Guide to business travel and expense management

A productive business trip can give your company new insights, stronger relationships and more. But while the benefits may be priceless, every corporate trip comes with expenses. Luckily, with some planning, organization and clear communication, you can optimize your business’s travel expense process to save time and money.

What’s included in this guide?

1. What are business travel expenses?
2. What is travel and expense management?
3. How to manage the travel and expense process
4. How to track business travel expenses
5. How to set expense limits
6. How to reduce business travel expenses
7. Best practices for business travel expense management

What are business travel expenses?

Business travel expenses include most costs incurred during a business trip – specifically, costs of products and services that are necessary to achieve the goals of the trip. As a loose rule, business travelers can usually claim expenses that relate to their basic needs or enable them to do their job while abroad. These subsistence expenses can have tax implications, so it’s vital that everyone at your organization understands what qualifies.

Most common business travel expenses are:

• Airfare
• Accommodation
• Food
• Car rentals
• Fuel for rental cars or personal vehicles
• Mileage allowance when a personal vehicle is used for a business trip
• Parking fees and road tolls
• Public transportation
• Costs associated with entertaining clients, prospects and partners
• Other miscellaneous business costs – anything from printing materials for a tradeshow booth, props for a photoshoot or renting tech for a presentation

While there’s a wide scope of expenses eligible for reimbursement, there are also limits. Business travel expenses generally do not cover things like commuting to a local office, clothing for trips or personal entertainment costs while travelling for work.

What is travel and expense management?

Travel and expense management is the process of setting travel policies, as well as ensuring that employees keep records while travelling and submit reports properly upon returning from a trip. Robust travel and expense management is important to provide clarity for employees, find corporate travel savings and to ensure accurate accounting.

In smaller businesses, these tasks may fall under your Legal Team, HR, office managers or be outsourced to a travel management company. At larger companies, there may be a dedicated corporate travel manager who is responsible for overseeing travel planning, establishing and enforcing travel policies and managing budgets and expenses.

No matter the size of your company, business travelers themselves also have an important role to play. They’re responsible for ensuring they understand and follow the travel policy, keep records of their expenses and submit claims in a timely manner.

How to manage the travel and expense process

Every company should have a travel and expense policy that includes expense management so that employees understand how to submit expense claims, which expenses are appropriate and what to expect from the reimbursement process.

There are several ways to manage corporate travel and expenses, each with their own benefits and challenges:

1. Business travelers book and pay for everything themselves and are reimbursed later.

• Benefits: travelers have the ultimate flexibility to make their own decisions and changes on the go. This approach also requires less investment or infrastructure to set up the process.
• Challenges: travelers must wait for reimbursement – which can lead to difficult situations depending on individuals’ financial situation. There’s also a bigger administrative burden on business travelers to track all their own expenses and records.

2. Business travelers book and pay for everything using a corporate travel card

• Benefits: it’s simple and clean to have all expenses on one card and prevents the temporary financial burden of employees paying out of their own pocket. By choosing the right corporate credit card, you can also take advantage of rewards.
• Challenges: businesses need to have a lot of trust in their employees to ensure they’re using their corporate cards appropriately. If several people are sharing a physical corporate card, it can be difficult to separate expenses and prepare claims. Additionally, a physical credit card could be lost or stolen.

3. Business travelers, travel managers or administrative support book and pay via a business travel platform

• Benefits: provides flexibility both in terms of who can book travel and the options available. The right platform can also help enforce your travel policy and provide transparency about travel booking across the organization.
• Challenges: travel management platforms are usually used for booking flights, accommodation and possibly transportation, so you’ll still need to use corporate cards or reimburse business travelers for costs accrued during their trip.

How to track business travel expenses

The optimal way to track business travel expenses and submit claims will vary depending on business travelers' preferences and your corporate travel policy. To be successful, your expense tracking process should include:

1. Expense management tool

The best way to streamline your processes is to use a spend management app. There are lots of options available depending on the size of your team, but look for one that offers features like receipt scanning, mileage tracking and approval workflows.

