Creating T&E policies for your company's business travel

Many organizations are now using a hybrid work model, with some employees at headquarters and others remote. As a result, finance teams are adapting their travel and expense (T&E) tools and policies to give employees the flexibility they need.

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For a long time, T&E policies have been a pain for everyone involved. That’s because:

• Department leaders often have no visibility into travel costs and spending, because spend management is siloed within the finance department and run through legacy or manual systems
• Finance teams have no control over employees’ travel spending, slowing the reconciliation process and month-end close process
• Employees spend hours filling out T&E expense reports for expense reimbursements and they dislike the inflexibility around hotel and flight bookings

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T&E is a critical component of business operations. But it’s an area with significant costs and risks. Because of this, it's critical for finance teams to establish effective T&E policies. In addition to directly impacting the bottom line, inappropriate T&E practices can create public relations issues for businesses, as well as difficulties with tax authorities if expenses are improperly claimed or reconciled. 

What you need to define in your T&E policy

Here’s a look at key sections of Ramp's T&E policy, to help you shape your own. 

Roles and responsibilities

We designate specific roles that are responsible for different aspects of expense management.

• Cardholders: We explain all employees should read and understand our policy in full and adhere to the spending guidelines with their business credit cards.
  

• Card managers: We explain how card members are responsible for reviewing each team member’s spending against the expense policy, bi-weekly.
  

• Finance administrator: We explain that our finance administrators define the expense policy, and train our teams on how to properly use their corporate cards (as well as how to maintain their corporate card policy).

Common travel expenses

Our card managers and employees are empowered to book cost-effective business travel. And this must be approved by either the card managers or finance administrators we mentioned above. Here are some of the T&E areas we’ve explained in our policy.

• Remote employees: This section covers how many times remote employees can travel to our two offices in New York and Florida per year, based on level of responsibility and visibility needs. We cover approved expenses for a maximum of five days during these trips. 
  

• Office employees: Similarly, we also set out how often employees working in each of the New York and Florida offices can travel between each office per year. Otherwise, the criteria and approvals are the same.
  

• Airfares: When we talk about airfares, we explain when and how employees should book flights, including what their maximum budget is per flight segment, plus reimbursements for in-flight WiFi for work use. 
  

• Public transport and taxis: Employees can expense reasonable transportation to or from airports and offices as necessary for corporate travel. We encourage people to mass transit when possible, and ride shares or taxis when public transport’s not possible.
  

• Mileage: For those who want or need to drive, we’ve set a fixed reimbursement amount per mile. And mileage needs to be fully documented, with the timeframe, starting location, ending location, the business purpose, and the number of business miles.
  

• Accommodation: We explain that employees should book lodging that is conveniently located for their business purpose and that is reasonably priced for their location.
  

• Meals and entertainment: We give a fixed budget for breakfast, lunch, and dinner. And if a team goes out together while traveling, we explain the most senior employee should pay using their Ramp corporate card—based on a discretionary social budget they manage for that team. 
  

How to create a travel & expense policy

Creating your own T&E policy should not be a command and control activity. You need to involve your teams. You need to partner with departments to find out how the business actually uses travel to achieve company goals, such as business development, talent recruitment, and international expansion. Whether you’re a founder, CFO, or department executive, these are three steps that will help you craft a great T&E policy. 

Step 1: Consult with company leaders

The first step in creating a T&E policy is research and preparation. Finance teams should carefully review the most relevant company policies regarding employee reimbursement and consider how their new T&E policy will fit within those guidelines. They should also discuss the proposed policy with different departments, such as human resources, legal or compliance teams, to make sure they're all on board before making any major changes.

Step 2: Set goals for T&E categories

After you’ve spoken to your teams, you can look at defining your goals and what you want the policy to achieve for certain T&E categories. By separating your probable T&E expenditure into different categories—such as accommodation, food, air travel, possible entertainment expenses, local transportation, and per diems—you can make it easier to track and record expenses later on.

It might be helpful to use these questions to craft your objectives:

• What expense categories are we dealing with?
• Would employees use business credit cards, personal cards, or cash?
• Which expenses would be reimbursable and non-reimbursable?
• What would be the process to report reimbursable expenses?

Step 3: Benchmark T&E costs

Before making a travel and expense policy, finance teams should prepare by researching flights in their area and the areas your team has approved, analyze how much of your company's budget can be allotted to travel, and determine what can and cannot be approved. They also need to make sure that they have systems in place for employees to pay for these expenses and report them.

T&E policy best practices

While every company will have its own unique uses, allowances, and demands for business travel, there are some best practices that can be applied right across the board. Here’s what we suggest. 

Prioritize your people

Don’t confine your approach to cost savings alone. Business trips have changed radically in the past few years, and you need to ensure your policy allows for your employees to be comfortable and safe when they’re traveling interstate or overseas. Consider who you are sending, expenses for executive officers might be different than t&e for sales teams. What is the most common destinations for them and see the best way to get to them. Give your employees reasonable options for booking hotels or choosing airlines. You can keep costs down by capping the hotel star rating or the class of airline tickets. But when it comes to employee travel, your employee comes first.

