Why Your Company Needs a Travel Policy

Did you know that the second biggest controllable expense for businesses is travel and entertainment? And this trend is not slowing down anytime soon. Business travel is ​predicted to grow to $1.6 trillion in annual spending by 2020.

Given the importance of business travel to overall company expenses, companies need to control spend and get return on investment while ensuring the travel process is easy and convenient for employees.

One of the best ways to achieve this is through a well-thought-out corporate travel and expense policy (T&E).

A Travel and Expense (T&E) policy, also referred to as Travel and Entertainment policy, is a set of guidelines created by a company to its travel program. The policy serves as the standard protocol followed by travel managers and employees as they ​plan​, manage and expense business trips.

Why Do Companies Need a Corporate Travel Policy?

60% of companies have a corporate travel policy.

However, almost ​a third of the business trips are unmanaged and many employees have no idea of the policy’s existence. Further, only ​38% of corporate travelers​ are satisfied with their company’s travel policy.

Such low policy compliance typically comes down to poor implementation of the policy itself and using travel booking tools that are outdated and out of line with the tech driven experience demanded by modern business travelers.

Companies of all sizes need to realize the benefits of a well-managed T&E policy and invest in the necessary practices, tools, and technologies to better manage the process. Each company has to find a program that matches its size, travel patterns, financial situation and culture.

So, what are the benefits of a well designed corporate travel policy?

Cost control

Corporate travel policy helps regulate business travel expenses effectively and reigns in overspending. You can track expenditures and see how your program performs vs. the policy forecast.

Employee Engagement

From easy booking to streamlining the reimbursement procedures, the T&E policy reduces uncertainty and provides procedure. A well designed policy strikes the right balance between cost control and making travel a perk for employees.

Improved productivity

A well-designed travel policy meets the employees halfway. With employee-friendly policies, business travelers can optimize their time and energy to be at their best performance during the trip.

Traveler safety

Companies are responsible for their employees while they are away on business trips. With a solid policy in place, you can fulfill your ​duty of care​ obligations with clear safety procedures.

Before You Start Writing Your Travel Policy

Before you get on with writing a proper travel policy for your company, here are some points that you need to factor in first.

Current travel patterns and practices

Identify your current business travel patterns by answering these questions:

• Who​: ​Who are the people that go on business trips the most?

• What​: ​What are the biggest expenses during the trip? What vendors do they use?

• Where​: ​Where do these trips usually take place?

• When​: ​When do they start arranging for their trips?

Travel and Expense Policy objectives

The travel policy should be made with the well-being of both companies and employees in mind.

Key objectives considered should include:

• The company’s priorities (i.e. to save money or to provide flexibility and increase employee engagement?).

• To ensure the policy reflects the employees’ needs and travel patterns

• To have a clear reimbursement process.

• To ensure the employees’ understanding and policy compliance.

Company Travel Budget

Poor management of travel expenses can cost businesses significant amounts of money. While your policy should address the employees’ needs for comfort and flexibility, it also needs to secure savings for the company. Use the travel budget and projected / historical volume of travel to forecast what different proposed travel policies will cost your company.

Travel Policy Implementation

Even the best travel policy won’t work if none of your employees know about it. Make sure the policy is communicated to the entire company by holding on-boarding sessions and that it is easily accessible for all employees.

Better yet, you can use a business travel software that allows you to customize your policy and have it run on autopilot to ensure full compliance.

Ready to create a corporate travel policy?

Getting Started

There are many aspects to consider when writing a corporate travel policy, but the policy should reflect the unique needs of your business and employees. Here are some fundamental items that you should addressed in your T&E policy.

1. Booking Process

First you need to specify how you are going to book travel in your company and from what vendors.

The booking procedure should include:

Tools or platforms used to book

There are multiple options, including an external or internal help desk, allowing employees to book themselves using online travel agents​, or individual airlines sites. A defined approach is what you need to save time for everyone involved.

Tip​: Consider ​hiring a corporate travel agent or using a tech driven business travel software, such as ​Betravelo​ for simplified and convenient process.

Preferred travel vendors

Stick to a group of vendors to negotiate better deals, increase your chance to get benefits, i.e. free upgrades or lounge passes, out of loyalty.

Tip​: Consider using airlines that are in a ​partner program​, such as ​Star Alliance​.