2. Organized records

This is the most important aspect of tracking business travel expenses. Be sure that every expense has been categorized based on its type so that you can file taxes correctly and have insight into where you’re spending the most money.

3. Clear processes

Whatever method you choose, your travel policy should set clear expectations of how business travelers should track expenses, what needs to be submitted and timelines for when expense reports need to be submitted.

How to set expense limits

In general, business travelers and corporate travel managers share the same goal: to maximize trip productivity while minimizing business travel spend.

The key to setting expense limits is to balance restrictions with freedom. Everyone has different routines, diets, needs and preferences. For some people, having a gym in the hotel could be a valuable amenity, whereas others may prioritize being in a specific location. Some people may need a big breakfast, while others prefer several small meals throughout the day. Keeping things flexible empowers business travelers to make choices that improve their productivity while on the road – which is a win-win for all.

To achieve the right balance, here are some suggestions for setting policies in key expense categories:

• Food: set a daily food allowance but allow business travelers to decide how they want to split the allowance between breakfast, lunch, dinner and snacks.
• Accommodation: set parameters around room type, hotel star rating and/or maximum price per night, but allow employees to pick their own hotel within those guidelines.
• Transportation: provide clear advice about how to choose cost-effective transportation methods, but keep in mind the time lost to travel. For example, it may be worth paying a bit of extra money for a direct flight rather than losing a whole work day to multiple layovers.

How to reduce business travel expenses

There’s no shortage of tips and tricks to keep business travel spend low – here are a few ways to get started with reducing business expenses:

1. Plan ahead. Avoid last-minute markups and take a moment to look ahead. If your company has a conference that it always attends or a client relationship that requires regular face-to-face contact, then booking flights and accommodations in advance can help you get deals.
2. Keep your bookings flexible. Sometimes it's worth paying a bit more for flexibility. Things can change fast, so you may save money in the long run by booking flights and accommodation that you can move around without paying fees. You can even seek out cancellable, refundable bookings for the ultimate flexibility.
3. Look for accommodation amenities. When choosing a hotel or other accommodation, be sure to check out the amenities it offers. For business trips, free WiFi is essential. Other amenities that can save you some money are free breakfasts, access to meeting or conference rooms and free parking.
4. Take advantage of credit card perks. Some business credit cards have lower fees for currency exchanges, cash back incentives or offer deals on rental cars, flights, insurance, and airport lounges.
5. Use loyalty programs. Sometimes sticking with one hotel chain or airline can pay off in the long run. Look out for special business rates, memberships and loyalty programs that can cut down costs for multiple bookings.

Best practices for business travel expense management

The best corporate travel expense management strategy is one that’s tailored to you, your organization and your team. Engage your employees in regular reflection and feedback to create an expense management process that works for your unique business.

Here are a few best practices that apply for all organizations:

1. Use technology to keep organized

There are plenty of travel and expense software options to streamline the process of submitting claims and staying organized. You can also ask business travelers to take photos of receipts and invoices immediately and upload them to shared folders on the go – it’ll prevent lost receipts and save time when creating expense claims later.

2. Set deadlines

It’s easy to let administrative duties pile up – especially after coming home from a busy business trip. Make sure your employees have clear deadlines for when they must submit their expense reports for reimbursement.

3. Adjust your budgets to the situation

Even within the same country, costs can be drastically different. Set realistic business travel budgets and consider tailoring your expense limits to the location. You should also review your travel policy at least once per year to ensure your budget is keeping with inflation and local fluctuations for frequent travel destinations.

4. Communicate your travel policy well

Try to make your travel policy easily understood by everyone at your organization. When creating your policy, keep the language simple and make sure there’s no ambiguity about what expenses can be claimed. After your policy is created, you should also have a plan to communicate it to the organization and give people regular reminders to keep the information fresh.

Administrative tasks like travel and expense management can often feel lower priority when things get busy. But a little bit of planning, organization and communication goes a long way. A clear strategy does more than just driving administrative and financial efficiency, it reduces confusion and anxiety so that your team can focus on what matters: achieving the goals of their business trip.