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Travel and Expense Management

How to Write a Company Travel Policy

If you're looking to create a travel and expense policy for your company, you've come to the right place. Rocketrip has a number of resources that will help you establish an effective process for managing your employees' travel booking, spending, and expense reimbursement.

Our free example travel policy takes care of the heavy-lifting and eliminates the need to write your own from scratch. It's a customizable template that can be tailored to match your organization's specific requirements. You can download your free copy here, and read more about travel policy best practice in the post below.

 

Choosing a Travel Management Style

Travel policy is the corporate equivalent of the spleen. Both take care of themselves when functioning properly, and neither are, strictly speaking, necessary.

In much the same way that a human can survive without the largest organ in its lymphatic system, it’s technically possible for a company to get by without ever formally documenting rules on employee travel and expenses (T&E). Possible, but inadvisable.

And also, surprisingly common.

A survey conducted by the Global Business Travel Association found that almost a third of U.S. business travelers are “unmanaged,” and have no stated company guidelines.

On the other end of the spectrum are the 21% of business travelers in “mandated" programs where they must follow the company’s stated policies and/or use the providers or agencies chosen by their company. This tightly managed approach works well for some companies, but not for others.

Between these two poles are employees at companies with non-mandatory travel policies - less a set of rules than best practice guidelines.

There’s a fair amount of overlap between the varieties of travel policies. “Mandatory” rules are often enforced at the discretion of a traveler’s manager, while even companies with “no policy” travel policies have to draw the line somewhere when it comes to what constitutes reasonable spending.

Each company has to find a program that matches its size, travel pattern, and culture. Yet for all these unique considerations, the importance of getting T&E right is universal, as are the basic principles that go into designing the right policy.

 


Looking for an easy way to get started? Download your customizable travel and expense policy template here:

DOWNLOAD THE TEMPLATE


 

Why You Need a Travel Policy

If you’re looking for a way to manage your company’s travel and expenses, the bad news is there’s no one-size-fits-all policy. The good news? There is a specific policy that fits your company, and like a favorite pair of jeans that fit just right and can be worn with anything, it’ll prove useful in more ways than one. Here are some of the benefits of a well-designed travel policy:

  • Cost Control - Smart policies don’t just protect against overspending, they actively encourage saving.
  • Employee Satisfaction - Business travelers want the right amount of guidance from their company policy. Not having defined rules can leave employees confused, but having too many rules can be counterproductive. By creating more work for an employee during booking, and giving them too few comfortable and convenient options on the road, overly-strict policies encourage travelers to go rogue.
  • Reporting - T&E is one of the largest expense categories at a typical organization, often ranking behind only salary and rent. Because a company’s travel policy determines how employees book and submit expenses, it has a huge effect on whether spending remains visible.

With those goals in mind, let’s take a look at the questions you should ask when writing your company’s policy.

 

Who Should Be Involved

Though large companies often have a travel department, most small and mid-sized ones do not. Even when there is a dedicated travel manager in place, it’s important to include other key stakeholders throughout the company while designing a policy.

  • Finance - Accountants and controllers need to know that employee expenses are being properly tracked; CFOs should be interested in travel’s (not-insignificant) effect on the bottom line, and look to ensure that there’s a strategy in place for controlling this major expense category.
  • Operations - Get the perspective of someone with broad knowledge of your company's processes by including a senior representative from your operations department.
  • Human Resources - It's common for companies to rely on their HR departments for day-to-day management of their travel program.

Last but not least, consult employees who travel often, since they’re the ones who will be most affected by the end product. Including these road warriors will help uncover their travel preferences and pain points, and make it more likely that they buy into your new policy.

 

What to Know In Advance

Know Your Priorities

A corporate travel policy that tries to do too much ends up accomplishing nothing. By identifying specific priorities, you’ll know where to focus your attention. Here are some possible objectives:

  • Reduce average trip cost
  • Replace some travel with virtual meetings
  • Promote use of approved vendors
  • Secure favorable negotiated hotel rates
  • Increase advance booking
  • Improve employee satisfaction with flight and hotel options
  • Reduce travel agent fees / encourage use of low-cost online booking
  • Increase percent of spend through a travel management company
  • Speed up expense reimbursement process

Know Your Current Costs

Review your historic travel costs to see the “who,” “what,” “where,” and “when” of your spending:

  • Who - Identifying which employees are responsible for the majority of trips will help you engage the right people and drive compliance. It’s also necessary if your policy will feature customized spending guidelines by department, office, or employee level.
  • What - Knowing the “what” of your company’s travel spending means you’ll have a sense of potential saving opportunities. What class of hotels are employees choosing? Are they flying business class or coach? Are they using sharing economy services such as Uber and Airbnb, and if so, should your travel policy cover these?
  • Where - Flight and hotel costs vary widely from city to city, so headline expense trends might be a result of a change in itinerary composition rather than employees spending more or less carefully. If a small number of destinations account for a significant portion of total trips, it can be useful to create location-specific guidelines; for instance, a list of recommended hotels in a given city.
  • When - Last minute travel is occasionally unavoidable, but invariably expensive. If your employees are waiting until close to their trip date to book, your updated policy should be designed in a way to encourage advance purchase.

 

What to Cover

Writing a corporate travel policy is a balancing act. The policy should be comprehensive, covering every stage of of trip from booking through reimbursement, and at the same time comprehensible.