Booking period and preparation

Always encourage your employees to book well in advance to save on flights and hotels. Implement deadlines before which travel needs to be booked.

Tip​: To know the best window for booking, read our booking guide ​here​.

Payment method

State if employees should exclusively use a corporate credit card or their personal card to pay. For added flexibility work with a vendor that offers the option to pay later via invoice.

Tip​: Carefully select the credit card you use to pay to maximize your benefits

2. Decide Included Expense Categories

Expense categories include the spending that is covered under the policy. List every T&E item that company is going to cover, along with any limitations or guidelines for the booking procedures on each of the categories.

Flights

The airfare policy should cover the costs for business related flights only.

Cabin class

Specify which classes employees can fly while on business travel, i.e. economy, premium economy or business.

Tip: ​You can adjust the class allowed on the basis of the flight duration or if its for a business meeting or company offsite

Flight selection

Define specific parameters that make the flight a sensible choice worth paying more for, i.e. direct flights, flexibility or avoiding layovers.

Tip​: Always offer the chance for employees to keep the ​frequent flyer benefits earned while on business travel​. Doing otherwise is a huge blow to employee engagement and leads to resentment.

Airline fees

State if you will cover any additional airline fees, such as checked baggage, in-flight meals, change fees, or travel insurance.

Hotels

Empower your business travelers by giving them control over their own spending within a set budget, whether they want to cap their budgets by hotel star rating or room type.

Hotel selection

Provide a list of preferred hotels along with the average room rates in popular company destinations.

Tip​: Negotiate a rewards program with your preferred hotel so your employees can get fast access to status

Room type

Standard room types are usually the go-to option but you can also go with star rating or maximum price per night.

Incidental expenses

Clearly separate valid business-related room charges (i.e. internet, parking) from non-business charges (i.e. minibar, in-room movies).

Tip​: Reward your employees whenever they spend less, for example a gift voucher for Amazon

Ground transportation

Remind travelers to exercise their best judgement and use budget-friendly public transport when convenient. For example, they can use trains instead of planes for shorter trips if that is more cost effective.

Tip​: Use mobile ​taxi-apps​ such as ​Uber​ or ​Grab​ which are often cheaper and more convenient. Click here for an overview of the best taxi apps in Asia.

Car rentals

Assist your travelers with clear guidelines on car size, insurance coverage, and refueling policy.

Tip:​ For domestic trips, encourage your employees to use their personal cars with reimbursement on parking, mileage, or tolls.

Meals

Set a daily allowance that covers breakfast, lunch and dinner, giving employees the choice to decide how much to spend on each meal.

Tip:​ Include a statement about alcoholic beverages to clarify that they will be at the employee’s cost, unless they’re with clients.

Entertainment

Entertainment covers the hospitality expenses, such as business meals or events, spent to host clients. The most effective way to manage this is by setting a limit or range.

Tip:​ You can have an approval system in place. If employees go over a certain range, their reimbursement request needs to be approved by higher ranking executives.

3. Decide What Expenses are Not Included

Not all expenses are reimbursable. Specifically state what items the company will not reimburse to avoid any ambiguity going forward!

Common non-reimbursable categories include:

• Childcare for when you are away

• Personal grooming

• Pet hotels

• Airline Upgrades

• Traffic tickets

Tip:​ Include exceptions, for instance, when the airlines lost the travelers’ baggage, they might need to buy toiletries and clothes.

4. Develop an expensing and reimbursement process

Have a clearly defined process for reporting the expenses and claiming back those expenses.

Some key points:

• The ​expense reporting platform​ they need to use. Ask employees to create an expense report with the date, amount, category, location and business purpose stated.

• Materials and documentations that need to be submitted for reimbursement. These include receipts, vendor IDs, or a brief description of the expense purpose.

• The timeframe for report and reimbursement. Travel expense reports should be reported within a certain period to help company maintain accurate cash flow. Specify when the employees will get their money back. Use short videos for easy explanation.

Tip:​ Use ​an expense management tool such as ​Expensify to integrate payment, track expenses, create itemized expense report, as well as automate reimbursement.

5. Ensure Safety and Duty of Care

It’s crucial your policy has clear procedures to accomplish your duty of care.

Some precaution steps you can take:

• Centralize travel itineraries to locate the employees’ whereabouts at any time.

