Expense management

Guide to travel expense reimbursement

Apr 05, 2024

If you have a lot of needs for business travel, then you know that there are many processes involved in ensuring that expenses during travel are made appropriately. One way to make business travel expenses is by relying on your employees’ personal funds.

Their out-of-pocket spending will be reimbursed after the trip. The travel reimbursement process involves the employee filing a claim before a manager reviews it and forwards it to the finance team to settle.

What is travel expense reimbursement process?

One way to manage travel expenses is by having employees make expenses out of their own pockets, file reimbursement claims, and get reimbursed at a later date.

The travel reimbursement process encompasses everything from budgeting for travel expenses to reconciling reimbursements. Most organizations will have their own version of the process, with different guidelines and policies in place.

Traditionally, however, travel expenses reimbursement is processed manually or semi-automatically, which can be tedious without the help of automation.

What are the different types of travel expenses that need to be reimbursed?

1. Transportation expenses

Anything that involves transporting your employees from one place to another will fall under this category. This can be bigger, pre-booked transportation expenses such as plane tickets or spontaneous expenses during the trip.

Train tickets, bus fares, cabs, and even ride shares are all considered transportation in the travel expenses reimbursement process.

2. Accommodation expenses

Most business trips that your employees go on probably span across a duration of multiple days, meaning that they’ll need a place to stay.

Any form of accommodation such as hotels, resorts, hostels, and even Airbnb that your employees pay out of pocket can be applicable for travel reimbursement.

3. Entertainment and meal expenses

Often trips are made for an important client meeting out of town. Specifically for trips with that purpose, your employees will need to make expenses for client entertainment, including business lunches or dinners.

You may also give your employees a budget allocation for their own meals during travel to be reimbursed.

4. Business-related expenses

If your employees are traveling for a conference or business event, tickets or registration fees will fall under business-related expenses.

Other sorts of expenses in this category include any purchases for business supplies during travel, shipping, and mailing costs, computer rental fees, and many more.

5. Miscellaneous expenses

While the four expense categories listed above should cover most of your travel purchases, there may be miscellaneous expenses that don’t fit into any of the categories.

Whether or not expenses that don’t fit into the four categories are reimbursable or not is up to your company policy, so make sure your employees are aware of the rules.

Do you know business travel has been rapidly increased irrespective of the sectors all over the world? Here is our quick outline on business travel trends and forecasts in 2023. Read this to know more.

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Different stages in travel expense reimbursement process


Pre-travel planning

Before a business trip, it’s important to do some planning to ensure that your travel expense management goes smoothly.

You want to identify the purpose of every trip you or your employees go on, which will help you determine what expenses are necessary. After the travel request has been approved, create a budget for the trip accordingly.


Expense tracking

Make sure every reimbursable expense made concerning or during the course of the trip is tracked appropriately.

Traditionally, you can do this by collecting and retaining every receipt from your trip. Alternatively, you can also make travel reimbursement easier by utilizing digital tools to store and track all your expense data.


Creating expense report

Depending on your travel reimbursement policy, your employees will likely have to do more than just hand over a pile of receipts to their managers.

Some OCR tools will be able to help employees record details just by taking a photo of or scanning the receipt. Employees should verify all necessary information before submission.


Submitting expense report

After the creation of an expense report, your employees will then have to submit the report so that their travel expenses reimbursement can be processed.

If you choose to use tools to help streamline the entire process, make sure that employees are given proper training on how to use the systems to submit their expense reports.


Review and approval

After the expense report submission, the next step is to get the expenses reviewed and approved so the travel reimbursement process can start.

While this can be done manually by submitting paper documents to managers, you can streamline the approval workflow using digital tools to keep all reports and approval requests in one place.


Reimbursement processing

After expense reports and reimbursement claims are reviewed and approved, your finance team will be able to start processing the travel expenses reimbursement.

The HR department might also be involved in this process. If you send reimbursements straight to employee bank accounts, be sure that you know the details to send the reimbursable amount.


Check status and updates

While it’s possible to settle travel reimbursement claims immediately or within a few days, many companies will have schedules on when to process claims and only settle them a few weeks later.

Either way, you want to communicate with your employees what the status of the claims are, either manually or via a digital tool.


Reconciliation and reporting

Once reimbursement claims are settled, your finance and accounting teams will have to reconcile the reimbursed amounts with your company’s financial records.

Make sure that the amount paid back to your employees matches what your records say. Using accounting or expense management software can make this step easier.

Common challenges associated with travel reimbursement process

1. Lack of awareness of reimbursement policy

It’s important that you ensure everyone in your company is aware of your travel reimbursement policy. However, it could get difficult to maintain that level of awareness when you have a large team, especially if you’re constantly adjusting and adapting your policies.

Make sure you have standardized procedures on how to communicate your policies to everyone.

2. Inadequate documentation

Sometimes employees simply might not have the required documentation to get their expenses reimbursed. Whether that’s because they don’t have access to the purchase receipt or there is other information required that is not on the receipt, this could create problems.

Make sure that employees know exactly what is needed from them.

