A guide to employee business travel and expense reimbursement policy

I. Employee Travel and Expenses

Employee travel and expenses form the second largest controllable expense for any company. At this scale, every business needs to setup certain guidelines and criteria to manage and process business expenses. This guide will help you understand everything about these travel and expense policies and help you build, automate and optimise the expense management process in your organisation.

II. What are travel and expense policies?

Travel and expense policy defines how an organisation will reimburse employees for all expenses necessary, reasonable and actually incurred when traveling on company business or executing business transactions. Travel and expense policies sit at the core of enterprise expense management to directly impact

• How employees spend money on business functions and travel; and,

• How organisation adjusts and accounts for business expenses.

III. How do businesses currently implement reimbursement policies?

The Global Business Travel Association (GBTA) published a survey result conducted on business travellers in 2016. The results show that fewer than half of respondents (44%) had to follow a policy, while a further 21% of travellers stated that they don’t have any restrictions on their policies.

This state of expense management is cheerful for the business traveller - they can choose the hotels and flights of their own preference and make unchecked spends that the company will bear cost of. For an employer, however, this is a precursor to a disastrous bottomline. With no check in place,

• Your employees have no benchmark against which to measure their own spend.

  Will your employees be frugal? Or will they splurge? The statistical average answer lies somewhere in between. Being the 2nd largest controllable expense for businesses, this gives a huge room for intentional and unintentional leakage and overspending that hurts the business bottomline.

• You can’t funnel spend to one vendor.

  One of the top methods for controlling business expenses is choosing a preferred business vendor to negotiate volume discounts, but with no policies or guidelines in place, business lose out on any premise for implementing cost control measures.

• Poor predictability into net bottomline.

  Being able to predict revenue and spends is a top target for finance functions. However, with no control on spends, predictability goes down the drain.

An attempt to understand why a business would not implement policies brings us to a few possible answers,

• First is that they simply haven’t got around to writing a travel expense policy.

  This usually happens in absence of a person or function responsible for creating and implementing these policies. For anyone else, this might seem a daunting task and hence the ignorance.

• Second is that enforcing policies is difficult.

  This is specially true for companies that are still using manual (pen-paper or spreadsheet) based systems to manage expenses. Even for companies with some sort of automation in place, enforcing policies on a mammoth volume of receipts is difficult.

• Some companies also ignore policies on premise of ‘employee satisfaction’.

  They believe that employees will stay frugal and not perform fraudulent tasks. They argue that they trust their employees and don’t see the need for measures. This is (statistically speaking) not a good idea, and has often led to huge frauds historically.

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