Did you know corporate travel spending is expected to hit $1.7 trillion by 2022? It is now more critical than ever for businesses to have a capable T&E software to control travel spends.
With the growing number of employees that travel on business, companies must have a clear air travel policy in hand. An air travel policy helps trim and eliminate out-of-policy and fraudulent expenses around business travel.
In this article, we look at how to create an effective air travel policy from ideation to implementation. Additionally, we list down some of the best practices around seamlessly adopting and enforcing these policies within your organization.
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What does an air travel policy consist of?
- Documentation all the processes around business air travel.
- Communication regarding how employees can book, report and reimburse air bookings.
- List of all the supporting documents required for expense report submissions.
- Enlisting legal implications with regards to IRS on policy violations.
- Tips on how employees can spend responsibly during business travel.
- A policy that is thorough and transparent leads to lesser fraud and reduces overall company spends.
Why should businesses have an air travel policy?
Companies all over the world are looking for ways to improve their T&E management. Here are some benefits of having effective policies in place:
- Streamlines business processes: With the help of a TEM software, you can capture data points and acquire spending visibility on various factors. Additionally, this invariably creates a standardization in your corporate travel. Standardization establishes certain norms in your corporate travel and creates a benchmark for business travel.
- Improves overall productivity: Policy administrators have an easier time dealing with employee queries when your policies are well-defined and easy to understand. With clear instructions with respect to what to do, employees may waste less time on bookings and other travel related chores. This allows for all the stakeholders to tend to their core duties without worrying about reimbursements.
- Prevents fraud: Employees may get creative in manipulating the system set in place. This is why having an expense management software is paramount to making sure you have the visibility to all expenses. With advanced digital audit trails for all your expenses, automated travel and expense management software ensures you never lose track.
Must-haves in your air travel policy
- Travel booking process: It is important you define how employees can make travel bookings. There are numerous options available, including external or internal help desks, travel booking tools, or other travel websites. We recommend that you implement a T&E software that integrates directly with the travel software and travel aggregators of your choice. This will immensely speed up the booking process.
- Cash and Card spending Limits: Mandating a corporate card program and specifying per-diems for employees will help in reducing unnecessary expenses. Running policy checks when the expense is created rather than later will ensure all spends are compliant, reducing the chance of fraudulent expenses.
- Preferred airlines: If you have an approved contractor with a particular airline, then make sure your employees know about it. Specify when traveling employees need to book for their business travel. This will eliminate any chances of confusion around the booking process.
- Business class vs. economy class: The policy should clearly specify when business class travel is allowed. As an example, let’s say only high ranking company members (CMO, CFO, etc.) can obtain business class seats. Another example is allowing business class only for international travel and economy for domestic travel. Ensure you avoid unnecessary spends on expensive seats. This can help you control and monitor employee business spends.
- Lodging: Make sure you enlist what kind of rooms can be booked by your traveling employees (e.g., Standard Room VS Deluxe Suite.) If you have partnered with specific hotels, ensure your employees are aware of it. This will help you save up on costs with discounts and other additional benefits.
- Booking costs and exceptions: The goal of this section should be to provide guidelines to employees on acceptable booking costs for airlines, lodging, and car/cab rentals. If the booking cost exceeds the guidelines, then a process should be in place to approve those exceptions. This helps effectively communicate the consequences of such submissions.
Best practices for successful implementation of air travel policy
Defining a policy is just the beginning; implementing it in a user-friendly manner is an entirely different ball game. Let's end this guide with some best practices which you can use to implement a Travel and Expense policy in your company successfully.
- Keep it simple: When drafting an air travel policy, avoid using business jargon. It is encouraged to use simple language. Policies are known to be ignored and misread by employees, and simple language can help mitigate this. For increased responsiveness, keep it brief and define as few rules as possible.
- Focus on policy adoption and not enforcement: It is a common sight to see employees reporting out-of-policy and non-compliant expenses. This increases the workload for the finance folks. You can avoid this situation by understanding and accommodating the needs of your employees. Take note of how an exception can be handled by outlining and including it in the policy.
- Assign ownership of policy: For a policy to succeed, it needs clear ownership. That is a financial function in the business. Even after making a policy and implementing it, there will be loopholes, and it won't be perfect. It's up to the respective owners to track, modify and communicate policy adoption and its changes.
- Receive executive support: T&E policy implementation is well adopted in cases when the senior executives like CFO (Chief Financial Officer/Executive) are in favor of the policy. Convincing your CFO on why this policy is needed and how it impacts the business is vital.
- Integrate policy checks with travel & expense management software: Implementing a well-defined policy and manually having to review expenses is a roadblock to how fast your expense management works. Modern expense management software allows you to create complex and detailed policies within them. This helps in achieving seamless expense reporting.
Advantages of using Fyle for air travel policy compliance
- Real-time logging of expenses into a central expense management dashboard for easy accounting. This gives the utmost transparency to all stakeholders.
- Pre-configuration of policies for seamless expense reporting. This helps achieve real-time compliance.
- Faster and efficient expense approval processes due to automatic policy enforcement. This ensures timely employee reimbursements.
- Real-time policy checks at the time of expense reporting. Pre-checking expenses result in good spending habits.
- Implementation of complex policies straight into the software with the flexibility to alter and fine-tune it according to business needs. This helps in taking immediate action to improve policy compliance.
- Leverage insights into business travel spending habits and augment your cost control processes. This helps optimize budgets and prevent financial leaks.
And that’s our comprehensive guide to making an effective air travel policy. Fyle isn’t just about enabling real-time compliance. We also help businesses optimize and streamline their entire expense management processes.
Whether its expense analytics, T&E expense management, or integration with various accounting/travel software. Fyle enables businesses with the definitive solution to expense reporting and management.
Schedule a demo today and unlock the true potential of your business!