If your employees travel for business – regardless of your business size – you need to implement a travel expense policy.
Yes, even if you’re a two-person operation and you both only travel twice a year.
- Get your business expenses under control, spend less and fight fraud
- Reinforce your corporate culture and discipline
- Simplify and speed-up your reimbursement process
- Get organized!
Here’s what a travel expense policy should cover:
1. Expense categories allowed for reimbursement. The most important groups include accommodation, travel (airlines, ground transportation, employee-owned vehicles) and meals. You might also want to include a communication group for phone and internet payments. Chances are there will be expenses that aren’t covered by any of these categories, so be flexible and add a “Miscellaneous” category to your policy. To gain more control, set per-day or per-trip spending limits for each category.
2. Proof of payment. Determine if you want to see receipts for all expenses or just for the ones that exceed a certain amount.
3. Timing. Give your employees a time frame for submitting expense reports. Encourage your business travellers to submit reports as soon as possible to speed-up the process. If you want the most accurate information, ask them to create an expense report the same day they incur the expense (especially important for foreign currency expenses). Also, be nice and clearly lay-out the reimbursement period so they know when to expect their money back.
4. Information required in the expense report. It’s a good idea to at least require the expense date, amount, category, place and business purpose (a project, trade show or customer).
5. Approval process. Show your employees who will approve their expenses in each case. The process might be as simple as forwarding the report to an accountant for approval then payment. It can also be a bit more complicated, based on the amount spent, project or category, or any other parameter.
For a more sophisticated process, consider this:
- Set up an employee hierarchy with permission levels so they can have different amounts to spend and approval processes depending on their positions.
- Consider using corporate credit cards or prepaid cards for your travellers. Outline if you want your employee to use the cards for all business-related expenses or just for specific ones.
- Choose preferred providers and put down their names in the policy. You might have special relations with a hotel chain or an airline, so you can encourage your travellers to use these providers and to help keep your budget in shape.
While crafting your travel expense policy, keep in mind it should not only help you control corporate spending, but also your help your employees comply with policy easily – and increase productivity. That’s why, above all, make it simple to administer and easy to use.