Any small business, even a small company of only 3 employees, can benefit from an effective travel policy. The lack of a clear policy can set your business up for a myriad of problems including unnecessary expenses, dissatisfied employees, and general loss of productivity.
Without clear guidelines business travelers are likely to book out-of-policy which will result in a financial loss for your company. When business travelers are dissatisfied with their business travel experience it is likely to negatively impact their performance or hurt your company’s employee retention rate. These are just a few of the reasons it’s important to have a corporate travel policy in place.
When constructing a travel policy for the first time or updating an existing policy remember to make it to the point, clear, and easy to follow. An effective travel policy will help you control costs, but should also factor in your employees’ needs and company culture when deciding what to include.
Good policies ensure that the travel booking process is well organized, the reimbursement procedures for travelers are streamlined, employees are compliant (which saves money), your company avoids fraud, and employees are protected through clearly outlined safety procedures.
There are a few major topics that are a must for any travel policy. We will cover expense categories, non-refundables, the expense reporting and reimbursement process, and safety information.
This is usually the largest component in any travel policy. In this section, you will need to layout the expense categories that you will reimburse travelers for. Some companies only allow employees to book through a mobile booking tool or company card. Regardless, you will need to list all the travel and entertainment items that your company covers. You will also need to include a list of restrictions and guidelines for booking in each expense category. In each category, travelers will need to know:
- Preferred venders they can use
- Advanced booking requirements
- What website or mobile booking tool to use
- The process for payment
These are just some of the most common items, but depending on your companies needs there are many other things that will need to be taken into consideration.
When constructing a clear travel policy, it is important to state the items that your company will not provide reimbursement for. Examples of common non-refundable items include: childcare, dry-cleaning, in-room movie rentals, flight change fees, parking tickets, airline seating upgrades, pet boarding, and tips. The non-refundable items may be listed under the expense categories, but it is important to have a clear list available in its own section to make it easy for travelers to reference and use.
Expense Reporting and Reimbursement Process
Companies tend to use two different methods when writing the expense reporting and reimbursement processes in their travel policies. They either break down the explanations in each expense category, or they create a separate section describing the expense reporting process. No matter which style works best for your business there are some important issues that will need to be addressed. Here are some common questions that should be answered by your companies travel policy:
- What documentation does your company require for reimbursement?
- What is the deadline to submit an expense report after a trip?
- When will an employee be reimbursed after an expense report is submitted?
- What are the consequences for noncompliance with company policies?
- Do employees need pre-approval for any expense categories?
- Who can approve trip requests and expense reports?
Without clear and detailed guidelines your company is susceptible to expense reporting fraud. You can set up a minimum price or per diem to help make things easier for employees and accountants alike, but at some point, you will need detailed reporting. For example, you may need to specifically require employees to submit receipts rather than credit card statements. In the case of a hotel room, a statement will only show the total price of the stay while the bill will include items like movie rentals and the use of the minibar. So, by clearly setting the standards for what items are acceptable for claiming reimbursement, you can greatly reduce the instances of expense reporting fraud.
The most important information in your travel policy is safety guidelines. When writing the policy your goal should be to protect the safety of your employees. Many companies make the mistake of placing cost in front of safety when putting their travel policies together. However, the safety of your employees should remain a priority when traveling, the same as it does in the office.
There are several things to consider when deciding what safety and security policies fit your business best. Many companies require travelers to submit their itineraries so they know where they are at all times. This information should include hotel phone numbers. As an employer, you may want to include information on any travel insurance that the company provides or provide contact information and resources in case of an emergency.
Incorporate Evolving Travel Trends
It is important to be open and flexible when it comes to the rapid evolution of business travel. Leisure, travel, and even traditional offices are all becoming a bit blurred thanks to the help of sophisticated new technology and improved access to wireless internet. However, these disruptions in the way employees used to travel for business are not necessarily bad for business. Let’s take a look at some of the most common travel trends you should include when writing your companies travel policy.
The Sharing Economy
The sharing economy, or the gig economy, has made a major impact on the way we travel and more and more business travelers are using its services. You will need to let your employees know where you stand when it comes to using popular services like Airbnb and Uber. Allowing the use of these services could expose you to risk or compromise the safety of your employees. For example, it’s not possible to ensure that all Airbnb properties are safe for your employees to stay, whereas a Hilton will have complete and transparent safety and security protocols available for all of its guests. Do some research and decide what works best for your company. Whatever you decide, make it clear what services can and cannot be used during business travel.
Mixing business and leisure together on the same trip is becoming increasingly popular as travel becomes easier. As a result, you will want to include business travel guidelines for travelers who wish to add days to their business trips for leisure time. So far, this trend hasn’t seen too much backlash from the business community because it helps to boost employee morale and can save the company money at the same time. Consider the cost of flights on the busiest day of the week – by allowing employees to add days for leisure the cost of airfare can drop dramatically. Some businesses allow bleisure only if it saves money, but whatever you decide make sure that you clearly define when the company’s coverage ends and the employee’s responsibility begins.
Once the travel policy is in place it is important to keep it up to date. Even an out-of-date travel policy can impact your company’s bottom line. Review the policy on an annual basis and look for savings, but also elicit feedback from travelers and make necessary changes. Many successful companies look at their travel policies as a living document and keep them up to date based on changes in the business landscape. The travel industry, technology, employees and clients all change over time so remember to make your travel policy open and flexible to keep up with the times.