As the post-pandemic workforce evolves, digital expense reporting has continued to grow in popularity as a method for keeping both employees and budgets on track. Not only does this result in streamlined efficiencies that keep costs down for businesses, but it also is more accessible for remote and hybrid workers than traditional reporting methods.
Tracking expenses can be a time-consuming task for both employees and travel managers, especially when considering that most companies designate 10% of their overall budget to employee travel expenses. To help with this process, a travel expense policy conveys clear spending parameters for your most valued internal audience—your employees. A well-thought-out policy promotes booking compliance as well as outlines the work-related expenses that qualify for reimbursement, complete with details for tracking and reporting.
While implementing such a policy has a wide-range of benefits, we have highlighted here the five most important reasons why your business needs a travel expense policy.
When it comes to smart spending, T&E expenses are the second-largest controllable expenditure behind employee wages. A well-established travel expense policy helps with spending oversight by outlining limits on allowable expenses to ensure that your business travelers stay within budget. By setting clear spending parameters and expectations, you can efficiently manage costs, minimize overspending, and prevent financial surprises.
A strong travel expense policy also includes expense data that is easily accessible by travel managers during strategic contract negotiations with travel partners and potential suppliers. Airlines, car rental companies, and lodging partners are hesitant to offer discounts to businesses that do not have a travel spend tracking system in place. Expense data gives both parties a better view of the full picture. This is part of the reason why nearly 60% of companies have expense reporting procedures in place for their corporate travelers.
Consistency & Fairness
A travel expense policy promotes fairness across the organization. Robust travel expense policy provides a uniform framework for traveler expense submission, approval, and reimbursement, ensuring that all employees are treated equally.
Notably, it clarifies individuals with the authority to approve expenses, such as supervisors, managers, or finance departments and HR. A concrete hierarchy ensures that claims are approved by the appropriate individuals, preventing favoritism and unfair treatment that can hinder morale and a positive work environment.
Corporate Risk Management
By clearly outlining approved travel suppliers, allowable expenses, and preferred booking methods, businesses can minimize the risk of fraudulent or inappropriate spending. Most companies lose 5% of their annual revenue to fraudulent expense reporting. Travel expense policy that ideally aligns with your organization’s philosophy and goals reduces the likelihood of expense reporting fraud.
Efficient Travel Planning
A travel expense policy simplifies travel planning and booking while bringing major efficiencies to reporting processes. Manually entering receipts can be tedious and takes valuable time away from what matters most. In fact, nearly 1 in 5 expense reports contain errors that take more than 15 minutes to correct.
Leveraging modern expense solutions can not only greatly reduce errors but also help with budget creation, forecasting, and report analysis. It also allows key stakeholders to easily identify months and quarters with high travel spend.
One approach to adding efficient booking processes and enhancing traveler satisfaction is to provide staff with an online booking tool (OBT) that accounts for traveler preferences without losing focus on adhering to travel policy. At Direct Travel, we offer advanced OBTs that are user-friendly and customizable. Most importantly, they operate through a centralized system that adheres to your company’s travel expense policy.
Employee Awareness & Education
When it comes to T&E spend and policy success, it’s essential that your teams are all on the same page due to clear and consistent communication. Take this as an opportunity to educate your employees and managers on the guidelines and expectations that foster responsible spending. In addition to company-wide emails or intranet updates, it may be worthwhile holding mini-workshops to coach department leads through the steps and to further disseminate information to employees.
Additionally, a clear and concise travel expense policy can vastly improve the corporate travel experience. Remember: Business trips can be exciting, engaging, and help bring new opportunities to the table.
Download the Essential T&E Guide
At Direct Travel, it’s always our goal to help you integrate essential systems with the right tools so you can simplify the booking and reporting process. As a preferred partner of both SAP Concur and Deem, we offer technological solutions that provide an edge in expense reporting and elevate your processes. We understand the value of compliance and can help you build policies through reliable and actionable data sets.