How to write an effective corporate travel and expense policy?

Having a formally documented travel and expense policy is vital in ensuring your employees’ safety while on the roads and helping your business stay within budget. 

Whether you are crafting your company’s travel and expense policy from scratch or adjusting your current policy to suit your company’s needs, read on to find out what needs to be included in a great travel and expense policy.

Need more help? Download our helpful template that you can copy, paste and customise based on your business needs and culture right here!

1. General

Begin your policy by defining the objective, scope and any general expectations and requirements. 

Objective

Give an overview of why the policy is important for employees to review and what is covered.

Scope

Under the scope of the policy, you can define who the policy applies to. This is particularly useful if you have multiple policies that are applicable to different groups of employees in your company.

Any general expectations and requirements

List general expectations or requirements of employees when using the company resources and your company’s stand on fraud, bribery and corruption here. This helps create trust between the employee and the employer by ensuring both parties know what can be expected of them.

Here are some examples you may include in your policy:

• act in the company’s best interests; spend company money frugally, as if it were your own
• act with honesty and integrity
• comply with the guidelines set out in the policy

2. Reimbursable expenses

The core of your travel and expense policy should cover the allowable expense categories, complete with the individual budgets and rules on what is and what isn’t permitted. 

While your policy should reflect the unique needs of your business and employees, here are some common categories:

Flights

This section should cover the basics such as:

• Preferred supplier or method of booking (⭐ TIPS: Consolidate your company travel in one place for easier tracking of travel spend and employees’ location)
• How far in advance must trips be booked?
• What class of travel can be booked?
• What is the maximum budget for each flight?
• What air fares (restricted fare / flexible fare) are preferred?
• What carriers (low-cost carriers / full-service carriers) are preferred?
• What is the maximum number of stops per flight?
• Which airlines are preferred or not allowed?
• Whether upgrades and personal airline loyalty programs are allowable?

Hotels

This section should cover the basics such as:

• Preferred supplier or method of booking (⭐ TIPS: Consolidate your company travel in one place for easier tracking of travel spend and employees’ location)
• How far in advance must trips be booked?
• What room types (e.g. standard rooms only) can be booked?
• Maximum hotel nightly rate in each location
• What is the minimum and / or maximum hotel star rating allowed?
• Whether upgrades and hotel loyalty programs are allowable?

Ground Transportation

This section should cover the basics such as:

• The preferred and allowed mode(s) of transportation (public transport / rails / taxis and private hire cars / rental cars) for all employees and under what scenarios will one mode of transportation take precedence over another.
• Budget for different transportation modes
• Rules for different transportation modes such as allowable class for rail tickets, types of rental vehicle allowed, whether car insurance, parking fees and fines are covered etc

Meals

This section should set limits on meal prices (e.g. daily allowance or individual budget for breakfast, lunch and dinner) and provide guidelines on when meals are claimable (e.g. on-site meals when employees work overtime, meals whilst travelling). Your policy should also include a statement about alcoholic beverages – usually to clarify that they will be at the employee’s cost, unless they’re with a client.

Gifts & Entertainments

Clearly define the gift and entertainment types that are allowed and not allowed to ensure your company complies with laws and regulations and guard against inappropriate expenditures that may arise when employees entertain or purchase gifts for customers. To effectively manage entertainment expenses, you can:

• set a limit for different expenses types
• require a business reason
• require receipts for claims
• require employees to provide name and company of all attendees (both employees and non-employees)
• enforce managerial approval for claims

Per Diem Allowance

Depending on your company, you can define a fixed per diem rate for each region and spendings that are covered by this allowance.

3. Non-reimbursable expenses

Your policy should include a list of things that your policy won’t cover so employees will not incur these expenses or pay out of their own pockets if they want something that isn’t covered.

4. Expense reporting & reimbursement process

It’s best practice to ensure that employees have a clearly defined and easy way to file their expenses, and get reimbursed promptly especially if they have paid for them out of their own pocket.

To ensure that your company can promptly validate and reimburse employees’ claims, list down explicitly:

• what tool to use for expensing (⭐ TIPS: Including a time frame helps your business maintain a stable and accurate cash flow)
• what information you require for an expense claim / report (e.g. date, amount, category, location, business purpose of their claim, receipt / tax invoice)
• deadline for expense submissions and approvals (⭐ TIPS: Including a time frame helps your business maintain a stable and accurate cash flow)
• typical processing time for reimbursement after request approval

It might also be necessary to include a section about the consequences of not following the set guidelines and procedures in this policy.

5. Safety information

Employees’ safety, security and well-being must be at the heart of every corporate travel policy. Consider the different types of emergencies that could occur in a foreign country (e.g. personal accidents, severe weather or political unrest) and ensure that your policy has procedures in place (e.g. what to do and who to contact) to help your employees respond. If your employees are often travelling to high-risk countries, consider organising additional travel safety and security training.

Conclusion

We hope this article has been helpful! Feel free to contact us or visit our site to learn how Navisteps can help make your life easier by consolidating your travel bookings and automating your policy and approval workflows.