A complete guide to travel and expense management in 2024

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Efficiently managing business travel expenses is crucial for a company to thrive. Fortunately, there are a number of software solutions that can help with this. These include Ramp, Zoho Expense, SAP Concur, Expensify, Emburse, TravelPerk, and Rydoo.

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‍In this article, we’ll explain what goes into travel and expense management, how to design an effective T&E policy, important tax considerations, and how software can streamline this often difficult process for your company.

What is travel and expense management?

Travel and expense management, also called T&E management, is the set of processes and policies companies use to control their business travel expenses. This function is crucial for managing outgoing cash flow, complying with the company expense policy, and maintaining financial visibility.

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The travel expense management process involves setting clear guidelines and policies for employee travel and then enforcing them effectively, using tools like employee credit cards and expense management solutions.

How to design a travel and expense management policy 

There are six critical steps to writing an effective travel and expense management policy. 

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1. Set travel booking guidelines: The first step in designing a travel and expense management policy is to identify the vendors (e.g., airlines, car rental companies, and hotels) employees should use when booking their travel
2. Draft expense submission and reimbursement procedures: Next, you’ll need to clearly outline the expense reimbursement process you want your employees to follow
3. Detail policy compliance and safety measures: The next step to designing an effective T&E policy is to detail the safety regulations and tax compliance your employees must follow when traveling in an official business capacity
4. Adapt the policy for remote and hybrid work: An effective travel expense management policy should include guidelines specifically geared towards remote work, assuming this is a component of how your company operates
5. Use a travel and expense policy template: Using a travel and expense policy template can help ensure you don’t overlook critical parts of your policy
6. Implement and communicate your travel and expense policy: The final step is to share your travel and expense management policy across the company and require that new and existing employees acknowledge they’ve read it

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Tips for managing business travel expenses

1. Draft a business travel policy

Creating a comprehensive business travel policy is a foundational step in managing travel expenses. This policy should clearly outline what’s considered a reimbursable expense, set daily spending limits, and specify preferred vendors for flights, accommodations, and car rentals. By following the six steps we reviewed above, you’ll be well on your way to creating an effective T&E policy for your organization.

2. Communicate your policy

Once you have a travel policy, make sure your employees know about it. Share your company's travel policy with all employees, regardless of whether they’re likely to travel. Ensure your policy is easily accessible and send out reminders before business trips to review it. Make your T&E policy required reading as part of the onboarding process for new hires. A clear and thorough travel policy will help prevent confusion when it comes time for reimbursements.

3. Record and categorize all expenses

Establish a method for employees to track and categorize all their travel-related expenses. This could involve using corporate cards and expense management software that lets employees upload receipts and track spending in real time. Categorizing expenses will help your team analyze spending patterns and identify areas for cost reduction. It also streamlines the approval process and reimbursements and keeps your financial reports accurate.

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4. Calculate trip costs

After a business trip ends, calculate the total cost of the trip and split out costs by category. This equips you with valuable information to help plan accurate budgets for future trips to similar destinations or events. It also lets you pinpoint any trips or employees who exceed the average costs. Look at expense categories like travel and fuel costs, dining, entertainment, and other costs to get a sense of where your company is spending money on trips.

5. Predict future travel expenses

Having historical data from past trips will help you forecast your future travel expenses. Predicting future spend is important for budgeting and strategic corporate travel planning, helping you allocate resources more effectively. Also, understanding your company’s travel needs and spending means you can plan to negotiate corporate rates with providers like airlines, hotels, and car rental companies.

What kind of travel expenses are tax-deductible?

Needless to say, there are important tax considerations to keep in mind when designing your company’s travel and expense management policy. The IRS allows you to write off certain travel expenses, and you’ll want to make sure your employees understand they can only get reimbursed for these specific types of costs. It’s also important to keep track of your receipts for each and every one of these charges in case your company ever gets audited.

