Comprehensive Guide on How To Build An Effective Corporate Travel Policy

  • Comprehensive Guide on How To Build An Effective Corporate Travel Policy

    Comprehensive Guide on How To Build An Effective Corporate Travel Policy

    Every company with employees who travel wants to save money on expenses. Some companies, however, have taken trying to save money in an unwise direction. You’ll find companies that make employees share hotel rooms while traveling to try and cut back on expenses. Others make the expense claims process so complicated that employees end up paying for their own travel expenses.

    Approaches such as these might save money in the short-term, but they’re not a good long-term way of cutting costs. For one thing, it results in a complicated mess of paperwork related to unresolved travel and expense claims. An even more pressing problem, however, is employee dissatisfaction.

    When employees feel like they’re being used and cheated by your T&E practices, they become dissatisfied with your company. Performance ratings often drop and they may start looking for a new job. Employees who do leave result in increased expenses for your company to train replacements, which cancels-out any money you saved by not reimbursing expenses.

    Having an effective corporate travel policy is the key to keeping employees happy and keeping T&E spending under control. Providing guidelines and setting expectations lets your company control travel costs by setting spending limits, selecting preferred vendors, standardizing booking and reimbursement, and outlining guides for what expenses you will and will not reimburse.

    If you don’t have a corporate travel policy yet, or if your policy is ready for a review, keep reading. In this article, you’ll learn more about how to build an effective corporate travel policy that works for your company instead of against it.


    Assess Your Current T&E Practices

    Whether or not you have a travel and expenses policy already in place, you need to start out by taking a good look at your current T&E practices. Ask and answer these questions:

    • How often do your employees travel and for what purpose?
    • What problems do you have tracking T&E expenses?
    • Do employees comply with current policies, if you have any?
    • What problems/complaints do employees have with making travel arrangements?
    • What problems/complaints do employees have related to travel and expense reporting and reimbursement?
    • Which changes do you want to see in expense management?

    As you answer these questions, you’ll be gathering data related to how travel and expenses currently work in your company. With this information, you can start to identify trends and figure out which practices work and which ones don’t. That’ll give you a guide for what sort of issues you need to address when crafting your travel policy.

    Define Your T&E Goals

    Research into your current practices will help you answer this next question: What are your goals for business travel and for the new policies you’re writing? Your goals might include things like:

    • Keep costs down.
    • Ensure employees’ comfort and safety.
    • Set clear expectations for employees.
    • Address issues in current travel policy.

    Goals like this are pretty standard for most company travel policies. How you meet these goals, however, will be unique to your own company’s needs. Your goals are also going to be shaped by how your assessment of current travel policy went.

    Provide Clear Booking Procedures

    For employees, travel planning tends to start with booking flights and hotels. You’ll want to have clear guidelines regarding hotels and airlines laid out in your new travel policy.

    Most people like to have options, so it’s a good idea to allow a certain amount of flexibility when making your booking policy. But you’ll also need guidelines to keep costs in manageable. One option is to give your employees several hotels and airlines they can choose from, but cap the hotel star rating or class of airline ticket.

    You’ll also want to include preferred vendors that employees should book through in your travel policy. Another thing you’ll want to include is your company’s advance booking requirement (many companies require employees to book hotels and flights at least two weeks in advance). You’ll also want to specify a payment process, and when employees should use a company card versus a personal card.

    Your booking procedures will also be affected by whether your company wants to manage travel arrangements externally or internally. One solution is to set up an online platform that will automatically enforce your booking policies when employees make travel arrangements.

    Detail Expenses That Are Eligible For Reimbursement

    Your travel policy should provide clear guidelines on which categories of expenses are eligible for reimbursement. For certain categories, you’ll also want to set a budget for how much your company will cover. That way employees can know exactly what parts of their travel expenses will be covered by the company and what they’re responsible for themselves. This part of the policy should address the following categories, as well as anything else that your company’s unique situation calls for.

    • Airfare (what class of service employees can book, whether employees or the company retains frequent flier discounts, who’s responsible for extra baggage and cancellation fees, etc.)
    • Lodging (define room types that employees can book, determine if the company will pay for additional charges such as WiFi or minibar, etc.)
    • Ground transportation (type of car rental allowed and whether or not to purchase insurance, whether or not ride-hailing apps are allowed, etc.)
    • Meals (requirement to stay within a certain trip allowance, company statement regarding alcohol reimbursement, etc.)
    • Client entertainment expenses (spending limits or ranges, whether or not you’ll cover tips over 20%, etc.)

    Describe Which Expenses Are Not Covered

    It’s very important that your travel policy clearly states what expenses are covered and which ones are not. Unclear policies make it easy for employees to misuse the expense reporting process. It’s not uncommon for employees to charge extra drinks, in-room movies, or another day at the hotel to their expense reports. These little charges don’t seem like fraud if they aren’t clearly against company policy. Examples of expenses most companies do not cover include:

    • Childcare.
    • Dry-cleaning.
    • In-room movies.
    • Airline change fees.
    • Parking tickets.
    • Airline preferred seat upgrades.
    • Extra nights in a hotel room before or after the trip.
    • Hotel staff tips.
    • Toiletries or clothing purchased during the trip.
    • Pet boarding.

    This part of the travel policy should be very clear and precise so there’s no room left for doubt. However, you don’t want it to be so strict that it won’t allow employees to combine a little pleasure with business. As millennials become a larger part of the workforce, more and more employees want to take a little extra time when they’re traveling to see the sights and enjoy themselves. You’ll want a policy that allows for that while also making it very clear which expenses are your company’s responsibly and which expenses are the employees’ responsibility.

    Clarify Gray Areas

    You’ll also want to address issues not directly related to expenses which can come up during company travel. This includes

    • Company policy regarding the purchase and acceptance of gifts or favors.
    • Safety and security procedures.
    • What medical coverage and assistance employees can expect in case of sickness or an accident.
    • What to do in case of an emergency.
    • Policies for when an employee extends the trip for leisure.
    • What happens if an employee misses a flight through his/her own fault.

    Summarize The Reporting and Reimbursement Process

    Once you’ve defined your booking procedures and outlined which expenses are and are not covered, you need to let employees know how they should report expenses for reimbursement. This section is where you’ll answer questions like

    • What documentation does the company need to reimburse employees?
    • What’s the minimum amount that requires a receipt?
    • Do employees need to hand over paper copies of every receipt when they return, or can they upload receipts via an app or online platform?
    • How long do employees have to submit expense reports after the trip?
    • What happens when employees don’t comply with company policy?
    • Are there any expense categories that require pre-approval?
    • How soon will the employee be reimbursed after submission?
    • Who approves trip requests or expense reports?

    The easiest way to handle the reporting and reimbursement process is by automating it. With NextProcess’ Travel & Expense automation software it’s extremely easy for employees to upload receipts and submit expense reports. They can also track their submissions through the entire reimbursement process.

    Introduce The New Policy To Employees

    The last step in building an effective corporate travel policy is to introduce it to your employees. You can choose to deliver the policy as a printed document, via intranet, or in an email. Just make sure that the policy is written in a way that’s easy to understand and that it is readily accessible for all employees.

    When you’re updating your T&E policy, it’s also a good time to automate the entire expense reporting system. Automation makes it easier for employees submitting expense reports and for employees managing reimbursements. Plus, you get to customize the system so it automatically applies your company’s new travel policy. Contact us today to schedule a free demo and see exactly how NextProcess can help your company save time and money in expense reporting.