When employees travel away from home to conduct business and spend from their pockets for the same, it is only fair that businesses reimburse their travel expenses on time without punishing them in the name of expense reporting.
What are travel expenses?
Expenses incurred when employees travel to conduct business are known as travel expenses.
According to the IRS, travel expenses must be both ordinary and necessary to qualify for a tax deduction. Personal, lavish or extravagant expenses, even if incurred during business trips, do not qualify as business expenses and are non-reimbursable.
What is travel reimbursement?
Once an employee has completed a business trip and fyled all trip-related expenses with supporting expense receipts, the company reimburses employees for business expenses compliant with the IRS regulations and the organization’s corporate travel policy. This is a typical travel reimbursement process.
Common challenges businesses face with travel reimbursement
Travel reimbursements are tricky for all stakeholders involved in the process - the traveler (your employee), the approver (manager/ travel manager), and your Finance team. This is because, in business travel, costs come even before the trip.
Then, your Finance team has to weed out personal expenses, out-of-policy expenses, and detect fraudulent expense claims before they can process expense reimbursements. In case a non-compliant expense slips through, you might be opening up your business to an audit with the IRS.
In this article, we address challenges the different stakeholders involved in the travel reimbursement process face and how a travel reimbursement software can help bridge the gaps - pre-trip, on-trip, and post-trip.
Pre-trip travel and expense management challenges
When employees travel for work, their travel accommodation bookings are made beforehand.
The research for these bookings is either done by the traveler or the travel manager. In either case, the travel accommodation bookings must comply with your corporate travel and expense policy, IRS regulations, and budget specifications. That’s a lot to keep in mind while shortlisting options, and this is just the first step in the business travel process.
Businesses generally have a list of preferred vendors who reward loyalty points and possibly discounts to business travelers. While this list might make it easier for shortlisting travel accommodation options, another essential factor to consider is the traveler’s preferences.
- If employees are handling the booking research themselves, they must keep in mind preferred vendors, expense policy, budgets, etc.
- If a travel manager is making the bookings, there is a lot of back and forth on traveler preferences. For example, the kind of seat an employee prefers on a flight.
- Finance teams don’t have visibility into the booking process. Further, they need also to
- Review the heaps of receipts and request forms to issue cash advances.
How can a travel reimbursement software help with pre-trip challenges?
An intuitive travel reimbursement software like Fyle automates trip requests and cash advances with custom policies around each. This eliminates the need for multiple calls/emails between employees and travel managers.
- Employees can raise trip requests from the mobile app.
- The travel manager can review the request and attach the booking details to it.
- An approver can then approve the trip request, after which the booking is made.
- You can create policies around which employees can raise trip requests based on different employee parameters.
- Any requests that are not in line with your travel expense policy are flagged, so employees/travel managers can review them before they submit for approval.
- Travel managers can coordinate with multiple vendors right from their dashboard.
- Approvers can issue cash advances in bulk in case there are numerous trip requests.
- An integrated travel dashboard that gives Finance teams complete visibility into budgets.
Now that we’ve automated your pre-trip expense management, let’s look into challenges on-trip.
On-trip expense management challenges
Travel, whether for business or personal, comes with unforeseen challenges, candid itinerary changes, and more expenses! But when it comes to business trips, employees have to ensure expense policy compliance despite the unpredictable nature of travel.
How can a travel reimbursement software help with on-trip challenges?
If an expense your employee logs doesn’t comply with your travel expense policy or budget, the software raises a flag and helps the employee fix it. If the employee still wants to file for reimbursement, he can add an explanation in the comments field and submit it to the approver.
The system then forwards the expense report to the respective approver based on the level of the policy violation. For example, you can set up a policy like -
- If the bill exceeds “X” dollars, the policy-violated expense report should be sent to “Y” approver.
- If the bill exceeds “Z” dollars, the policy-violated expense report should be sent to “R” from the Finance team.
This customizability makes the entire expense reimbursement process smooth-flowing and easy to track.
- Track expenses wherever they occur, from within their everyday apps.
- Track mileage with Google Maps integrated mileage tracker app
- Easily calculate differential per diem rates with our per diem calculator.
- Approvers can approve individual or bulk reports from their mobile app
Lastly, traveling employees don’t have to be tied down to their desks, making expense reports. They probably already have another flight to catch!
Post-trip expense management challenges
Once the employee has reached home and submitted the business trip expense report, the Finance team has to verify expense receipts, check for policy compliance, and process reimbursements. Here, the Finance team has to be extra vigilant for any fishy expenses because it is easy for employees to play foul with receipts.
What’s more? The IRS might hold your organization accountable for fraud if any non-compliant expenses go undetected.
How can a travel reimbursement software help with post-trip challenges?
An intelligent travel reimbursement software like Fyle integrates seamlessly with your existing accounting/HRMS/ERP software and bank portal. This means employee data flows into your Fyle dashboard, where you can easily find all employee information with corresponding bank account details.
Now, your Finance team can take all of the following actions from the centralized expense management dashboard:
- Verify and approve expense reports with attached receipts
- Process expense reimbursements in bulk with integrated ACH payments
- Initiate expense reimbursements to multiple employee bank accounts with one-click
- Bulk upload reimbursement details in a bank-friendly format directly from Fyle
P.S You might also win some extra brownie points from your Finance team if you eliminate manual verification, data entry, and payment processing from their job roles!
Top benefits of switching to a travel reimbursement software:
- Get a 360-degree view of all trip-related business expenses in a single trip report.
- Easily track the expense reimbursement status for any given expense report in real-time.
- Gain in-depth insight into all business expenses, category-wise expenses, top spenders and more with Fyle’s advanced expense analytics.Access receipts for any expense or expense report from a unified, searchable receipt management cloud.
- Finance team gets real-time visibility into unreported expenses
Fyle helps drastically reduce the turnaround time for employee expense reimbursements and increases employee compliance with little to no manual intervention.
Sounds like cake? It is. All you have to do is schedule a demo, and we’ll take it from there!