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Deductible business travel expenses include:

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• Travel expenses: Travel expenses include airfare, tolls, taxes, and lodging. Note that the travel destination has to be away from the area in which your company normally conducts business, and the trip must be longer than one day.
• Meals: The cost of meals while traveling for business are deductible up to 50%
• Auto expenses: This category is most often associated with the business use of a personal vehicle, which you can deduct with either the standard mileage rate or actual expenses method
• Office supplies: Office supply costs are deductible if they’re required for a business trip
• Education: Sending an employee on a trip to take classes or attend an accredited seminar can produce multiple deductible expenses
• Incidentals: Incidental expenses like laundry or dry cleaning costs, gratuities for hotel staff or valets, and equipment rentals are tax-deductible

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Challenges of manual travel and expense management

An ineffective travel and expense management process creates several pain points for organizations, including:

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• Complexity: From airfare and accommodation to meals and transportation, corporate travel management can be overwhelming. This complexity often leads to errors in manual data entry, which results in inaccurate records and potential compliance issues.
• Lack of visibility: Organizations often struggle to gain real-time insights into where their travel and expense budget is going. This lack of spend visibility makes it challenging to identify cost-saving opportunities and optimize spend
• Inconsistent enforcement: Without a strong system in place, it’s difficult to ensure employees are following your company's expense policies. This opens the door to potential tax compliance issues.
• Overspending: If you don’t have a way to consistently enforce your T&E policy, you may wind up with budget overruns, misallocation of funds, and potentially even cases of expense fraud
• Administrative strain: Manually managing travel bookings, receipts, expense documentation, and the reimbursement process amplifies the administrative strain on your finance team
• Slow employee expense reimbursements: When your staff is bogged down by manual T&E processes, reimbursements are slower to hit employee bank accounts. This can lead to frustration and low morale.

Travel expense management software solutions

Travel and expense management software simplifies the process of expense reporting, automates approval workflows, and organizes your financial data so it’s easy to review.

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Travel and expense management systems can also offer valuable insights into your company’s spending patterns, notifying you when transactions are outside company policy or when spending in certain categories is higher than your benchmarks.

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Here are some of the leading platforms you can use to manage travel and expenses:

Ramp

Ramp Travel is an all-in-one expense management platform with powerful automation features to streamline your travel expenses. With Ramp, you get:

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• Automated receipt capture and tracking
• Real-time visibility into spending with customizable reports
• A corporate card with built-in spend controls
• Accounting software integrations (QuickBooks, Xero, NetSuite, and more)

Zoho Expense

Zoho Expense is designed to automate the process of expense reporting, streamline approvals, and manage business expenses. Some key features of Zoho Expense include:

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• Receipt capture via mobile app
• Customizable workflows 
• Detailed analytics and reporting
• Support for multiple currencies and tax regulations 

SAP Concur

SAP Concur is one of the oldest—and largest—digital travel management platforms on the market, with tools to help manage spending and streamline expense tracking and approval workflows. SAP Concur offers:

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• Travel booking
• Invoice processing
• Compliance and policy enforcement
• Analytics and reporting

Expensify

Expensify’s platform features a range of tools that automate and streamline the travel expense reporting process. Expensify gives you:

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• Receipt scanning
• Spend management and reporting
• Corporate card reconciliation
• Multistep approval workflows

Emburse

Emburse offers a suite of business software solutions focused on streamlining financial operations and managing spending:

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• Integration capabilities with various ERP and accounting systems
• Detailed analytics tools 
• Customizable workflows

TravelPerk

TravelPerk is a comprehensive travel management platform designed to handle various aspects of business travel. TravelPerk’s key features include:

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• All-in-one travel booking tool
• Travel policy integration
• 24/7 customer support
• Comprehensive reporting tools

Rydoo

Rydoo is a cloud-based travel and expense management platform designed to streamline the process of corporate travel. Rydoo offers:

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• Travel booking capabilities
• Policy compliance automation
• Real-time reporting and analytics
• Corporate card reconciliation

Use Ramp for end-to-end travel expense management

Ramp Travel is designed specifically for business travel management. Here’s how Ramp can streamline your travel expenses:

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• Automated expense tracking: Ramp automates expense tracking, logging each transaction by vendor and category whenever employees swipe their cards. We also have accounting integrations to generate financial reports.
• Travel itineraries: Ramp automatically generates travel itineraries when employees forward their airline confirmation emails. All expense data during the trip is seamlessly linked to create a consolidated trip report, providing valuable spending insights.
• Better employee experience: Define your company travel policies and set specific rules, like maximum airline costs or dining expenses. Using Ramp cards avoids employees paying out-of-pocket and filing business travel expense claims—only allowable expenses can be charged in the first place, making for a better experience.
• Customer support: Our dedicated customer support and live training is available to help you configure your cards to your specific business needs.

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Businesses of all sizes use Ramp to realize a better expense management workflow. Our customers save an average of 5% a year with our suite of modern finance tools. Try an interactive demo to see why.$