Travel Expense Policy Best Practices

Best practices for travel expense policy

The travel and expense policy outlines reimbursable business expenses incurred during business trips.Every company has its own travel and spending policy that is tailored to its specific requirements. All effective policies follow a few basic guidelines. As a business owner, you need to ensure that your travel policy is comprehensive and clear. Employees must familiarize themselves with the travel and expense policy before making business travels to ensure compliance with expenditure limits.

Failure to reimburse employees for travel expenses may result in a class action lawsuit by an employee against the employer. This writing by our California employer class action defense attorney on travel expense policy is informed by representing thousands of business owners; additionally, the best data comes from my first-hand conversations with business owners and their leadership team.

The best expense policies are dynamic, tying spending to revenue and customer information. This way, recommendations are tailored to the particulars of the organization. For instance, a last-minute business trip may cost more than permitted by a standard travel policy. Regular updates to the travel and expense policy aim to streamline processes and reflect changes in travel-related practices and financial regulations. Additional recommended practices include:

1. Be precise and uncomplicated

Keep the travel and cost policy as simple as possible. To make it simple to read and reference, write it in brief, plain language. Make sure that the rules regarding spending caps and daily allowance rates are obvious and justified.

2. Take staff needs into account

Ensure that your employees won’t have to pay for anything with their own money by swiftly reimbursing them for any expenses. Let’s say your policy requires staff to use specific suppliers, such as hotel chains. Make sure there’s a quick and simple process for them to request permission for substitutes in the event that the site isn’t available. Any deviations from the established travel and expense policy require pre-approval.

3. Link the policy for travel and spending to revenue

A traveling employee should have the authority to spend what is needed in order to increase the company’s revenue. Depending on the anticipated profit of the trip, it may be wise to create a budget. As an example, for travel and expenses, sales representatives may receive 12% of the total value of their sales opportunity. Since they are aware that the deal needs to make a profit, this will motivate them to be wise with the money they spend.

4. Simplify the procedure

Submitting expenses should not be a complicated procedure. As long as technology isn’t used in the form of tedious forms and intricate scanning, it is very helpful. Employees can submit their expenses while traveling by taking pictures of their receipts using their mobile devices. This is thanks to the newest digital travel and expense systems. Employees that submit line-by-line expenses avoid building up a backlog of costs that could affect the company’s cash flow. Inform employees that failure to comply to the travel and expense policy may result in delays in reimbursement or potential disciplinary action.

5. Make use of a unified system

An integrated travel and expense system can program the process of managing travel expenses. It does this by including reservations for travel and lodging made within the system into an expense claim. Employees and financial staff will save time as a result. This also improves accuracy and provides better commercial visibility of spending.