3. Manual and time-consuming process

The traditional travel reimbursement process that relies on manual admin work can be tedious and time-consuming. Manual processes often require a particular piece of document to cross many desks, putting it at risk of getting lost or forgotten.

When data entry is done manually, you’re also bound to run into more errors.

4. Lack of record-keeping

It can be hard to keep track of all your expenses and receipts when you’re on a business trip. There’s a likelihood that receipts could get lost or thrown away by accident.

With no concrete records of your expenses, it will be difficult to process travel reimbursement or budget for future trips.

5. Delayed expense report submission

With traditional manual processes, creating and submitting expense reports can be time-consuming. Employees will likely only get to the expense report process after they get home from the trip.

When there are many expenses to report, it could take a while before your finance team receives all the appropriate reports.

Also read- 5 best expense management software in Australia

6. Non-compliance with travel expense policy

While having a clear travel expense policy encourages your employees to comply with it and spend appropriately, you might run into instances of non-compliance. In this case, you want to be clear about what the consequences of out-of-policy expenses are.

It’s also important that you monitor travel expenses to nip problems in the bud.

7. Complex approval workflows

There are many ways that you can approach approval workflows for travel expenses reimbursement. Regardless of whether you have one or multiple levels of approvers, you want to make sure that it’s easy for employees to be able to submit claims for approval.

Otherwise, the reimbursement process can unnecessarily take up too much time.

8. Lack of communication and transparency

Ensuring that there is clear communication between employees and upper management goes both ways. On one hand, you want your employees to be transparent about their travel expenses so that the reimbursement process can go smoothly.

However, any status updates from managers also need to be communicated effectively to employees.

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Benefits of having a streamlined travel reimbursement process


As a whole, having a streamlined travel reimbursement process along with the additional help of an automation platform will save you a lot of time.

Starting from receipt collecting to settling reimbursements, you can achieve the whole reimbursement cycle in half the time it normally would have taken traditionally.

Faster reimbursement

Employees can get disgruntled when it takes months after the claim submission before they receive their travel expenses reimbursement. Streamlining your processes can help you avoid this.

The goal is for your turnaround time to be as fast as possible. It also helps your finance team when you don’t have reimbursements pending.

Improved efficiency

When your team is going through the reimbursement process faster, this means that they will have more time to perform other tasks. No one needs to waste time being confused or be bogged down by tedious manual processes.

Ultimately, streamlining travel expenses reimbursement will also increase your team’s productivity and efficiency.

Accurate financial tracking

Using a travel reimbursement platform will help you keep all your travel expense reports in one place. This way, you can get full visibility of how money was spent on each trip without having to search through numerous file cabinets.

Employees can also upload receipt photos immediately after an expense is made.

Cost control and better spend visibility

Streamlining your travel reimbursement process also means you have a standardized budgeting procedure to ensure that employees are spending within the budget.

By reporting their expenses in real-time, you can also track how much money has been spent at all times. No more surprise amounts at the end of each trip!

Reduced incidents of expense fraud

An automated travel reimbursement management platform can help you track expenses and reports better. With OCR, you can request your employees to upload receipts as soon as they receive them.

This way, it’s difficult to fake expenses and commit fraud. Some systems will also be able to flag suspicious reports and claims to avoid fraud incidents.

Improved employee satisfaction

Using digital tools to streamline your travel reimbursement processes will make the entire ordeal easier and more pleasant for your employees. Their reimbursement claims will be settled faster, boosting employee morale.

Employees also won’t have to stress about the expense report process, lessening their workload and allowing them to free up their time.

Better adherence to policy guidelines

With increased visibility and better control over your expenses through the use of digital automation tools, you’ll find that you will have an easier time monitoring employee expenses and reimbursement claims.

This helps you in enforcing your travel reimbursement policy and ensures that every employee is adhering to the policy guidelines.

Best practices to streamline your travel reimbursement process

For employees

1. Plan ahead

Before employees go on business trips, it’s important that they understand the company’s travel reimbursement policy. This way, you can plan and budget for the trip accordingly. It’s also advised that you have a general idea of what expenses will be incurred.

2. Submit reimbursement requests promptly

One of the reasons why the reimbursement process can take a long time is that there are delays in submitting reports and claims. To ensure this doesn’t happen, you want to enforce a submission deadline for reimbursement requests that employees must meet.

3. Adhere to policy guidelines

To allow reimbursement requests to get processed faster, make sure that your employees know that they must adhere to policy guidelines. In turn, they will be able to get reimbursed for out-of-pocket travel expenses much sooner and not have to worry about it.

4. Seek clarification if needed

Even with the most comprehensive travel expenses reimbursement policy, it’s still possible to need clarity on certain matters. To achieve a streamlined process, employees are encouraged to seek clarification so that they can move the process along and not cause delays.

For employers

1. Automate travel reimbursement process

There are a lot of traditional manual processes involved in travel expenses reimbursement that ultimately cost you time and money. By automating your travel reimbursement processes, you can lessen the time taken to do manual work like data entry and avoid errors.

