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A Comprehensive Guide On Corporate T&E Policy (+Free Template)

Travel and Expense Policy 101

Travel and expenses form the second-largest controllable cost for any company. Therefore, it makes sense that every business sets up certain guidelines and criteria to manage and process business expenses. A T&E policy simply sets the ground rules for this. It clearly defines the responsibility of all stakeholders involved – employees, managers, accounts team & HR – and the entire expense management workflow. Its main purpose is to control business travel expenses by taking preventive measures

In this blog, we will help you understand everything about the travel and expense policies, why you need to have one, and how to create an effective one.

What Is A Corporate T&E Policy?

A corporate T&E policy is a set of rules that define how a company will reimburse employees for all expenses necessary and reasonable when traveling on company business or executing business transactions. With no T&E policy in place, it can be tough to predict employee spending. With a policy, you know how much each employee can spend on travel and or other business expenses.  

The key objectives of a T&E policy are:

  • Define reimbursement process for both employees and non-employees – The process includes how to report expenses, what to include and how employees are reimbursed for expenses during business travel and other business transactions. It can be for employees and for others such as candidates traveling for hiring purposes
  • Ensure compliance with IRS tax rules – Make the employees understand the legal requirements from government tax and audit authorities regarding expenses

Benefits Of Having A T&E Policy

A T&E policy, when it is automated, helps in the following ways:

  1. Streamlines workflows & sets employee expectations: A clear and concise T&E policy helps employees understand how much and where they can spend, and how the company will process their expenses. It will also lay down limits on different purchases. Thus, repetitive questions that your finance or HR managers need to answer reduce drastically. 
  2. Helps in fraud prevention: With a proper policy and a process being in place, there is no ambiguity amongst an employee regarding an expense. Either it is permitted, or it is not. Automated policies ensure that common unintentional events like duplicate receipts or out-of-policy booking are checked.
  3. Define roles and responsibilities for different teams: A part of setting travel and expense policy is to identify key stakeholders around them:
  • Role of the finance, accounts, and audit teams 
  • Role of the Human Resources 
  • Role of managers and approvers in the reimbursement workflow
  • Role of the employees 
  1. Helps in staying audit-ready: A major incentive to set a travel and expense policy is to align with the tax and compliance guidelines laid down by governing authorities and stay compliant, audit-ready. You can check the guidelines laid down by the IRS. 
  1. Enhances employee travel experience – The employees know the budget and books hotels, transportation accordingly, and get reimbursed on time. This helps in boosting employee morale. 

Key Sections Of A Comprehensive T&E Policy 

To create an effective travel and expense policy, the HR managers and Finance managers of a company need to collaborate. Also, it is essential that you continually communicate about the policy to all employees and update them in case of any changes. 

Not all companies have the same T&E policy. However, here are the 3 sections, we believe, should be a part of your policy. You can use this as a template to create a T&E policy as per your company’s needs! 

The Objective Of The Policy

The first section of your T&E policy should lay down the objectives of the policy and its benefits for employees. It should make it clear who the policy is for and the goals you want to achieve by revising or formulating it.

Expense Reporting & Reimbursement Process

The second section of T&E policy should be to explain the entire expense reporting and reimbursement process i.e. the workflow flow for pre-authorization, expense report creation, submission, finance approval, & reimbursement. Your policy needs to clearly tell all the employees: 

  1. The allowable booking tool to be used for claiming the expenses  – Provide a link to the booking tool or T&E solution your company uses for travel and expense management purposes. You can also share the contact number of the travel agency if you have outsourced your company’s travel management.  
  2. If pre-authorization is important?  – It’s necessary for employees to know if pre-authorization is required before making any business expense, travel-related or otherwise. If an expense needs permission, then it should be a part of the expense management workflow
  3. Mode of payment – The employees need to be informed about any preferred mode of payment for business transactions. Do you provide company credit cards for business transactions or you would reimburse on a per diem basis?
  4. What mandatory proofs are needed for claims i.e. receipts, etc? – You need to tell all the employees the documentation that would be needed in order to get reimbursed. This can be as per internal guidelines or a government mandate.
  5. Timeframe to report an expense  – Employees must be aware of the time period in which they have to file the expenses every month.
  6. Approval process – It should be clearly mentioned how approvals will take place. The expense claims can be accepted or rejected basis the defined budget. Also, there should be a proper workflow for approving authorities to approve or reject an expense report.
  7. Audit by the finance teamYou must also lay down that the finance team might re-check if all the approvals are fine and ensure that the documents are audit-ready.
  8. Reimbursement timeline & how can employees track their reimbursements – You should also clearly mention the timelines when the employees will get their claims i.e. 15 days after filing an expense report and receiving approval. 

Reimbursable & Non-reimbursable Expenses

The third section of your T&E Policy should include all the expense categories that will be considered for reimbursement. Some common considerations can be: 

  1. Travel – The employees should know about the different methods of transportation available for them i.e. plane, train, rental car, etc. Is business-class allowed for all employees? Will they be reimbursed for extra luggage? In case, they are using their personal vehicles, how will they report their mileage, and what’s the limit? Will you also reimburse the paring fee?
  1. Accommodation – What is the standard acceptable rate for a hotel room? Can they get Airbnb or studio apartment options?
  1. Food – Will you reimburse it as per diem or per meal wise? Or will they get a company credit card? What is the limit? Is room service also included in it? Will you reimburse for client dinners?
  1. Medical/Health or Travel  Insurance – Is your company providing medical insurance for employees, especially when they are traveling abroad? Also, are you providing travel insurance? Where can the employees reach to know about it? 
  1. Mobile charges – Will you reimburse for international calling charges?
  1. Miscellaneous – What if an employee is charged with a parking fine? What if an employee’s mobile phone is broken or lost, will the company pay for the damage?

Further, you can also provide a list of expenses that won’t be considered for reimbursement such as alcoholic beverages, personal leisure, per boarding, childcare, personal grooming, traffic violation charges, airline upgrades, etc.

Enforce Your T&E Policy Successfully With ITILITE

Creating a travel and expense policy for your company is only half the work done. For your policy to be effective, powerful implementation is the key. Wondering if there is a way to ensure policy compliance in your organization? Well, automating travel and expense management is the answer. 

A modern cloud-based integrated travel & expense management software like ITILITE can help you build and implement custom policies easily. The software will automate and streamline all your travel and expense management workflows and ensure near 100% compliance. To know how you can ensure 100% policy compliance with the ITILITE, book a demo with our product expert today.

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