Business travel is the engine that fuels a successful company and drives growth. But let’s face it, those travel costs can add up. Travel spend often represents a significant chunk of a company’s budget, so timely travel expense reporting is the key to maximizing every dollar spent on the road.
This comprehensive guide covers the basics of capturing expense receipts and handling reimbursement requests. It then covers how companies can use modern spend management tools to automate the entire expense process. Along the way, you’ll find insights, best practices, and expert tips. Let’s dive in!
Below is a primer for those getting started with capturing business travel expenses.
These documents are used by employees to record and detail expenses incurred during business trips. They typically include details on mileage, airfare, accommodation, meals, and other travel costs, alongside matching receipts for each expenditure. These reports are submitted to employers for reimbursement and serve as a means of tracking and managing corporate travel expenditures.
Travel expenditure records play a crucial role in maintaining financial discipline, transparency, and compliance within an organization.
This documentation is important for several reasons:
A travel expense refers to any cost incurred by an individual while conducting business-related activities away from their usual work location. This includes expenses such as transportation, accommodation, meals, and other incidentals necessary for the purpose of the business trip.
These expense types are typically reimbursed by the employer:
It’s a best practice for a company to outline exactly what travel expenses are reimbursable in a travel and expense policy. This document also outlines the approval, booking, and expense reimbursement processes.
Specific details included on these reports typically include:
Business travel expenses are reimbursed by employers after an employee submits a detailed expense report explaining the business use for each expense. This report includes receipts and documentation of incurred expenses. The company reviews and approves eligible expenses, then provides reimbursement to the employee, typically through payroll or expense reimbursement systems.
So, how do employees report on their travel costs, exactly? Here’s a step-by-step guide to the expense process from the perspective of the business traveler.
The heart of a healthy travel budget is a solid travel expense policy. Before completing travel bookings or embarking on a business trip, travelers need to understand the rules around approvals and reimbursements.
All receipts related to the trip need to be collected. This includes the travel booking itself — flights, accommodation, etc. — and the costs incurred during travel for meals, ground transportation, and incidental expenses.
After the trip comes the formal expense report process. Most companies use specialized software to assist with creating these documents, while some businesses use rudimentary Excel spreadsheets. These methods are explained in detail in the next section, “Methods for Creating Expense Reports [add jump link].”
After double-checking that all information on the expense claim is accurate, it’s time to submit it to the designated approver, typically a member of the procurement or finance team. These workflows should be outlined in a company’s travel policy.
Any out-of-policy reimbursements will be processed after an approver ensures the amount is accurate and aligns with company travel policy.
There are several ways to document expenses, and each comes with its own advantages and considerations. Here are some common methods:
Some companies still use paper-based templates or expect employees to use spreadsheet software such as Excel or Google Sheets.
While these methods come with a minimal cost, they require extensive time to complete and reconcile. These methods are also prone to data entry errors and is not scalable long-term as a business grows.
According to a Global Business Travel Association study, the average traditional expense report for a one-night hotel stay:
Plus, one in five expense reports has mistakes or missing information, which leads to an additional 18 minutes to fix and $52 in company costs. Multiply that by the number of reports a company processes each month, and it’s clear how these methods can suck up a considerable amount of time and money.
In Summary: Traditional Expense Reports
Time to complete each report: 20 minutes
Upsides: Minimal cost, no additional software requirements
Downsides: Time-consuming to complete and reconcile; prone to data entry errors; not scalable as a business grows
A number of expense trackers on the market are specifically designed to document expenses. They often come with features like:
These features are certainly a step above a spreadsheet. Compared to traditional reporting methods, this type of software can help make managing expenses easier for business travelers and improve the unwieldy bookkeeping process for procurement and finance teams.
The downside is that these expense trackers still require manual intervention and often rely on payroll to reimburse employees, which can cause unnecessary financial stress.
Today, technology exists to eliminate the entire expense reporting process.
Using travel and expense management software, companies can set travel policies; when they do, these spend rules are automatically enforced at the point of sale. With the swipe of a card, transaction details are categorized and reconciled, eliminating the need to create reports.
Let’s take a closer look at how this type of expense management system can increase compliance and streamline the expense management process for everyone involved.
This technology transforms all of the traditional processes around the reporting and processing of expenses, saving companies time and money. Schedule a demo to see how our spend solutions work.
Expense Reports: A Relic of the Past?
Fact: Traditional expense reports are needlessly complicated and waste employee time. Modern expense management systems enable employees to focus on growing the business instead of wasting time completing unnecessary busywork.