Corporate travel policy - Benefits, must-haves and best practices
Travel is an important part of the daily operations of most businesses. Business travel is especially important for organizations that frequently work with international teams and clientele.
According to a report made by the New York Journal, business organizations spend approximately 10% of their revenue on expenses that are related to corporate travel. Given how significantly large this percentage can be it is important that business owners carefully manage their spending on business travel.
This is where corporate travel policy comes into effect. Businesses design policy guidelines to ensure spending during corporate travel is always authorized and kept under control.
A corporate travel policy, also commonly known as a business travel policy, is essentially a formalized document that is created by businesses to guide and inform employees about spending when they are traveling for business purposes.
The corporate travel policy document of a company typically stipulates the guidelines, rules, and process of reimbursement for any spending done by employees during business travel.
This document highlights important information such as spending limits, reimbursable expenses, preferred vendors, expense reporting steps, per diem allowances, transportation allowances, accommodation allowances, and incidental or miscellaneous expense guidelines.
The factors that govern and minute details of these policies may differ from company to company. However, the main goal behind having such a formal document in place is to outline the dos and don’ts of corporate travel spending.
They are also created to highlight the procedures for obtaining reimbursements for any out-of-pocket expenses and what to do in case of incidental or miscellaneous expenses.
Having a document that governs business travel policy and procedure in effect benefits both employees as well as their employers.
Some of the benefits of having such a policy document in place include:
With the help of a well-constructed business travel policy, you can ensure complete safety and well-being for all your employees when they travel.
For example, you can choose the air carrier with the highest safety rating as your company’s mandated choice of air transportation.
One of the key reasons behind having a business travel policy document in place is to prevent budget overshooting.
This is especially important for small businesses. A travel expense policy for small business will ensure not a single penny is overspent and company funds are managed efficiently.
Without a proper document outlining what is authorized and what is not employees may find it difficult to navigate travel spending.
This might lead to intentional or unintentional incidents of fraud, unwanted expense claims, and out-of-budget spending. A corporate travel document is important to preventing such predicaments.
A properly defined and detailed corporate travel policy document also helps prevent any favoritism or biased behavior.
All employees will be governed by the same set of rules while on travel. This sense of equality will not only improve transparency but also build a sense of positivity amongst employees.
A major reason why companies need a document that outlines business travel policy and procedure is expense control.
These documents set budgets, per diem allowances, and limits on any expenses employees can make when on travel.
This helps the company control how much is being spent on business travel.
Well-constructed corporate travel documents always outline the correct procedure for obtaining approvals and getting reimbursements.
Without such a document employees may find it difficult to know what the exact course of action is when they want reimbursement for funds that they have spent from their own wallets.
What a corporate travel policy document will exactly entail is likely to differ from company to company. Moreover, no policy document is ever really perfectly complete, it needs to evolve with time and the changing requirements of the company.
There are, however, some must-haves that ideally every business travel policy document must consider.
In your company’s travel policy document, there must be a section dedicated to outlining how to go about the actual booking part of travel.
Corporate travel booking can be done via travel management software tools, online or offline platforms. Make sure you specify where bookings are to be made and what are the parameters concerning destinations and costs.
Ideally, most company policies mandate working with a dedicated travel management company.
Companies approve the use of these mandated tools to manage and make bookings so that all data can be kept consolidated and within reach.
Transportation and accommodation are two very important aspects of any form of travel, including business travel.
You need to specify which types of transportation and accommodation are covered by your company’s T&E policies.
For example, for domestic travel employees should use only travel by train or road and for international travel, you may mandate a particular air carrier as the preferred flying option.
In terms of accommodation, you could specify which types of accommodation your policies cover, whether it is a star hotel, a guesthouse, or a budget stay.
When framing transportation and accommodation policies make sure you keep your budgets in mind.
It is practically impossible to chart out and account for every single expense an employee might make while traveling for business, there are bound to be expenses for which employees might have to pay out of their own pocket.
These expenses may come in the form of unplanned client meetings, conference fee add-ons, and so on.
Your employees must be able to get reimbursement for these expenses without much hassle. Make sure your policy document clearly outlines the process for getting reimbursements.
You must also always make sure to account for the safety and well-being of your employees when they are traveling.
Typically, this is done by providing insurance coverage for the traveling employees. This insurance may cover health, travel as well as accidental incidents.
For a more comprehensive insurance policy, you should ideally partner with an insurance provider.
