How to Write a Travel Expense Policy for a Small Business

For so many businesses travel is essential to the everyday operations of the organization. But while many larger companies have well-established travel expense policies in place, having a coherent business travel policy often slips through the net in businesses that could benefit from it the most.

We know that start-ups and small businesses with 50 people or less often have less revenue to play with than their larger counterparts. In instances where funds are tighter, e.g. at smaller organisations, it’s even more important to have a solid employee travel policy in place.

As a travel manager, corporate travel is one of the few costs you can control. Along with helping ensure compliance, a clear corporate travel expense policy for a small business can help fledgling companies take good care of staff while avoiding unnecessary expenses and fraud. An effective corporate travel policy for small businesses will result in maximized profits; cashflow that can ultimately help support business growth.

What’s in this guide:

  1. What is a small business travel expense policy?
  2. Benefits of travel expense policies for small businesses
  3. What should you include in your travel expense policy?
  4. How can small businesses implement a travel policy?
  5. Common mistakes to avoid when writing a corporate travel policy

What is a small business travel policy?

A travel expense policy in a small business is a set of clearly defined corporate rules, which outlines exactly what is expected of employees when it comes to booking and paying for work-related travel. Successful travel expense policies set boundaries on the amount an employee can spend on corporate travel, while also defining what is an acceptable expense. It should also specify exactly what the process is when it comes to claiming their expenses back. Find out more about how to control your business expenses here.

Benefits of travel expense policies for small businesses

According to FinancesOnline, just 60% of companies have a travel expense policy in place. Now consider that 31% of employees say that they do not comply with the policy.  Why? It all comes down to the terms of the expense policy itself. More than a quarter of employees (27%) find their company policy to be “poor”, and 52% say that they feel that the policy in place does not align with their wider company culture.

There is so much for small businesses to gain from creating a corporate travel policy that tracks and scrutinizes your organization’s outgoings more closely. When building out your policy, consider how you can align your travel expense policy with your company culture. What are your values? How can you balance those values with profitability in a way that’s as fair as possible? The answer is invariably by making your employee travel policy as clear and accessible as possible.

The benefits of having such a policy include, but are not limited to, the following:

  • Prevents employees from making any violations and booking travel outside of the permitted budget, saving your business money both in the long and short term.
  • Gives employees guidelines to follow without having to check with the finance or HR departments, thereby saving valuable time, reducing workloads and increasing employee satisfaction. 
  • Ensures your business travel bookings are organized and helps to streamline the expense reimbursement process. This will save your finance and accounting teams time for more productive work, which can be particularly beneficial for smaller businesses with less available resources.
  • Prioritizes the safety of your employees, ensuring they only book travel with trusted and verified companies. 

Make it easier for your employees to access the policy using a cloud-based platform like Gett.

What should you include in your travel expense policy?

Your corporate travel expense policy should be as unique as your business, considering your financial means and employees’ needs. It’s important to include clear budgets and information about the documentation required (e.g. receipts, travel tickets), time limits and the reimbursement process. You should also make it clear what journeys and situations are eligible to claim as business expenses, giving employees examples they can refer to such as business dinners to improve client relationships, travel to conferences, and events outside of working hours.

Gett’s platform streamlines the entire process, providing travel policies tailored to your business to help you manage your budgets and maintain your duty of care. Choose from Gett’s existing travel expense policy templates suitable for small businesses or create your own bespoke policy. 

When the time comes to put your travel expense policy together, here are some key things you may want to consider including:

Expense categories

As mentioned above, your corporate travel policy will need to outline which expense categories your business will reimburse employees for, indicating any restrictions and/or prohibited categories. Make sure you include:

  • Companies that your employees can book with
  • The types of travel they can book, such as taxis, buses and trains
  • Websites and tools approved for them to use
  • The payment process and information relating to personal or company cards.

Travel expense reporting and reimbursements

Make sure it’s clear from your travel policy what the organization requires from employees for travel expense reports and reimbursement. The policy should outline the entire process of how your employees should submit their expenses, such as submitting receipts and invoices, and not just credit card statements. Most businesses, including global organizations, require employees to submit travel expenses within an allotted time frame; this should also be clearly displayed within your travel policy.

Here are some additional considerations when creating your business travel policy:

  • Who is allowed to book travel?
  • Does travel need to be approved in advance?
  • What evidence should employees provide when submitting an expense claim?
  • How long will it take for employees to be reimbursed?

Non-refundable items

To avoid disappointment or breaches of company policy, be sure to also include stringent guidelines on what the company will not reimburse employees for, such as parking tickets, hotel room upgrades and server tips.

Employee safety

Ultimately, a business should never choose cost over the safety of employees – a truth that needs to be made apparent within your travel expense policy. Consider how the terms of your agreement with staff will affect your travel insurance, and make sure you provide employees with contact information in case of emergencies.

Some business travel booking platforms, like Gett, provide full access to your employees’ travel information, giving you real-time route tracking and driver information. Gett also has strict standards for its supply partners, for added peace of mind.

Bleisure travel

In the corporate world, the line between business and leisure can often be blurred. ‘Bleisure’ trips can cause confusion for employees, especially if the business trip involves entertaining prospective clients. According to a study conducted by Forbes, 2.2 million ‘bleisure’ trips took place in 2017 alone, accounting for 10 percent of all business trips.

Providing examples of acceptable and unacceptable scenarios within your travel policy can prevent confusion, which often leads to noncompliance. For example, organizations may wish to extend business trips for leisure time if the cost of return travel is cheaper on an off-peak day.

How can small businesses implement a travel policy?

Although it may involve making some big changes to operations, implementing a travel expense policy for your small business should be relatively straightforward. It all comes down to three key steps:

1. Communicate your travel policies clearly in an accessible document or via an online platform before sharing them with your employees.

2. Universal documentation should apply to both junior and senior employees, as well as those in management roles. Ensure that managers are leading by example and are following the company policy.

3. Prevent the need for uncomfortable conversations between employees and HR about the travel policies by automating the process using a business transportation management software, like Gett. This will eliminate the need for HR having to personally outline what employees can and cannot spend.

Common mistakes to avoid when writing a corporate travel policy

There are a few pitfalls you must watch out for when writing a corporate travel policy. Here’s a list of the most common mistakes and how you can avoid them:

  • According to the Spend Journal, the average manual, paper expense claims take 20 minutes to process, plus extra time to correct human error – identified in 19% of all expense reports (Global Business Travel Association). An app like Gett, with automated reporting capabilities, can help streamline the entire process.
  • Out-of-date travel policies can lead to inefficiencies and dissatisfaction among employees. It’s important that you review your policy regularly to prevent employees from being misled or setting expectations that will not be met. Always update your employees when changes have been made to the travel policies.
  • Check, check, and check again to ensure your policy is compliant. If a small business is non-compliant, this can result in big fines or even criminal charges.
  • Don’t be miserly! Make sure your policy is fair for both parties, to ensure your employees don’t feel taken advantage of. Your employees should feel comfortable and safe when travelling for business, and it’s your company’s responsibility to ensure that your employees’ needs are met, within reason.
  • On the flip side, try not to create a policy that is too lenient as this may lead to employees capitalizing on it or even committing expense fraud. In fact, according to a study by webexpenses, 85% of people admit to lying on an expense report to get reimbursed more money.

Does your small business have a solid travel expense policy in place? Find out how your organization could benefit from streamlining travel and expenses all in one easy-to-use platform. Request a demo today.