So remember that while J.K. Rowling’s Harry Potter books have sold more than 450 million copies and total 4,224 pages in length, peoples’ apparently inexhaustible willingness to read about teenage wizards does not extend to rental car insurance and baggage fees. To paraphrase another great British author, brevity is the soul of effective travel policy.

Imagine the steps an employee should go through to arrange a trip, then focus on addressing potential areas of confusion.

Booking, Payment, Approval and Reimbursement

  • Where should employees book travel? Are they allowed to use their preferred travel sites, such as Expedia, Kayak, or Priceline? Or, are they required to go through an online booking tool linked to a travel management company?
  • How should they pay? Is billing centralized through a corporate account, or can employees use their personal credit cards and submit expenses later for reimbursement?
  • How are trips approved or rejected? Are there situations in which employees should get trips authorized by a supervisor prior to booking? Pre-approval might be required based on:
    • Purpose of a trip - Travel for internal company meetings and industry conferences might be treated differently than travel for sales or client services.
    • Number of days a trip is booked in advance - To cut down on last minute travel costs, a company might flag trips booked within a week of departure.
    • Total trip cost - It’s advisable to have a process for reviewing trips with unusually high costs, but not to create static spending caps. Flight and hotel rates are highly variable, and sometimes there’s an underlying reason for eye-popping prices, such as a major convention.
  • How does reimbursement work? Make sure employees know:
    • What expense reporting platform they should use.
    • What materials they have to submit to be reimbursed - This might include receipt copies, vendor IDs, and a brief description of the expense purpose.
    • How soon after the expense must the reimbursement request be made?

Flights

  • Cabin Class - Whether an employee can fly business class, premium economy, or economy usually depends on their seniority and the flight duration.
  • Flight Selection Criteria - Simply telling employees to choose the "lowest logical fare" is a recipe for confusion. It's better to define the parameters that make a particular flight the "logical" choice. Most travelers will naturally prefer direct flights, but should they look for less expensive options that have a layover? Two layovers? What about early morning or red eye flights? There are too many scenarios to account for with a rigid set of rules, but employees will benefit from a flexible list of booking best practices.
  • Ancilliary Fees - Address whether your company will cover additional fees airlines charge for checked bags, trip insurance, cancellations, and in-flight meals.

Hotels

  • Hotel Star Class - The difference between hotel star classes is less distinct than that between flight cabins. A three star hotel in New York could easily cost more than a five star hotel in Phoenix, and the various travel websites will often be inconsistent in how they classify the very same hotel. Given this imprecision, many companies provide employees with a list of suggested hotels for top travel destinations.
  • Allowable Incidental Expenses - Valid business-related charges might include in-room internet, parking, room service for primary meals, tips to hotel staff, and fees for late check-outs or early check-ins required to accomodate a traveler's meeting schedule.
  • Non-Allowable Incidental Expenses - Most companies choose not cover in-room movies, minibar charges, or use of the hotel's dry cleaning service.

Rail

  • Trains vs. Planes - For shorter trips rail can a cost-effective alternative to flying. Let employees know if they should take the train on certain routes, for instance, from New York to Boston.
  • Economy vs. Business Class - As with air travel, the different rail options vary significantly in cost. Specify when employees are eligilible to book express business class (e.g. - Amtrak Acela) and when they should take the standard regional train.

Rental Cars and Ground Transport

  • Rental Car Guidelines - Rental cars are just like normal cars, only they require lots of confusing paperwork before you can get behind the wheel, and once you do, none of the preset radio stations are what you want. So help your travelers as much as you can by providing clear guidelines on car size, insurance coverage, and refueling policy.
  • Ground Transport - Remind travelers to exercise their best judgement and use cost-effective public transport options when possible. Uber is quickly overtaking taxis in use by business travelers, so be sure to specify whether your employees will be reimbursed for these ride-hailing services.
  • Personal Car Usage - Decide if and when employees can use their personal car on business, and how they'll be reimbursed for mileage, parking, and tolls. The IRS provides widely used standards for mileage reimbursement.

Per Diem Food Costs

Everyone's got to eat, so it's no surprise that one of the most common sources of uncertainty for employees on the road is per diem spending policy.

A traveler's meals will cost much less than his flight and hotel (and if they don't, there should be a pretty good reason), but that doesn't mean your travel policy can ignore this expense category altogether. Avoid overregulation. Instead, create a set of common-sense guidelines for how much employees can spend on meals, both on their own and with clients. Often times companies will cut down on paperwork by not requiring receipts to be submitted for meals under a set spending threshold.

 

How to Improve Compliance

The first step to getting employees on board with your company's travel policy is to make sure they're aware your company has a travel policy.

There are few sounds sadder than that of hundreds of employees simultaneously clicking their email "trash" buttons only seconds after receiving the travel policy their company spent countless hours designing. Driving adoption requires more than attaching a PDF to a message that gets blasted over the all-staff list.

It's better to make travel an ongoing conversation at your company. Share cool employee trip stories, celebrate travelers who spend smart, and consider travel management less about cracking down on bad behavior than promoting good. Periodically ask top travelers what's working and what's not, so you can modify your policy as necessary. Remember, compliance is only a worthwhile goal if the policy is well-designed. There’s no use forcing employees to conform to a travel policy that’s demonstrably not meeting their needs.

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