You pick any successful or ever-thriving business in the world; they’ve got to have a substantial and well-optimized travel and expense policy at their disposal.
And why wouldn’t they have one? After all, it improves their company’s bottom line, keeps frauds and risks at bay, helps them comply with IRS rules, and streamlines the entire travel booking and reimbursement process.
However, it is not that easy to formulate a T&E policy. It takes a lot in terms of resources. The process involves handling expense receipts, verifying them, tallying the data, auditing the finances, and whatnot.
But, on the other hand, it is also essential to formulate one as it has the potential to simplify the processes related to business travel and expense management to simplify drastically. So, how can you do it? Let’s find out.
What Exactly is a T&E Policy?
Policies for Travel and Expenses (T&E) clarify what workers can and cannot do when using the company’s money to pay for business travel. They give workers a list of rules to follow when paying for things while on business trips. This keeps them safe, comfortable, and financially secure while away.
Between the company and its employees, these rules set boundaries, stop theft, and make it easier to plan for costs. T&E rules should always align with the company’s culture and financial goals, but they should also be flexible enough to support travel needs as the business changes.
What is the Purpose of Having an Optimized Travel and Expense Policy?
A Travel and Expense (T&E) policy tells workers what they can and can’t do when they use their corporate credit cards or T&E cards for business travel. That’s why having a clear and wholly optimized policy is essential for communicating about costs and spotting areas where money might be wasted.
Furthermore, not having a solid policy can lead to dishonest activities and calls for repayment, which wastes both money and time. Business trips are not vacations; they have set limits, procedures, and sources that are allowed to work with the company.
It’s not about how to get hotel discounts for your employees. Still, it’s more about having a good travel and expense policy to ensure that the organization follows the rules, finds ways to save money, and keeps the primary goal of business travel in mind. Although there is always room for improvement in policies, even if they are well-structured now, consider using various ways to create an open and legal T&E policy that everyone can quickly get along with.
What are the Advantages of Having a T&E Policy?
1. It Streamlines the Reimbursement Process
A clear T&E strategy makes it easier to get reimbursed for costs. Once an employee’s boss accepts their travel and entertainment expense report and sends it to accounts payable, the team looks it over and processes the refund for out-of-pocket costs.
Depending on how the company works, the accounts payment team may be in charge of keeping an eye on the spending report. Some places let you pay ahead of time by giving them cash, and people who understand how compensation works will have a better time with it.
2. It Makes Travel-Related Bookings Easy
When booking travel, the biggest companies in the business use new, cutting-edge methods. This includes ensuring employees are happy by improvingthe planning and trip experience. They do this by actively asking travelers for feedback and using it to shape future decisions about policy and vendors.
Instead of keeping employees in the loop of hassled bookings where they only wonder how to get hotel discounts, giving workers access to a booking system that considers their personal preferences while still following company travel policies is a creative way to make the booking process more accessible and make travelers happier.
How Can You Develop a Robust T&E Policy?
Companies that want to simplify their expense process need to make sure they have a vital travel and expense (T&E) policy, which can be done with a clear travel and expense strategy that not only helps keep costs down but also makes sure that rules and laws are followed.
To make a good T&E strategy, you should start by making its purpose and reach very clear, which can be done by setting limits on what can be spent and what the rules are for travel and lodging.
The next step in this endeavor would be to figure out who is responsible for what in your company when it comes to T&E management. To do that, put someone in charge of making sure the policy is followed, and teach all workers what they need to do to report expenses.
Set up a standard way for people to submit receipts and other paperwork so that expense reports are clear and correct for which you can also use digital tools or software to make tracking expenses easier and cut down on paperwork.
Further, a clear approval process should be set up so that managers can quickly look over and approve staff costs, ultimately helping keep people accountable throughout the process and keeping payment from being delayed.
Last but not least, help your workers understand how important it is to follow the travel and expense policy by giving them regular training or tools and maintaining open lines of contact so that workers feel free to ask questions about any parts of the policy they aren’t sure about.
What are the Best Practices for Creating and Management of T&E Policy?
1. A Comprehensive Travel and Expense Policy is Needed to Be Developed
When writing a policy on travel and expenses, make sure to use simple, clear wording that all workers can understand and not the lingo or words that are hard to understand.
Separate the policy into parts to make it easier to read and understand like putting topics that are linked together to make it easier for workers to find the information they need. Also, make sure to list any exceptions, like costs that need to be approved ahead of time.
You should also include in the policy what will happen if you break it, or what will happen if workers don’t follow the policy, which will as a warning and emphasize how important it is to follow the rules.