2. Simplify approval workflow

One of the things that often holds back the reimbursement process is the approval workflow you have in place. Instead of having each reimbursement claim cross many desks to get reviewed and processed, develop a workflow that allows every approver to quickly approve or reject claims.

3. Establish clear travel expense policies

Without a travel expense policy, it’ll be difficult to develop any standardized process. You want to be sure that you have a clear and comprehensive travel expense and reimbursement policy before your employees go on business trips so everyone is on the same page.

4. Implement real-time policy checks

Don’t get lazy with monitoring whether or not your employees are complying with your policies. Take advantage of an automation tool to flag any claims that seem suspicious and could potentially be out of policy. You want to do this regularly to maintain compliance.

5. Provide training and support to employees

When employees aren’t sure what is expected of them, you’re bound to run into many errors and back-and-forths throughout the process. Make sure that you are providing your employees with the appropriate training on your policies and let them know who to get in touch with.

6. Regularly review and improve

The policy you have might not be as suitable in the future as it is now. As an organization, you must be open to adapting and adjusting your travel reimbursement process. Consider feedback from your employees and regularly review your processes to make improvements.

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What is travel reimbursement software?

To make the travel expenses reimbursement process smoother and more efficient for your business, you’ll want to consider switching from manual processes to automated ones.

To do this, you’ll need the help of the best travel and expense management software, which will have features that can eliminate manual data entry and speed up approval workflows.

Using one will allow you to access your travel expense data easily from anywhere and make expense reporting much faster for your employees.

Essential features to consider when selecting a reimbursement software

User-friendly interface

The goal of using an automated reimbursement platform is to streamline your workflows and cut back on the time needed to process travel reimbursements.

To achieve this, you’ll want a software interface that is easy to use, especially if you intend to have many employees use the software. Employees are more likely to utilize platforms that are simple.

Mobile accessibility

Having a mobile app with your travel expenses reimbursement software enables your employees to easily create and submit expense reports and reimbursement claims on the go.

Conversely, managers and approvers will also be able to review and approve reports at any time from anywhere to hasten the process.

Receipt capture and management

Instead of having to keep file cabinets filled with receipts, you want to be able to easily store and view your travel receipts.

Look for travel reimbursement software that will allow you to take pictures of your receipts and store them in the cloud. They should be accessible via a dashboard with filters for easy sorting.

Policy compliance and validation

There are travel expenses reimbursement software that will automatically mark suspicious expense reports. Having this feature will make it easier for you to spot any out-of-policy expenses without having to spend too much time poring over every single expense.

By turning on notifications, you can be immediately alerted of any non-policy-compliance expenses and resolve them quickly.

Expense categorization

Considering that there are multiple travel expense reimbursement categories, it would be helpful if your software of choice can help you categorize your expenses.

This way, it’ll be easier to track spending and see if all expenses made in each category are still within the allocated budget or not.

Approval workflows

You don’t want to still need to go through tedious and complicated approval workflows.

Instead of passing around a piece of document across multiple desks, get a travel expenses reimbursement platform that allows you to streamline the whole approval workflow. If you have multi-level approvals, make sure you also get that feature.

Security and data privacy

When you use software to help automate and manage your reimbursements, you’ll be trusting them with your data.

Taking security and data privacy into consideration is a must before you pick which software you use. Make sure that your software provider is reputable, takes security seriously, and has industry-standard certifications.

OCR technology

While it’s possible to keep physical receipts or snap pictures of them for safekeeping, the ideal feature that you want to get for your travel reimbursement software is OCR technology.

With this, employees will be able to automatically capture receipt data just by taking a photo, making expense reporting easier.

Volopay - All-in-one expense management solution

It’s no surprise that there are many aspects that you have to consider when it comes to travel reimbursement.

Instead of having to haphazardly take care of many different processes on various platforms, however, you can use Volopay as your all-in-one expense management solution.

Budget for your business trips, create expense reports and settle reimbursements all through the Volopay platform. Save time and money by using the features available to you.

With corporate physical and virtual card offerings, you can also manage your travel and entertainment expenses better without having to rely solely on travel expenses reimbursement.

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Does travel reimbursement count as income?

No. Any travel reimbursement does not need to be reported as income. In fact, reimbursements are considered business expenses as you are paying your employee back for using their own money on the company.

Is GST applicable on reimbursement of travel expenses?

While GST may be applicable on travel purchases, employees should be able to reclaim GST when they get reimbursed. For foreign travel, employees can reclaim GST during the transaction or at the airport through tax refund to save costs. For domestic travel, however, companies generally should reimburse GST on legitimate business expenses.

How to ask for reimbursement of travel expenses?

This depends on what your company’s travel reimbursement policies are. Generally, you’ll want employees to have a clear idea of what expenses are reimbursable before they go on their business trips. The most efficient way for employees to request reimbursements is to submit expense reports and reimbursement claims.

Is travel reimbursement taxable income?

It depends. Employers can be subjected to fringe benefits tax (FBT). Regardless, reimbursements should be recorded and kept separate from salary and wages to ensure that all taxes are done correctly, allowing travel reimbursements to be entirely separate from employee salaries.