How to write a travel & expense policy in 7 steps

If your employees are traveling more this year, you need an effective travel and expense (or T&E) policy in place. A travel and expense policy outlines how employee expenses for business-related travel are managed and covers actual expenses, like airline tickets, domestic travel costs, and hotel reservations.

By establishing clear guidelines upfront, a T&E policy helps eliminate confusion, minimize errors, and promote responsible spending habits among your employees.

The primary goals of a T&E policy are to:

• Certify that expenditures are reasonable and within the company's budget
• Provide a framework for booking travel and submitting business expense reimbursements
• Ensure consistent and fair treatment of all employees
• Comply with relevant tax and labor laws

In this article, we explain how to create such a policy, outline essential components, and provide practical steps for writing a clear and effective travel and expense policy for your business.

The essential components of a travel and expense policy

An effective T&E policy addresses all elements related to business trip planning, such as pricing, travel advances, and travel management. Additionally, it covers expense management, detailing how personal expenditures are handled and ensuring reimbursement requests are submitted with original receipts. To align with expense policy best practices, it should be clear, comprehensive, and easily accessible to all employees, promoting adherence and simplifying the approval process.

Let’s take a closer look at the key elements:

Expense categories

Clearly define the types of expenses that are and are not eligible for reimbursement upfront so your employees have clarity and can make informed spending decisions. Examples of reimbursable expenses might be air travel, business meals, car rentals, entertainment expenses, professional development, and office supplies. Non-reimbursable expenses might include personal expenses like leisure activities or upgrades beyond the allowed standard.

Booking and approval process

An effective travel and expense policy provides clear instructions on how employees are to make travel arrangements. This includes selecting preferred airlines, securing hotel accommodations, and arranging ground transportation. It also outlines the process for obtaining pre-approval for certain business expenses, like using a designated travel agency or corporate booking tool.

Expense submission and reimbursement

Specifying the required documentation, timelines, and approval workflows for submitting and processing expense reports is essential. This includes detailing the types of receipts or supporting documents needed, the deadlines for submitting expense reports, and the approval process.

Credit card and corporate card usage

If you provide company credit cards or corporate cards, your policy should address the rules for using them. Specify the acceptable uses, requirements for timely expense reporting, and consequences for misuse. You should also outline the procedures for obtaining and maintaining these cards, as well as guidelines for reconciling statements.

Per diem rates and incidental expenses

Make sure to clearly define the daily allowance you provide employees for meals and minor expenses during business travel. Per diem rates may vary by location or role, but you also need to define the types of incidental expenses that are covered by the per diem, like local transportation, gratuities, and internet access.

Insurance and liability

This section typically outlines what travel insurance coverage your company offers to employees, such as emergency medical, medical evacuation, or for lost baggage, especially if your team needs to purchase supplemental insurance for international travel or when traveling to higher risk destinations. Provide specifics on how to file claims, submit documentation, and report any covered incidents that occur during business travel.

Ground transportation

This part lays out policies and procedures for rental car usage and mileage reimbursement rates and documentation needed if an employee opts to use a personal vehicle for business travel. Set daily or per-trip spending limits set for ground transportation costs to keep expenses reasonable, and consider preferred rental car vendors to take advantage of pre-negotiated corporate rates.

7 Steps to writing a clear travel & expense policy for your business

1. Set clear guidelines for travel bookings

The first step in creating a T&E policy is to establish guidelines for how employees should book their travel arrangements. This includes specifying the preferred vendors, such as airlines, hotels, and rental car companies, as well as any negotiated corporate rates.

You should also outline the allowed class of service for various modes of transportation (economy, business class, or first class) and any procedures employees must follow when booking travel (using a corporate travel agency vs. an online booking tool).

Setting these guidelines upfront helps manage travel costs, ensure consistency in employee experiences, and maintain visibility over business spending.

2. Outline expense submission and reimbursement procedures

Next, define the process for employees to submit expense reports and receive reimbursement. This involves outlining the required documentation, such as itemized receipts, invoices, and mileage logs, that employees must provide.

