Why setting up a travel expense policy doesn't have to be hard
Published on January 11, 2018
The world is getting smaller every day. Thanks to lower flight fares and new, digital communication tools it’s never been this easy for businesses to expand their international efforts.
It might be limited to just a couple of meetings abroad per year, or it could be opening multiple offices on the other side of the world - the bottom line is that we’re flying much more than before.
Most young companies tend to be quite flexible with their travel allowances, and in lots of cases there’s no formal travel policy at all - it’s easy to think you don’t need it when you’re managing only a handful of people. The opposite is true, however - companies big and small can profit from having a clearly defined set of corporate travel rules.
First and foremost, it’s a great way to save money - for example by forcing everyone to only book tickets in economy. When you have a lot of people hitting the road, your company might even be eligible to negotiate discounted rates or custom plans with your preferred suppliers. It’s also an opportunity to streamline and automate the processes for booking and reimbursement, which isn’t just great news for traveling employees, but also makes life easier for the financial department.
Thanks to strictly defined rules and a formal process, dealing with large amounts of travel expenses will be much more manageable, while they’ll also be able to easily safeguard the company budget.
Even when your company is still at an early stage, it’s smart to think about this - setting up a solid process from the start avoids chaos later on, when you might be dealing with hundreds of traveling co-workers instead of just ten.
So how do you set up a stellar travel policy? We’ve split things up in two easy steps.
More travel management tips, tools and strategy:
1. Establishing and implementing a travel expense policy
First off, you’ll need to define the roles and obligations for both the employees as well as the enterprise.
It’s critical to make sure that your employees understand that if they want their travel to be reimbursed, they’ll need to abide by the expense policy. If they don’t accurately track their expenses by keeping invoices and receipts, they won’t be able to get their money back. The employer needs to take care as well, making sure that the policy is applied consistently throughout the company by following its own rules to the letter, naturally avoiding any kind of preferential treatment.
Then it’s time to write the actual policy, setting the parameters that outline if an employee can be reimbursed for something. You’ll to need to think about what kind of spending you want to allow and which companies you want to work with - especially if you’re looking to get loyalty discounts. It’s recommended to do proper research and carefully consider all options, as the best deal offers good value for money but should also be a great fit with your company needs.
These are some of the categories to consider for your policy:
Flights - Picking a preferred airline is important in order to optimise your loyalty discounts, but there are lots to choose from - do you go with economy seats on a low-cost carrier, business class with a top company or somewhere in between?
Stay - Do you want to give workers the luxury of a hotel or the charm of an AirBNB? The price difference can be big, but hotels often have better rewards programs for loyal customers.
Door-to-door transport - Is it alright for employees to freely use on-demand ride services like Uber, or do you want to limit them to public transport? This could also entail rental cars, bike sharing or other forms of transportation.
Other - There’s much more to account for including meals, entertainment and phone bills. Think about what kind of industry-specific spending you can expect from your employees, and include it in your policy.
There are some other things to think about - some companies like working with travel agencies, for example, which isn’t cheap but saves everyone a lot of hassle. Keep in mind that your policy should be made to evolve, as the preferences, financial flexibility or another aspect of your company might change due to growth or other factors. You should always plan ahead.
2. Applying and ensuring travel expense policy compliance
Depending on your company, it might make sense to make your travel policy very strict, or perhaps not so much - it all depends on its culture and financial flexibility. There’s something to say for being a bit strict, however, as a 2010 GBTA study found that “stricter policies could equate to nearly $30 billion in savings.”
This strictness doesn’t have to impede your team’s agility, however – you just need to make sure there are enough options that correspond to their needs, while anticipating possible changes in the future.
To make sure the policy is then properly implemented company-wide, follow these three principles:
You can’t make it too hard for your employees to follow the rules - if you keep changing them or make them too vague or flexible, it’s expected that they won’t always abide.
It’s crucial that everyone knows about the policy, and is able to easily understand the rules. Make sure that the distribution is done diligently, and make the documentation always accessible through a shared file system or company intranet.
To ensure that everyone complies with the policy, you’ll need to think of a way to penalise people who don’t follow the rules, while rewarding those who do. Alternatively, you could require that all spending to be pre-approved by a manager, which makes its easier to crack down on incorrect usage of the policy.
All in all, coming up with a travel expense policy and enforcing it can prove to be a real challenge. Using a real-time expense management platform like Spendesk makes things a lot easier - managers are able to approve purchases and monitor all spending, while the finance team gets a clear, detailed overview to work with.
It’s a modern, all-in-one package that you’ll love to use - why not take it for a spin today?