Are you an employer looking to create a travel and expense policy? Or an employee who wants to stay compliant with their company’s travel and expense policy? Either way, it’s important to know what a travel and expense policy is and how it works.
A travel and expense policy is a set of guidelines that an organization uses to reimburse employees for business-related travel and expenses. The policy should clearly state what expenses are eligible for reimbursement and how employees should go about submitting their expenses.
An effective travel and expense policy can help an organization save money and keep employees compliant with company guidelines. If you’re an employer, use this guide to create a travel and expense policy that meets your business needs.
Important components of Travel nd Expense Policy
You should evaluate your current business travel expenses before drafting your policy. Software for tracking expenses and receipts can make this process much simpler. Take into account the following factors in your analysis.
- Ticket Expense
Everything pertaining to purchasing tickets, whether for a train or an airplane, must be included in this category. You could list the permitted classes of air travel, permitted travel regions, permitted ticket prices, and other relevant information.
It must also be stated if employees are unable to reserve tickets in first or business class. If you employ a travel agent, their information must be made public.
- Cab Expense
The cab expense category must have everything related to the usage of cab services. Setting up guidelines for tracking mileage, location, traveled distance, etc. would be beneficial.
- Accommodation Charges
Your staff may be told to stay in a particular hotel chain or those with a specific number of stars depending on the terms of your agreements with vendors. Additionally, be sure to provide the highest rate for lodging and daily allowance for each level of employee in your company.
- Daily Advance
Your company must explicitly disclose any cash advances, per diems, or travel advances it makes to its employees, along with any conditions. For instance, you may insist on business meal caps and the submission of authentic receipts.
- Company Credit Cards
Employees sometimes charge personal credit cards to work-related costs so they may subsequently claim them. However, businesses now frequently give workers (particularly frequent travelers) corporate credit cards to use for work-related purchases.
Your policies must explicitly declare that workers are not permitted to use these corporate credit cards for both personal and business purposes.
- Other expenses like Insurance and Medical
Along with information on the insurance business you may partner with, you must explain any medical and insurance coverage you may wish to offer to the employees.
Benefits of Travel and Expense Policy for businesses
Most businesses require their employees to travel for work, whether it’s for meetings, conferences, or client visits. While business travel can be beneficial for both the company and the employee, it can also be costly. A travel and expense policy can help control these costs and ensure that employees are only spending money on necessary expenses.
There are several benefits of having a travel and expense policy in place for businesses. First, it can help control costs. By setting limits on how much employees can spend on certain expenses, businesses can save money. For example, if employees are only allowed to spend $50 per day on meals, the company will save money on travel expenses.
Second, a travel and expense policy can help ensure that employees are only spending money on necessary expenses. By requiring employees to submit receipts for all expenses, businesses can ensure that employees are not making personal purchases with company money.
Third, a travel and expense policy can help streamline the reimbursement process. By having a clear policy in place, businesses can avoid confusion and delays in reimbursement.
A travel and expense policy can be beneficial for businesses in a number of ways. By controlling costs and ensuring that employees are only spending money on necessary expenses, businesses can save money and run more efficiently.