Tips for managing travel and expense management

Efficiently managing business travel expenses is crucial for a company to thrive. Travel and entertainment are two of the largest costs many businesses face, so it’s important to develop a system that controls for these areas of spending.

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For finance teams, T&E management can present a number of challenges, including:

• The complexity of tracking expenses
• A lack of real-time visibility into employee spending
• Travel policy enforcement difficulties
• Administrative strain

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In this article, we’ll explain what goes into travel and expense management 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 process that companies use to establish and enforce business travel policies.

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This function is crucial for businesses to gain control of their travel spending, stay within company policy, and maintain 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 cards and expense management software.

Challenges of travel and expense management

Travel and expense management is not without its fair share of challenges, and improper handling of these aspects can pose several pain points for organizations, including:

• 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 in turn 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 being allocated. This lack of spend visibility can hinder decision-making, making it challenging to identify cost-saving opportunities and optimize travel expenses effectively.
• Enforcement: Without a strong system in place, it can be difficult to ensure that employees follow your company's expense policies. This not only opens the door to potential compliance pitfalls but also paves the way for budget overruns and the misallocation of funds.
• Administrative strain: Manually managing travel bookings, receipts, expense documentation, and the reimbursement process amplifies the administrative strain of T&E processes.

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 outline what’s considered a reimbursable expense, set daily spending limits, and specify preferred vendors for flights, accommodation, and car rentals.

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It should also address the process for booking travel and submitting expenses for reimbursement. Making sure the policy is clear and thorough can prevent misunderstandings and out-of-policy spending.

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. Make sure the documentation is easily accessible and send out reminders before business trips to review the policy. Making your travel policy clear and thorough will help prevent confusion and miscommunications when it comes time for reimbursements.

3. Record and categorize all expenses

Establish a method for employees to track and categorize all of their travel-related expenses. This could involve using corporate cards and expense management tools that let 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.

4. Calculate trip costs

After a business trip ends, calculate the total cost and costs by category. This will equip you with valuable information to help you determine the right budget for future trips to similar destinations or events, while letting you pinpoint any trips or employees who exceed the average cost. Look at spending categories like travel and fuel costs, dining, entertainment, and other travel expenses 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 future travel expenses. Predicting future expenses is important for budgeting and strategic planning, letting you allocate resources more efficiently. 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 is travel and expense management software?

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. Using software alleviates the administrative load carried by employees and finance teams subjected to manual spend management processes. That way, they can allocate their time toward more strategic tasks.

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Travel and expense management systems can also offer valuable insights into your company’s spending patterns, informing you when transactions are out of policy or when spending in certain categories is higher than industry standards.

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These insights can lead to significant savings over time by identifying opportunities for your business to negotiate better rates with travel vendors, enforce compliance with your expense policies, and get rid of wasteful spending.

Use Ramp for travel expense management

Ramp’s all-in-one corporate card and expense management platform has features specifically designed for business travel management. Here are some of the ways Ramp can streamline your travel expenses:

• 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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Ramp is an expense management solution for businesses of all sizes. With our corporate card, managing employee expenses is simple and effective.