Guide to business travel and expense management
Optimize your business trips, streamline your processes and make your organization more efficient with this comprehensive guide.
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.
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:
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 traveling for work.
Travel and expense management is the process of setting travel policies, as well as making sure that employees keep records while traveling and submit their travel expense reports properly upon returning from a trip. Robust travel and expense management is important to provide clarity for employees, find corporate travel savings and ensure accurate accounting.
In smaller businesses, these tasks may fall under your Legal Team, HR, or 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 making sure they understand and follow the travel policy, keep records of their expenses and submit claims in a timely manner.
The travel and expense management process often relies on the use of a T&E management solution.
Every company should have a travel and expense policy (T&E 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:
Travel and expense management is particularly important for companies as it addresses the typical pain points that come with business travel planning:
Business travel platforms are one-stop-shop software solutions that allow you to book the different legs of your trip. They help to streamline and manage the different aspects of business travel, including managing expenses.
Here are the main features and benefits that business travel platforms can offer:
Using such a solution can make both the business traveler and the finance or HR team’s life easier as some tasks are automated.
The optimal way to track business travel expenses and submit claims will vary depending on business travelers’ preferences and your corporate travel policy. Here are the four main steps of a travel and expense management process:
This process starts with an employee making a travel request, usually subject to the manager’s approval. The manager may approve, reject or ask clarifying questions. At this stage, if your company is using a T&E management solution with a built-in travel policy, any violations of the policy will be flagged.
Once the travel request has been approved, parts of the employee’s trip such as hotel and plane tickets can be booked in advance. Other expenses such as meals or transportation will occur during the trip. These can be paid for with a corporate card or the employee can be asked to pay for them out of pocket and be reimbursed later on.
Now is the time for business travelers to submit the receipts of all their expenses. To be successful, expense reporting should rely on:
Reimbursement is the final stage of the T&E management process. Depending on what your expense reimbursement policy says, employees can be reimbursed directly on their payslip or via bank transfer. Asking for feedback is also part of the process and it’s important to gather employees’ thoughts at the end of every trip to understand where you can improve your process.
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:
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:
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:
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.
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.
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.
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.
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