Travel is a crucial aspect of business but can be costly if not properly managed. To ensure control over travel expenses, it's essential to have a well-designed corporate travel policy in place.
A company travel policy outlines the guidelines and procedures employees must follow when traveling for business purposes, including transportation, accommodation, meal expenses, and more.
A business travel policy serves as a road map for organizations’ travel expenses. By setting clear guidelines and rules, business leaders can avoid misunderstandings, reduce costs, and promote consistency in travel-related decisions. Additionally, a travel policy can help companies comply with tax regulations and other legal requirements while improving duty of care and travel safety.
Here’s how to create a comprehensive travel policy for any organization.
When creating a travel policy, it’s critical to identify the company’s objectives and employees’ needs.
Start by outlining the policy’s goals for the business. For example, is the company looking to control costs associated with travel? Defining the objectives makes creating a policy that addresses these specific needs easier.
When it comes to employees, consider their job responsibilities and the frequency with which they must travel. For example, if a sales team frequently travels to meet with clients, their travel policy may differ from that of an administrative team that only travels occasionally.
To ensure the successful implementation of a travel policy, define the roles and responsibilities of stakeholders throughout the travel management process. Who is responsible for overseeing the booking process? Who approves travel expenses?
Because business travel affects everything from company culture to cost savings, organizations will share responsibilities differently. A human resources department might manage travel bookings and expense reporting at one company. While that responsibility may fall to a finance department, travel management team, or individual managers at another.
Organizations can streamline travel and avoid confusion by assigning clear roles and responsibilities.
One of the most important aspects of creating a travel policy is determining the budget for travel expenses. This includes airfare, hotel accommodations, ground transportation, meals, and incidentals.
It’s important to set clear guidelines for how much employees can spend on each expense and to provide them with a clear understanding of what’s covered under the policy. Likewise, a travel expense policy will determine travel spend.
Guidelines on travel costs will determine the mode of transportation allowed, such as air travel, trains, car rentals, or public transportation, and the class of travel, such as economy or business class. Preferences might shift for domestic travel versus international travel or the status of the employee who’s booking. Some companies might allow C-level executives to pay for upgrades and Wi-Fi on their company credit card, while more junior employees may always be expected to book economy class.
For accommodations, companies should provide guidelines on the types of lodging employees can book, such as hotels or short-term rentals. Guidelines should also cover any preferred providers, the range of room rates, and the use of loyalty programs or discounts.
A travel policy should also provide guidelines on meal and entertainment expenses. Factors to consider include the per diem (or the maximum daily allowance for meals), any restrictions on alcohol or entertainment expenses, and related expenses such as baggage fees, dry cleaning, parking, and other incidental expenses.
Defining the booking and approval process will help ensure that travel expenses stay within budget and adhere to company policy. Companies should determine who is responsible for booking travel arrangements, what documentation is required for approval, and the timeframe for submitting expenses for reimbursement.
The most efficient way to streamline this step is by partnering with a modern corporate travel management company that provides a booking tool as part of its services.
Establish a clear reimbursement process for how employees will pay and be reimbursed for travel expenses. This step may have previously included instructions for submitting paper receipts. Today, however, companies can partner with a modern expense management and corporate card solution, which makes submission and reimbursement easier than in decades past. It’s also important to set expectations around limits, define who is responsible for approving employee expenses related to business travel, and determine what criteria will be used to approve or reject expenses.
Always consider the safety and security of employees on business trips. Duty of care is one of the most critical factors impacted by travel policy compliance.
Companies can start by providing information on safe travel practices, identifying potential risks, mandating travel insurance, and establishing a protocol for emergency situations. With the help of technology, they can also know where employees in their travel program are at any time, so the company can assist them in an emergency.
Once a company has created a corporate travel policy, it's essential to communicate the details to employees. Make sure everyone understands the guidelines and procedures outlined in the policy. Consider hosting a training session and providing documentation to help ensure that everyone is on the same page.
While it might be counterintuitive to today’s hustle culture, companies benefit when employees travel using paid time off. Not only is it helpful for individuals’ well-being, but research also finds that for every 10 vacation hours a person takes, their average performance reviews are 8% higher.
Vacation time also helps employees return to their jobs more inspired. CEOs consistently rate creativity as the most important trait for incoming employees, and research shows that exposure to new and different travel experiences leads to new ideas and insights.
Once a company has established the travel policy document, reviewing and updating it regularly is important. This process allows for adjustments based on changes in company needs, travel industry trends, and employee feedback. By keeping the policy current, leadership can ensure that it continues to meet the needs of employees and remains effective in controlling travel expenses.
While all these steps are necessary to construct a travel policy, a modern corporate travel and expense management solution pulls it together. The right software will streamline processes while providing real-time access to data.
Modern solutions allow administrators to build expense policies into the software, which automates the approval workflow. And because these solutions display a company’s corporate travel policy during the travel booking process, travelers know immediately what expenses are appropriate. Finance and travel managers can update policies as situations and business needs change.
Some essential features of travel and expense management software include integrated payment, automated reimbursement, a booking tool that allows employees to make their own travel arrangements, approval and reporting, and customization – all available within a consumer-like UX.
Request a demo today and discover how Navan can support and improve your company's travel policy and management.