When a person works for a company. He or she occasionally has to pay multiple business-related expenses. These payments may be made while engaging in business travel, attending a client meeting, or at an occasion. But do you have a set of policies in place at your company that informs your staff about the types of expenses that can be reimbursed? Do your employees know the repercussions of filing false claims for reimbursement? A travel and expense policy would be useful in this situation if it is not present. Here is a comprehensive guide to your company’s travel and expense policy.
What is a T&E policy?
A travel and expense policy, or T&E policy, is a flexible set of rules that businesses establish, enforce, and continuously improve to advise staff members on business-related travel costs and other expenses. Business travel and expense policies will differ for each organization because each one has different needs and expectations.
These policy directives could cover anything from allowable spending for work-related expenses like subscriptions or stipends to budgets for travel and lodging, how to get reimbursed for expenses incurred while traveling, and everything in between. Some companies may include preferred airlines and vendors, instructions on how to submit expense reports, and rules for bleisure travel in their policies.
What are the consequences of not having a corporate T&E policy?
A travel and expense policy addresses all the possible travel expense concerns of the stakeholders involved.
- If business expenses are not constantly being monitored, a company may find itself incurring large costs as a result of hidden costs.
- Employees are more likely to spend carelessly while on business trips because of the consequences of not having a travel and expense policy.
- an increase in duplicate, inflated, and incorrectly reported business expense claims, which are indicative of fraud.
- Without a travel and expense policy in place, fraudulent behavior is neither addressed nor controlled.
- Without having sufficient knowledge about what is T&E policy and its insights. Employees may end up violating and doing expenses that are not mentioned in the travel and expense policy.
- If employees are not clear about what expenses can get reimbursed, they might end by not reporting all of them.
- Employees may decide not to take any business trips at all due to the loss of personal funds.
- Employee morale and productivity may be directly impacted by this.
What are the key points mentioned in a corporate travel and expense policy?
- Air travel: Clearly specify which flight class reservations will be eligible for reimbursements.
- Hotel bookings: It states in which hotel properties or groups your employees can stay at. Also, it mentioned the expense cap on each hotel booking.
- Local Transportation: Confirm the mileage rate in accordance with your government’s regulations based on the type of vehicle, the number of kilometers traveled, and the location.
- Travel advances: These refer to the predetermined cash or travel advances that your company provides to its relocating employees.
- Business credit cards: Its clearly states that employees should not use business credit cards for personal uses.
A travel expense policy makes sense because employee travel and expenses are the second-largest controllable cost after salaries. In fact, given their limited financial resources, small businesses often find that it is even more crucial than large ones. Therefore, it is important for the companies, as well as their employees to know what a T&E policy is and how it can be used.