2. The Policy Created Must Be Communicated Effectively
It is very important that the travel and expense policy is clearly explained so that all workers understand it. To do that, you can hold meetings with everyone in the company to explain and talk about the policy, which also gives you a chance to go over the policy in more depth, answer any questions, and stress how important it is.
You can also make sure workers understand the policy and what it means by having presentations and interactive meetings, which will be helpful to send workers reminders about certain parts of the policy on a regular basis.
3. Training and Education of Employees
Training sessions are important for teaching workers about travel and expense rules and encouraging them to handle expenses responsibly. To do this, choose a training method that fits the needs and resources of your company, which could be face-to-face sessions, internet webinars, or a mix of the two.
Dividing the policy into sections will make it easier to understand and allow focus on the most important parts. For a better understanding of the employees, use case studies and examples from real life to show how the spending policy works in different scenarios.
4. Expense Reporting Process Should Be Simple
Businesses can quickly find workers who aren’t following the rules when they have automatic systems and data analysis tools at their disposal. This proactive method lets managers find places where rules need to be changed to match how things are done in the real world.
The analysis of cost data can help companies find new costs and changes in government rules, which can lead to important policy updates. Therefore, organizations can keep their rules up-to-date and useful for their operations by keeping a close eye on these outside factors.
5. Policy Should Be Compliance
It’s definitely necessary to stress how important it is to always follow the rules you’ve carefully set up and made clear to your employees. This means that expense managers often have to go through the boring and time-consuming process of personally reviewing every single cost, which can be very resource-intensive and dull.
Now that managers have strong tools to carefully watch and skillfully handle costs, they can face this annoying problem head-on. Automating this time-consuming process not only makes sure that your carefully thought-out rules are strictly followed but also makes the whole process much more efficient, saving you a huge amount of time. As a watchful guard, the software carefully compares expense reports with the strict policy guidelines and compliance laws you’ve carefully set out.
6. Check Whether the Policy is Effective
To fully understand how well the policy is working, it’s important to set and regularly check key performance indicators (KPIs) that are in line with its goals. A lot of important metrics should be included in these KPIs, like how much a trip costs on average, how well expenses stay within policy limits, and more.
Another useful way to figure out how the policy is affecting things is to see how strictly employees follow it. In order to do this, expense reports must be carefully looked over to see how closely costs match the policy’s rules.
As part of this thorough review, actual spending will be compared to planned amounts. This will give a true picture of whether the policy is effectively controlling costs and encouraging practices that use resources wisely.
7. Take Feedback from Employees
Effective policy management is heavily reliant on obtaining useful feedback from employees about the travel and expense policy. This feedback is an important source of information about the policy’s practical applicability.
Employees can identify areas for improvement as they read and comprehend the policy, particularly in sections where the language may not be entirely clear. HR gains a deeper understanding of the challenges employees face by actively soliciting and acting on this feedback, allowing necessary policy adjustments.
Employees’ active participation in the policy-making process also conveys a genuine concern for their perspectives. As a result, employees develop a sense of ownership because they recognize that their concerns are not only acknowledged but also addressed.
When employees believe their opinions matter, they are more likely to embrace and follow the company’s policies. Furthermore, their participation provides them with a more complete understanding of the reasoning behind policy decisions.
8. The Policy Must Be Updated Time-to-Time
To keep your travel and expense policy-relevant, it’s critical to conduct regular reviews at a set frequency, whether that’s annually or semi-annually. Furthermore, by subscribing to industry newsletters, connecting with fellow professionals, and seeking advice from industry experts, you can stay on top of any regulatory updates. Another beneficial practice is to compare your policy to that of your industry peers, as this can provide valuable insights for potential improvements.
Consider using a virtual travel consultant, which is available through expense management software, for additional assistance. This consultant can provide you with comprehensive, step-by-step guidance on how to effectively optimize your policy.
Use ITILITE to Manage Your Travel and Expense Policy
Believe it or not, when it comes to business traveling, it is more than just about how to get hotel discounts. Travel and expense policy is something you should focus on as a business owner.
The benefits that you can reap from implementing a travel expense policy are endless, be it controlling travel costs, maintaining expense-related compliance, and ensuring fairness while executing these processes. But to make sure all of it happens, the way policy is implemented must be accurate and optimized.
Furthermore, the business travel management aspect of the policy should also be optimum. ITILITE is one such software platform, which with its travel and expense policy management capabilities can help you manage your company’s policy. And, not just management, it can also configure it and evolve it the way you want.
