As your small business expands and more employees travel for business purposes, providing a comprehensive corporate travel and expense policy is increasingly important.

Small to medium-sized businesses may have more limited funds and buying strength, making effective travel expense management essential.

A clear travel programme and expense policy can boost compliance, reduce hidden costs, and enhance budget visibility without time-consuming expense reports.

What is a travel expense policy?

A travel expense policy outlines rules for booking flights, hotel rooms, car rentals, and rail, defining work-related expenses and governing expense report procedures. These rules are in place to make it easier for employees to book their corporate trips and manage business-related travel expenses.

When creating a travel expense policy, consider your business needs, employee requirements, and your travel budget. There’s no one-size-fits-all solution.

Why does your small business need both a corporate travel policy and an expense policy?

Travelling is a key tool for employees, and making it as straightforward and clear as possible is very important. Your travel policies should be a combination of both company and employee needs. To prevent road warrior burnout, recognise employees’ expectations and offer flexibility. This can include extended routes or adding personal travel time on business trips. Learn how travel and expense policy impacts your overall company culture here.

Streamlining with a centralised booking tool and a clear travel and expense policy saves employees time and reduces confusion. It also simplifies expense management and speeds up payment and reimbursements. Centralised booking is a one-stop shop for all your travel needs. A corporate travel management platform simplifies booking by providing options that match your budget and needs, eliminating the need to waste time searching multiple providers. In addition, the centralised online booking tool will incorporate your travel policies throughout the booking experience and can provide consistent guidance for the overall trip.

Having a travel and expense policy allows your management team to clearly communicate to your employees the maximum amount of spending allowed. Limits on purchases need to be clear on everything from flights and lodging to entertaining clients. Providing clear guidance can also help reduce grey areas that can lead to expensive mistakes, while allowing your employees to book with confidence. Your business’s expense policy can help predict travel costs for the company and allow for increased real-time visibility into budget spending.

There are many variables to consider. The recommended options for car rental, airfare, and hotel room, based on price and safety, are always changing. Your policy approval settings need to be able to evolve with the changing economy and travel landscape. Things to consider include:

• The price range of airline tickets based on destination.
• Maximum costs for lodging expenses per night.
• Business class or first-class upgrade permissions.
• The minimum number of days booked in advance.
• Defining distinct types of purposes for business travel.

How do travel expense policies for small businesses differ from those for large companies?

At their core, expense management across businesses share many of the same features, like:

• Per diem meal rates.
• Guidelines for trip expenses (airfare, lodging, meals).
• Reimbursement requirements (receipts, documentation for services or goods).
• Documentation for tax purposes.

However travel and expense policies should be flexible enough to adapt to change, but still keeping an eye on reducing overall travel costs. This can impact expense report accuracy and efficiency, leading to delays in reimbursement, which can negatively impact company culture.

Balancing changing needs with flexibility is essential for growing businesses. Clear communication of travel and expense policies is critical to meet business demands.¹

Benefits of implementing a travel and expense policy

Sets up employee expectations
Providing a clear policy guide for employees to follow that outlines what expenses are covered and how the booking process works can reduce misunderstandings and frustration.²

Clear policies can keep your business audit-ready
Establishing a policy helps stay compliant with tax regulations required by the IRS or other regulatory agencies, so your company can be audit-ready.

Establish defined roles and responsibilities
Identifying who an employee can turn to for any questions or concerns helps establish trust and confidence within your organisation. For example, if the HR department will be handling all corporate travel policy, employees know that their questions can be directed to them.

Keep your company’s bottom line at the forefront
Travel policies provide centralised spending visibility, enabling budget managers to manage costs and implement measures to prevent overspending.

Expense policies help prevent fraud
Mistakes happen, but automating reimbursement requests can curb mistakes like submitting duplicate receipts. A good, clear travel expense policy can help avoid any confusion or grey areas that may lead to human error.

What should you include in a travel expense policy?

While no travel policy will look the same, there are a few things that an effective expense policy may include. Most importantly, your policy should be dynamic and flexible, as it’ll have to be updated frequently. Ideally, travel policies should be reassessed annually, if not more often. Change your policy based on business goals, budget, company size, etc. Below are other important must-haves to include.

Clear travel policy language
Use clear and concise language that is easy to understand when drafting your policy. Don’t overcomplicate wording with corporate and legal lingo that may confuse your employees or that leaves ambiguity about guidelines.

Budget limit amounts and preferred payment methods in travel policy
Clearly state the budget and maximum spending allowed for meals, lodging, flights, car rental, and rail. Any booking tool you’d like your employees to use should be clearly stated, along with specific payment methods (like credit cards). Also state deductions for non-compliance.

What is a covered expense?
Other things to consider as you create your policy are listing out explicitly what a covered business expense is and what isn’t. For example, if business travel involves client meetings over dinner or drinks, it should be included as a covered expense, as it directly impacts the business. If employees have a per diem stipend for food, this is also something that should be clearly stated within the policy’s language. If you’re not sure what is typically covered, consider:

• Airfare.
• Rail transportation.
• Car rentals.
• Hotels.
• Cabs and ride share expenses.
• Conference registrations.
• Parking.
• Mileage and petrol (if driving).
• Tolls.
• Tips for meals and hotels.

Instructions for Policy Reimbursement
It’s essential to include clear instructions on how employees should submit their reimbursement requests within policy guidelines. Everything should be spelled out clearly, including the reimbursement request timeframe and required documentation. Specify the wait time and how funds will be returned, whether by cheque or pay cheque.

Amex GBT offers corporate travel solutions to small and medium-sized businesses
Given your growing business, it’s important to invest in the right expense tools, processes, and systems that promote a meaningful travel programme and seamless expense management. American Express Global Business Travel helps manage your policies, travellers, and expenses in one comprehensive, easy-to-use platform with 24/7 support.

Request a demo to learn more: amexglobalbusinesstravel.com

[1] https://www.fylehq.com/expense-policy/guide#chapter4
[2] https://smallbusiness.chron.com/travel-expense-management-small-business-45401.html