You also need to establish expense report submission deadlines and an approval workflow. Clarifying the reimbursement timeline and acceptable payment methods streamlines the expense reporting process and ensures timely employee reimbursement.

3. Incorporate policy compliance and safety measures

Your T&E policy should address compliance with relevant laws and regulations, as well as safety considerations for business travelers. This may include adhering to per diem rates and other IRS guidelines for deductible expenses and company credit cards or travel expense reimbursement policies.

Be sure to provide guidelines for booking lodging expenses and ground transportation to ensure the safety and security of your employees while traveling. Establishing procedures for reporting lost or stolen company property, including laptops or mobile devices, is another important compliance and risk management consideration.

4. Adapt the policy for remote and hybrid work environments

It's important that T&E policy addresses the needs of a remote or hybrid work workforce. This may include reimbursement guidelines for home office equipment, supplies, and internet/utility costs, as well as policies around virtual team building or client meetings, allowances for meal delivery, or virtual event tickets. Do not forget to consider how your policy applies to employees working remotely from different states or countries, including potential tax implications and insurance coverage.

5. Use a template to create your travel and expense policy

Once you’ve confirmed the details for your policy, it’s time to document it. Use an expense policy template as a starting point to ensure that no critical components like mileage rates, parking fees, or hotel reservations are overlooked. Customize sections in the template to fit your business purpose and company’s travel needs.

6. Embed your travel and expense policy into your finance tools

Documenting your policy is just the first step. To prevent out-of-policy spending, utilize travel and expense management software to build guidelines into your company’s booking processes and corporate cards. Look for travel management tools that allow you to:

• Approve trips before booking, and route requests to different approvers depending on the team and amount.
• Dynamically adjust airfares and hotel maximums using market rates for a given route, or set fixed amounts.
• Help employees find and book in-policy hotels and flights, and block out-of-policy bookings from going through until they receive additional approval.
• Make it easy for employees to submit their expenses via SMS or email.
• Automatically analyze per diem expenses, trigger alerts for overspending, and flag unusual expenses like weekend spending or excessive tipping.

7. Communicate your travel and expense policy

With your travel policy and tools in place, the final step is to communicate the policy to your team. Consider hosting an in-person training session or creating a discussion forum for employee questions. Regularly review and update the policy to address changing business needs or regulatory requirements.

How Ramp simplifies travel and expense policy enforcement

Creating a travel and expense policy that's both effective and compliant can feel like walking a tightrope. You need rules strict enough to control costs and ensure compliance, yet flexible enough that employees can actually follow them without constant friction. Most finance teams struggle with policies that exist only on paper, gathering dust in employee handbooks while real-world spending happens without proper oversight or controls.

Ramp transforms this challenge by building your policy directly into our expense management platform. Instead of hoping employees remember spending limits, Ramp's customizable spend controls let you set precise rules at the card level. You can create merchant-specific restrictions, category limits, and even time-based controls that automatically enforce your policy. For instance, you might allow $50 daily meal allowances during business travel but restrict entertainment purchases entirely—all enforced in real time at the point of purchase.

The platform's automated receipt matching and expense categorization eliminates another major compliance headache. When employees make purchases, Ramp automatically captures and matches receipts, categorizes expenses according to your chart of accounts, and flags any transactions that fall outside policy parameters. This means you're not chasing down receipts weeks after trips or discovering non-compliant expenses during month-end close.

Perhaps most importantly, Ramp provides real-time visibility into all travel and expense spending across your organization. Finance teams can monitor adherence to policies as spending happens, not after the fact. Built-in approval workflows ensure that any exceptions or special requests get proper authorization before reimbursement.

By embedding your travel and expense policy into the actual spending process, Ramp turns what's traditionally been a manual, error-prone compliance exercise into an automated system that protects your business while making life easier for traveling employees.

Set your T&E policy on autopilot

Ramp's corporate card and spend management platform seamlessly integrates with your travel and expense policies, featuring compliance checks and capabilities to automate expense reporting, ensuring every transaction aligns with your guidelines.

Try an interactive demo and see why businesses that choose Ramp save an average of 5% a year across all savings.