Travel and Expense Management 101
Managing travel and expense in corporate business travel can be tricky. You don't want to be too strict in trimming down travel budgets, and in the same breath you also wish to enhance traveller experience. Since managing costs and expectations are equally important, you can look at maximising the funds available.
In this travel and expense management guide, we'll cover the best ways you can optimise costs, achieve business traveller satisfaction, and enhance business travel policy compliance. This will help you understand types of travel expenses, and give some guidance on how manage the costs, build an effective expense reporting, and how to get expense reports and track policy non-compliance. By understanding the importance of expense reporting, you will unlock opportunities to save costs and achieve greater financial control. After all, business travel should be seen as an investment and we're here to help you get the most out of it.
What is travel expense management?
In simple terms, it means managing and controlling costs made during business travel. Right from flight booking to food bills, travel and expense management maintains records of expenses incurred by travellers. Travel and expense becomes crucial for companies to oversee costs incurred, get visibility of expense data, and optimise their corporate travel programme. Expense management also helps business owners to:
- Align company goals to business travel
- Create and enforcing corporate travel policies
- Track and analysing expenses
- Build approval processes for travel requests
- Ensure satisfaction and expectation of travellers on business trip
- Measure how much profit yields from travel-related investments
- Establish claims and reimbursement processes
- Get rid of manual processes
Since T&E management also involves documenting and processing business travel expenses, it helps in tax deduction purposes as well. What is and isn't considered a tax-deductible expense varies by the country your organisation is based in. Regardless of locale, it is essential to report all eligible business expenses to optimise and lower tax liability.
What are the types of travel expenses?
Now that we've covered the importance of travel and expense management, let's explore different categories of business travel expenses. By understanding these travel related expenses, you can identify employee spend. Once you get a view of employee expenses on business trips, you can look at various affordable ways to facilitate and manage business travel.
Transportation
In addition to airfare, transportation expenses include fares incurred while travelling to and from business-related events (i.e. rental cars, shuttles, buses, trains, taxis, and ride-sharing services). Employees who hire or use their own car during business trips can also submit expense claims for mileage deductions based on standard mileage rates, which varies by country.
Accommodations
Any cost related to overnight lodging, like hotel stays or alternative accommodations, is considered to be travel expense. Of course, such expenses should be made within the policy and employees should not exceed their budget. In such cases, they should take hotel expense approvals to avoid deviation from policy and extra costs to the company.
Meals
Meal allowances will largely depend on your company's expense policies and may differ region to region, so it's best to check with your finance department. For example, an MNC might have a different expense policy for India and the UK due to various factors.
Misc. Spending
While transportation, airfare, lodging expenses, and food are the most common, there can be other expenses that employees may incur. Be sure not to overlook these costs on a business trip:
- Shipping and handling costs for luggage or work-related materials
- Electronics and other essential gear
- Parking fees
- Visa fees
- Laundry and dry-cleaning
- Business related communication (international calls, faxing, etc.)
- Other incidental expenses
How do you manage travel costs?
Ready to effectively control costs and also meet business purposes? Well, you're going to need a game plan that includes setting up travel and expense processes, onboarding an expense management software, and a whole lot of other tools. Here's our top tips for building processes:
Level the spending field
When it comes to creating travel and expense management processes and guidelines, it's best to apply the same rules across your entire workforce. When your travel expense policy is consistent at every level of your business, you help maintain transparency and avoid any potential misunderstandings that could lead to unintentional, but costly, out-of-policy travel bookings.
Plus, no one likes to feel like they're getting the short end of the stick. If you give managers and high-level administrators significantly more spending allowance and flexibility on travel and expenses than other team members – especially when booking the same trip – be prepared for some pushback.
Drive compliance with a people-first policy
It's not uncommon for employees to veer from policy from time to time. But while some companies may be quick to wield the disciplinary stick, travel policy adherence doesn't have to be a battle. It is always worth considering about employee travel, their convenience, market supply, business needs, and accordingly draft or adjust policy itself to cater to their needs while still save money.
By finding the right balance, you can drive effective business travel compliance and excel in travel and expense management that is cost-effective and employee-friendly.
Real-time data for real-time results
Once all your processes are in place, the next level is to track travel and expense compliance without spending hours on manual data and scanning through paper receipts. In this view, automated expense management systems can help in adhering to the expense management process, track data, create expense report, control costs, and present a holistic view of travel spends to the company. An expense management solution can create expense reports within a few clicks.
By supporting your corporate travel management with expense management software, you can unlock insights hidden within your expense report and spending data. Plus, you'll have a real-time view of your travel expenses, empowering you to make smarter financial decisions at the highest levels of your company's future spend and travel preferences.
Let automation do the heavy lifting
With automation on your side, you can save time, reduce manual process and errors, get rid of paper receipts (if your company allows) and say goodbye to financial headaches. Build efficiency into your business travel function through automated expense management systems. By automating expense reporting, you can improve cash flow, detect policy leakage, and seize missed savings opportunities.
A cutting-edge custom dashboard like the FCM Platform seamlessly integrates compliance and expense information, giving you a comprehensive view of travel expenses and enabling your travelling employees toward informed decision-making. It's like having a personal assistant who always has your back, keeping your finances in check while you focus on the things that truly matter: your business.
Now put it to action
The secret's out! For efficient travel and expense management, the corporate travel policy should incorporate having supercharged technology that makes tracking, expense reporting, expense claim a cakewalk. Travel managers should fully understand the impact of travel and expense management software, how to recognise best-in-class technology, the results it will give in spend management, etc.
But easier said than done, right?
Don't stress just yet. FCM is here to help – and lucky for you, we've done this before. A lot.
Let's talk!
Travel & expense to save costs
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