Did you know that companies spend roughly $1,425 for every employee they send on a business trip? It’s true; corporate travel spending is expected to hit $1.7 trillion by 2022!
Your employees are always on-the-move to meet business goals. This requires them to physically run around, lose out on sleep, stay pressured about closing deals, and burn a hole in their pockets, while at it. This costs them more than what expense reimbursements can cover.
Thus the onus of employee well-being on business travel - mental, emotional, and financial falls on the organization. Striking the perfect balance between employee morale and compliance is difficult, but we can help. Let's take you through the best practices for corporate travel policy.
What is a Corporate Travel and Expense Policy?
Essentially, a corporate travel and expense policy is a document that outlines guidelines for all spending, reporting, and tracking of business travel expenses. The finance team crafts these policies to ensure employees understand company procedures for business expenses and reimbursements.
Why do businesses need a corporate travel policy?
A company’s travel and expense policy and procedure should adhere to IRS rules and regulations on employee travel business deductions. According to the IRS, a business expense should satisfy the following conditions:
- The employee must be carrying on a trade or business that's a necessary expense that helps the company to make a profit.
- The travel expense must also be appropriate for your trade or industry.
Creating a travel and expense policy is a critical step toward controlling business travel expenses. It is also a vital step that ensures your business never runs into trouble with the IRS. To help employees stay compliant, they would first have to understand your corporate travel policy.
Your corporate travel policy has to be simple to read, easy to digest, and straightforward to remember.
Essentially, it has to cover a handy check-list of:
- What employees can spend on while on a business trip
- What is reimbursable and what is non-reimbursable
- How they can report their expenses
- How they can track their reimbursements
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Benefits of having a Corporate Travel Policy
The lack of a corporate travel policy does more damage than meets the eye. Here are a few major drawbacks:
- Overshooting budgets
- Delay in momentum
- Employee non-compliance
- Trouble with tax authorities
- No defined approval workflow
Additionally, the lack of a streamlined process can result in poor traveller experience for your employees. This diminishes productivity and lowers morale. We mean, your employees sure have better things to do than worry about receipts and compliance when on a business trip, yes?
Here’s why your business needs a corporate travel policy:
- Ensures compliance with IRS tax rules
- Streamlines your travel reimbursement process
- Improves efficiency of travel booking and vendor selection process
- Provides clear and concise business deductions
- Enhances your employee travel experience and overall employee morale
Six must-haves in your company's Travel Policy
There are numerous aspects of business travel that you should take into consideration before drafting your corporate travel policy. After all, no one policy template fits all.
We’ve listed the bare essentials that every business travel policy should comprise of:
Ensure this comprehensive document reflects the culture and unique needs of your business and employees.
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How can businesses achieve employee happiness and policy compliance?
Staying compliant with the set rules and regulations by the IRS comes with benefits. It means your employees won’t get taxed for additional income. Your audits won’t be under the radar for scrutinization. All this translates into your company, not worrying about fines and penalties.
On the downside, failure to comply with IRS business travel guidelines might result in the company being unable to use employee traveling expenses as a tax deduction.
In other words, just having a policy in place doesn’t translate to compliance. Implementation and effective enforcement define the success of your corporate travel policy. The easiest and most efficient way to achieve this is by automating your travel & expense management.
We say so because, with a T&E management software in place, you can:
- Enforce policies with ease
- Ease the expense reporting process
- Organize receipts and spend data
- Aid compliance with the IRS rules & regulations
- Insight into all data via a unified dashboard
How can Fyle improve your Corporate Travel Policy?
Fyle is an automated expense management software that automates, streamlines, and simplifies the expense reporting process for all stakeholders.
- Employees can strike off receipt safe-keeping from their priority list.
- Managers or approvers can approve travel requests/ reports with one click.
- The finance team can stay on top of budgets with real-time spend visibility and compliance.
How can Fyle help finance teams improve their corporate travel policy?
- With Fyle, finance teams can not only create customizable policies but can also enforce it via custom notifications, reminders, and more. This translates into seamless enforcement of your corporate travel policy from the back-end.
- Finance teams can effectively manage policy violations as Fyle runs real-time policy checks on expense reports. This means that Fyle does the flagging while finance teams can concentrate on other essential tasks.
- Finance teams can leverage intelligent insights with our advanced data analytics. Further, with insight into these numbers, they can calculate potential risks and eliminate the possibility of fraud.
- With reporting and compliance made easy, the finance department can steer clear of manual data entry, verification, and reconciliation. This not only increases your financial productivity but also ensures you are audit-ready at all times.
How can Fyle help employees stay compliant?
- Expense reporting for employees is a daunting task, especially for those who are always on-the-move. Fyle enables employees to report expenses from almost anywhere and by using any device! This makes expense reporting a truly one-click process.
- On uploading expenses, our real-time policy engine runs a policy check to scan for policy violations. In case of a breach, the employee gets a notification regarding why the expense was flagged. This ensures the employee is aware of the violation to take corrective measures.
- With no manual entry, no human error, or bias, Fyle enables employees to stay compliant. Staying compliant ensures employee expense reimbursements are not considered taxable income by the IRS.
Our travel expense reporting software is built for the businesses of today. We understand just how time-consuming and frustrating the process of expense reporting can be (for all stakeholders!). Our customer challenges pave our product road-map, and thus we created Fyle.
Fyle helps all stakeholders stay happy, efficient, and compliant. To ramp up your T&E management, schedule a demo today!