Provide clarity

Whether you're working remotely or not, as a business traveler, you inevitably come across various situations and questions that don't seem to fit into a standard policy. How much should I charge for a taxi? Do I need to keep receipts for my accommodation? Are there any tax implications when reimbursing the company for a client dinner?

Set spending limits

Using these benchmarks and any past expenditure data, you’ll have to decide what limits you’re going to put on the categories you made.

Explore reimbursement options

How your company pays for workers' travel expenses is perhaps the most important. Be sure to explore T&E reimbursement vs. directly paying for travel expenses vs. increasing an employee's salary to account for travel.

Travel & expense policy template

You can use Ramp’s Expense Policy Generator to creator your own T&E policy, but here’s what’s included in that template:

Overview 

This policy covers all expenses incurred by employees on behalf of the company, including expenses directly paid by the Employee that require reimbursement and expenses put on employee or department-Level corporate cards.‍

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Roles and Responsibilities 

• Cardholders 
• Card Managers 
• Finance Administrator 

General business expense policy 

If an Employee is ever unsure if a purchase can be expensed, they should consult their Line Manager or a Finance Administrator prior to making the purchase. 

• Work-From-Home Stipends 
• Learning & Development 
• Wellness Benefit 
• Meals 
• Recruiting 
• Commuting During Off-Business Hours 
• Travel Expense Policy 
• Remote Employees 
• Non-Remote Employees 
• Airfare 
• Ground transportation 
• Mileage 
• Accommodation 
• Meals 
• Entertainment 
• Submitting Expenses 
• Out-of-Policy Activity
• Exceptions 
  

Once your new policy is ready, the difficult work begins: the implementation.

Tips for implementing your T&E policy

Here’s how to ensure the implementation goes as smoothly as possible.

Create a communication plan

You’ll need to work with HR and your internal comms teams to do this well. It must be highlighted in management announcements, detailed across messaging channels like Slack, emailed separately to each employee, and be as easy to find as your own pay stubs. Team managers must also be brought into the process here. They have to highlight any changes to the policy and explain them well to the employees. The implementation of a new policy is always a company-wide effort and not just one team.

Seek employee feedback early

Early on, expect to do a lot of debriefing on how the new policy is viewed and used by your colleagues across the company. By gathering feedback from employees, you can ensure that procedures are being followed and identify ways that they can be improved. 

Track your T&E trends

Once the travel and expense policy is ready, teams will be able to track and watch its progress by looking at travel data, including expense reports, travel records, and employee feedback to determine whether or not the system is working or failing. A lack of order and not having a system in place is what causes a travel and expense policy to fail more than anything else.

Introduce virtual cards

Finance teams can incorporate virtual cards into their travel and expense policies by working with the tech and finance teams to create and distribute these cards when employees begin to travel. Using virtual cards gives finance teams more control over the expenses — especially for remote and distributed teams. They help you instantly create cards and block accounts. The paperless approach makes accounting workflows much more efficient.

Train your teams

Your employees should understand why travel policies are important and how they’ve changed in recent years. The more informed your employees are about their company's policies, the more likely they are to comply with them. This is where good training comes in. Take the time to develop strong procedure and policy training so that all employees know how to properly cover travel-related expenses. Because spend management isn’t just a finance team job—it’s everyone's.

Simplify T&E controls

Spend management software can be a useful ballast here too. For example, Ramp for Travel now lets you set up a simple T&E policy in just a few clicks, with a capped maximum per flight, per night of accommodation, and a daily stipend.

Don’t leave T&E expenses to chance

Finance teams should look beyond traditional options like paper receipts, spreadsheets, and manual reimbursements when implementing a T&E policy. Instead, seek out a centralized system that streamlines how employees submit their expenses and how finance teams manage the reimbursement process.

• Create a modern travel expense policy using Ramp’s Expense Policy Generator
• Digitize your policies with flags & alerts to stay on top of overspending
• Create a travel card program with built-in controls & accounting rules
• Empower employees to book travel anywhere with their own Ramp card
• Get real-time alerts on out-of-policy spend as it happens
• Automate employee expense reporting with powerful receipt integrations
• Provide duty of care with real-time visibility into trips for every employee
  

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A clear and comprehensive travel and expense policy can be a game-changer for your company, helping your finance team mitigate monetary losses, employee confusion, and fraudulent activity. By cutting out the unnecessary paperwork, everyone can dedicate their time and skills to doing what they do best—their actual jobs.

The ideal T&E policy will be built on this understanding. It will give your employees and finance teams’ the trust and tools to control costs. With more of us working traveling between company and customer offices as business trips bounce back, a solid T&E policy can make all the difference to your spend management efforts.