• Collect travelers’ contact information when they are away.

• Emergency procedures that include emergency contacts and resources employees can leverage.

• Additional travel safety and training.

• International SOS​ for medical and security assistance.

Tip:​ Use travel management software, such as ​Betravelo​, to track travelers during their trips.

What about about AirBnB and Bleisure?

Travel policy should cover every stage of trips from booking through reimbursement, including alternatives,​ such as:

Sharing economy travel apps

Sharing economy travel sites are built around the idea of sharing resources unused capacity to offer services cheaper. Think of Uber and ​Airbnb​. With the increasing number of business travelers adopting these services, companies have to consider how to tackle these non-traditional vendors.

Before allowing it in your policy:

• Factor in rewards programs and negotiated travel rates: Compare the price of sharing economy accommodations with your travel program’s negotiated rates for an unbiased decision.

Tip: W​ork directly with sharing economy suppliers to get discounts.

• Keep travelers informed and train them on the associated tools: Make sure that the travelers understand how sharing economy options fit into the company’s travel policy.

Tip:​ Inform travelers about the ​different ride levels and discuss which ones they should use.

• Ground safety: Work with sharing economy providers about your duty of care obligations.

Tip:​ Employees can use the “Share my ETA” option in the Uber app to check in with a travel manager or co-workers during travels.

4. Don’t fully transition: Make the sharing economy an option if it works for your travel program, but avoid forcing it.

Bleisure Travel

More and more travelers mix their business trips with leisure, especially in Asia, so a modern company travel policy needs to account for this. ​78% of corporate travelers agree that adding leisure days to business travel adds value to work assignments.

Ensure that the company only foots the bill associated with the business trip itself. E.g. additional nights in hotels and more expensive airfares should be paid by the employee.

How to manage key categories:

• Hotels: The company only pays for hotel nights directly adjacent to the business activity

• Flights: The employee has to pay for any incremental costs associated with arriving earlier or staying longer. Simply compare the cost of the itineraries and have the employee cover the difference!

Tip:​ Allow bleisure as long as it is clear when the company’s coverage of costs ends.

How to Ensure Travel Policy Compliance

After spending hours on drafting a good policy, the question becomes how to make sure your employees will actually follow it?

1. Leverage technology

Technology can be a sure fire way to increase policy compliance. ​​Reports suggest that investing in an end-to-end business travel solution​ results in a ​44% improvement​ in compliance.

Tip:​ A travel management platform, like ​Betravelo​, allows you to streamline the booking process and automatically apply a customized travel policy in minutes.

2. Make your policies transparent and up-to-date

Emails might be the easiest way to share the policy, but to encourage compliance you need to invest in the implementation. To ensure a fast and smooth implementation conduct small group sessions describing the new policy and why it is being implemented.

Also, make sure that your policy is continually refined and updated as your company and business travel evolves.

Tip:​ Share the policy on company leaderboards, create an interactive blog for employees to share tips, or hold annual meetings to announce updates to promote positive company culture!

3. Factor in your employee’s satisfaction

Be flexible in your policy and aim to improve your employees’ travel experience. Collect employees’ feedback via ad hoc emails or online survey tools to gain their insights on what can be done better.

Tip:​ Use a travel management platforms that takes employees’ personal preferences into account without losing focus on the company’s priorities. You can also assist them in ​applying​ for APEC cards for easy immigration.

4. Incentivize your employees

A travel incentive program is great to encourage employee compliance. Some approaches you can take:

• Cash back: Every time travelers pick a more cost-effective option, they’re saving the company money. You can offer to give 50% of the saved budget to the employees as cash reward.

• Reward with upgrades: Offer business class upgrades to employees that spent less than budget in their business trips.

• Make it a game: Gamification is an opportunity to bring together your employees and enhance compliance. Host an interesting travel contest, i.e. employees that save the most for their yearly travel win a trip to an exotic location.

Tip:​ Be creative in your strategies, i.e. offer bleisure if employees only book airfares in economy class.

Over To You

Every modern company engages in some elements of travel that are best regulated by a travel policy. Businesses need to create a robust corporate travel management process that is tailored to their employees, industry and financial situation. This is how to create a policy that will benefit both the company and the business traveler.

After all, a happy business traveller makes a good company ambassador and more productive employee!