size, having a well-defined travel policy is essential for financial control and maintaining positive relationships with clients and partners. A carefully crafted policy can significantly impact traveler motivation and productivity, while also addressing environmental considerations, and aligning with modern sustainability goals.
What is a Travel Policy?
A travel policy is a set of guidelines and rules established by a company to manage and control employee travel expenses and ensure safety and compliance with company standards. It typically includes guidelines for booking travel, selecting accommodations, using transportation, and reimbursing expenses.
A travel policy may also outline expectations for behavior while traveling, such as adherence to the company’s code of conduct. The main goals of a travel policy are to control costs, ensure traveler safety and well-being, and streamline the travel booking and reimbursement process.
Importance of Creating a Travel Policy
Creating a business travel policy is important for several reasons. It provides clear guidelines that ensure fairness for all employees. Travel policies are not just about imposing rules; they can have positive effects on both travelers and businesses. Here’s how:
Benefits for travelers
- Employees have the freedom to book their travel arrangements within the policy’s guidelines.
- The company can track travelers’ whereabouts to ensure their safety.
- Employees experience less confusion and hassle when booking travel.
Benefits for the company
- The policy helps reduce spikes in travel expenses and provides better control over spending.
- It minimizes conflicts and frustrations related to expenses and reimbursements.
- The policy helps reduce overall business travel costs and allows the company to optimize its budget.
- By ensuring consistency and fairness, the policy helps foster a positive company culture.
Key Components of a Corporate Travel Policy
Travel Booking: This part of the policy explains how employees should book their business trips. It includes details on approved booking methods, like online systems or designated agencies. It may also mention specific guidelines for air travel, such as preferred airlines, class of travel, and when to book tickets.
Expense Guidelines: This section outlines how employees can submit their travel expenses for reimbursement. It includes the deadline for submitting expense reports, required documentation, and any special approval needed for certain expenses.
Transportation and Accommodation: It guides on choosing transportation and accommodation options. It may specify preferred modes of transport and types of accommodations based on cost and convenience.
Entertainment Policy Guidelines: This part explains the rules for entertainment expenses during travel, like meals with clients or team activities. It may set spending limits and require specific documentation for reimbursement.
Per Diem Allowances: It clarifies how employees can request advances or receive daily allowances for expenses. It outlines eligibility criteria, maximum limits, and the process for requesting advances.
Reimbursable and Non-Reimbursable Expenses: The policy specifies which expenses will be reimbursed and which will not. Reimbursable expenses usually include transportation, accommodation, and meals within set limits, while non-reimbursable expenses may include personal expenses or unapproved upgrades.
How to Create an Effective Travel Policy?
By following the steps below, you can create a comprehensive travel policy that meets the needs of your organization and helps streamline the travel process for employees.
1. Review your current policy or practices. Assess the effectiveness of your existing policy or travel procedures.
2. Set goals and priorities. Define two or three key objectives for updating the policy, such as improving efficiency or reducing costs.
3. Involve stakeholders. Include key stakeholders in the process, such as travel managers, office managers, and frequent travelers, to gather insights and ensure buy-in.
4. Choose a travel management style. Decide how travelers will book trips and the level of autonomy they will have.
5. Decide on the level of strictness. Determine how strict the policy will be regarding booking and expense reimbursement.
6. Decide what to include in your policy. Include an introduction, approved booking procedures, expense categories, non-reimbursable purchases, airfare and ground transportation guidelines, expense report submission process, and contact information for travel support and emergencies.
7. Write the policy document and ensure it is clear and concise. Obtain approval from all relevant stakeholders.
8. Set up an automated travel policy. Create an automated version of the policy to guide travel bookings based on your parameters, such as cost limits per flight or route.
Challenges of Managing Corporate Travel Policy
Common challenges faced in implementing and managing a corporate travel policy include:
- Ensuring that employees adhere to the policy can be challenging, especially if the guidelines are perceived as restrictive or cumbersome.
- Managing and controlling travel expenses to stay within budget can be difficult, particularly when dealing with fluctuating costs and unforeseen expenses.
- Enforcing the policy consistently across all employees and departments can be challenging, especially when dealing with exceptions or special circumstances.
- Integrating travel booking and expense management systems with the policy can be complex and may require training for employees to use effectively.
- Communicating the policy effectively to all employees and ensuring they understand the guidelines and procedures can be challenging, especially in large organizations.
- Keeping the policy up to date with changing regulations, travel trends, and company needs can be challenging and may require regular review and revision.
Corporate Travel Policy Best Practices
By following the best practices listed below, you can create a corporate travel policy that is not only comprehensive and compliant but also easy for employees to understand and follow.
Ensure Clarity and Conciseness
Use language that is easy for all employees to understand, avoiding jargon or technical terms. Divide the policy into sections for different topics such as booking procedures, expense reimbursement, and safety guidelines. Provide examples or case studies to illustrate how the policy applies in different situations.
Customize to Company Needs
Consider the specific needs and priorities of your company when drafting the policy. Take into account the types of travel your employees typically undertake (e.g., domestic vs. international, short vs. long trips). Align the policy with your company’s culture, values, and budget constraints.
Establish a Transparent Approval Process
Clearly outline the steps employees must take to obtain approval for business travel. Specify who has the authority to approve travel requests and any limits or conditions for approval. Provide guidance on the documentation required for approval, such as travel itineraries and budgets.
Define Clear Business Objectives
Explain how following the travel policy contributes to the overall goals and objectives of the organization. Emphasize the importance of cost control, compliance with regulations, and ensuring employee safety and well-being. Help employees understand the broader context of the policy beyond just following rules.
Clarify Expense Reimbursement Procedures
State which expenses are eligible for reimbursement and any limits or restrictions that apply. Provide guidance on how to submit expense reports, including required forms and deadlines. Clarify the process for approving and reimbursing expenses, including any documentation needed for verification.
Set Clear Communication Guidelines
Ensure the travel policy is easily accessible to all employees, such as on the company intranet or shared drive. Provide contact information for questions or clarification about the policy. Regularly update employees on any changes or updates to the policy through email or company-wide announcements.
Utilize an Automated Expense Management System
Implementing travel and expense management software can streamline the process of booking travel, submitting expense reports, and approving expenses. An automated system can help reduce errors, improve efficiency, and provide real-time visibility into travel expenses. Consider training employees on how to use the system to ensure maximum benefit and compliance with the policy.
A Way Forward
A well-crafted corporate travel policy is essential for any organization looking to streamline their travel processes, control costs, and ensure compliance. Utilizing an automated expense management system, such as Peakflo’s Travel and Expense Management solution, can further enhance the efficiency and effectiveness of a travel policy.
Peakflo simplifies and expedites the reimbursement process for employees by allowing them to capture receipts and submit expenses digitally through the app. It streamlines reimbursement cycles, minimizes delays, and enhances employee satisfaction. Additionally, Peakflo integrates seamlessly with popular accounting software, eliminating manual data entry and reconciliations. It also offers robust expense tracking and reporting features, allowing businesses to gain insights into spending patterns and enhance cost control. Additionally, customizable approval workflows ensure compliance with the corporate travel policy, reducing errors and enhancing policy adherence.