Once you do, make sure you clearly state in your company travel policy document what the insurance covers and what it does not for employees on travel.
When employees travel for business, they might also have to incur some costs in the form of entertainment expenses.
This may be because they had to take out a client for a meeting to a show, golfing, or any other form of entertainment.
If the company allows, entertainment expenses may also cover some percentage of personal entertainment expenses for the employee as well.
Ensure you clearly outline in your travel policy document what sort of expenses qualify as entertainment expenses and how much of it will be covered by the business.
It is sensible to include a section in your company travel policy document that outlines the details of which expenses are reimbursable and which are not.
In other words, you need to clearly specify what the rules and regulations are that need to be followed by employees when navigating spending while on business trips.
Without clear instructions on what kind of spending behavior is authorized, employees might be confused or uninformed on how to utilize company funds.
Having a clear outline of the details of reimbursable and non-reimbursable expenses helps employees manage spending and at the same time improved transparency.
It always makes sense to account for and prepare for emergency scenarios.
Without a proper helpline number and point of contact in case of emergencies, employees might find themselves stuck when in difficult situations.
Providing an emergency helpline number and point of contact is critical to securing the safety and well-being of your employees when they are traveling for business purposes.
If employees do not have a clear understanding of your company’s travel policy, it will be practically impossible to enforce compliance.
While policy documents must contain all the required guidelines, they must also be easy to access and understand for employees.
To ensure this you could conduct regular training or informative sessions on how to navigate the company policy document and its guidelines while traveling.
A big reason why a travel expense policy for small business is important is that it helps manage costs.
However, cost containment should never come at the cost of employee satisfaction.
If your policy guidelines are too focused on cost-cutting and fail to account for employee satisfaction then there is bound to be noncompliance and policy violations.
You must ensure a proper balance between employee satisfaction and cost containment to guarantee policy compliance.
If you want to improve travel policy compliance you must clearly communicate all your business objectives in the policy document.
This will help ensure that your employees and your business are on the same page, and both understand the reasoning behind why certain policies have been put in place.
Clearly outlined business objectives help employees understand and stick to guidelines and work towards the same goals as the business.
If employees are unable to gain easy access to the company travel policy documents in the first place, then there is little chance that they will be able to comply with it.
To improve compliance, you must first ensure accessibility.
Ideally, after you are done creating your company travel policy documents you should circulate the same amongst all your employees.
Additionally, you could also store it in a cloud or other online platform from where the policy document can be accessed at any time, and anywhere by employees who need to reference it.
While a company travel policy document is drafted to first protect the company it is, however, going to be used the most by employees of your company.
Therefore, it makes sense that you encourage employees to give feedback on their experience with the policies and participate in review sessions.
Do not over-complicate your company travel policy guidelines. Over-complicating guidelines will only make them harder to follow.
Make sure you keep your policy guidelines clear, concise, and easy to understand.
Communication is key to the proper functioning of any business. Whether it is communicating the guidelines of the actual policy document to employees or getting feedback or reviews on the same; you need to establish proper and clear channels of communication.
To make sure your employees understand and are on the same page as your business’s goals you need to clearly define the objectives of your business in the policy document.
Ideally, you should keep a dedicated section that clearly outlines what the objectives of your business are and how you aim to achieve them with the help of the corporate travel policy document.
Having an expense management system to help with managing corporate travel spending can be a huge help. These systems are capable of consolidating all employee travel spending on one comprehensive platform.
You can use this platform to easily manage, track, and control expenses no matter where you are.
Volopay is one of the best, easiest-to-use travel and expense management software out there in the market. The platform offers a host of features that make it much easier to manage business travel.
1. Employees can easily upload images of receipts or bills on the software while traveling. This means they no longer have to carry around physical copies of proofs of purchase.
2. OCR or Optical Character Recognition technology automatically extracts data from proofs of purchase and records it.
3. Multi-level approval workflows ensure not a single penny of unauthorized spending is carried out.
4. With real-time expense tracking and visibility, your company can exercise complete control over organizational fund usage.
5. Volopay offers highly advanced and easy-to-use corporate cards that can be used for travel. Alongside physical cards, you also get to issue an unlimited number of virtual cards completely free of cost. These cards can be used as burner cards, travel cards, gift cards and so much more.
6. Volopay has integrated with the business travel management platform TruTrip to give you the complete corporate travel management software package. You can use this integration to use one single platform to both manage expenses as well as bookings.