A Guide To Travel And Expense Policy For Modern Businesses -Part I

What is a travel and expense policy?

Are you sending your employees on frequent business trips? If yes - then you must use a travel expense policy.
So, what is a travel and expense (T&E) policy?

An employee makes different kinds of payments related to business when working for an organization, especially if one is traveling –it could be, expenses to book a flight, accommodation, transport, food, an event, etc. All is good until the employee wants the money reimbursed which he/she paid from his/her pocket. The employee may want the exact amount to be reimbursed for all the expenditures made by him/her, thinking the organization is responsible for any spending made by him/her. And he would be right in demanding so if there is no limit set on the spending. Here, it is up to the company to set guidelines and help employees realize the capping on each expense category, explain what expenses are reimbursable, and define the consequences of fraudulent claims. These all rules and regulations need to be listed down as the travel and expense policy.
T&E has been deemed as the second most difficult operating cost to control. Yearly, a company spends an average of 10% of its budget on T&E, thus making it important enough for the company to pay heed and set control with a well-written travel policy.
A comprehensive travel and expense policy just not helps with cost control, it comes with numerous other benefits like— helps a business streamline the payment process, detect and eliminate fraudulent claims made by employees, scale the business, etc.
Here, we will discuss elaborately why it is necessary to have a well-defined travel and expense policy.

Why have a travel and expense policy?

Ideally, a travel and expense policy should cover every rule an organization wishes to exercise concerning its business travel and expenses. It should provide guidelines to employees and the finance team on limitations of the company travel and expense budget, and how employees would be reimbursed for business travel expenses. It is therefore important for a company to do a good amount of research when listing down the rules for a T&E policy. A well-written T&E policy should be easy to understand and follow and cover all aspects of expense reporting. This will help simplify the travel expense reimbursement workflow and easily enforce controls and limits on business travel spending.