Guide to company travel and expense management
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Efficient travel and expense management, also called T&E management, is more critical than ever. This systematic process guides organizations in controlling and overseeing their business travel expenses, from planning and booking trips to tracking and reimbursing expenses.
The basic idea of corporate travel management is to establish clear guidelines and policies for employee travel, using software to streamline the processes of expense reporting and approval workflows.
However, it's not without its challenges, including the complexity of tracking expenses, a lack of real-time visibility, policy enforcement difficulties, and administrative strain.
In this guide, we’ll explain what goes into travel and expense management and how software can streamline this process for your company.
What is travel and expense management?
Travel and expense management is the systematic process that organizations use to control and oversee business travel expenses.
This function is crucial for businesses to maintain control of their travel spending, abide by company policies, and maintain financial visibility.
A travel expense management solution involves setting clear guidelines and policies for employee travel, from choosing preferred airlines and hotels to defining acceptable meal and entertainment expenses.
Travel and expense management systems
Using technology and specialized software is a key component of travel and expense management for small to large businesses.
These tools simplify the process of expense reporting, automate approval workflows, and organize your financial data so it’s easy to review. Using software alleviates the administrative load carried by employees and finance teams subjected to manual processes. That way, they can allocate their time toward more strategic tasks.
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.
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.
Why is travel and expense management important?
Travel and expense management offers several benefits, including:
- Better experience for employees: Creating clear guidelines for travel spending and using expense management software to enforce them creates a smoother travel experience for your employees, without any guessing about which expenses they can charge.
- Reduced manual work: Using expense management software for your T&E expenses lets you automate several of the processes involved, reducing the burden on your employees and finance team.
- Identifying savings opportunities: By automating expense reporting and approval workflows through software, you can identify ways to cut back on your business travel spending. For instance, choosing less expensive flights, or finding better deals on hotels.
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, keeping tabs on every expenditure 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 transparency can hinder decision-making, making it challenging to identify cost-saving opportunities and optimize travel expenses effectively.
- Enforcement: In the absence of a robust system, maintaining employee adherence to company expense policies can be challenging. 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: Grappling with the intricate task of managing receipts and expense documentation amplifies the administrative strain, particularly when entangled in manual processes.
- Technological changes: Navigating the ever-evolving landscape of expense management tools and solutions can be an intimidating ordeal for organizations.
The travel and expense management process
The travel and expense management process is a workflow that lets you control and easily view all of your business travel expenses. It involves several steps designed to streamline financial tracking, increase compliance, and optimize your spending.
For some businesses, a designated travel and expense manager is responsible for overseeing business travel budgets as well as approving and reimbursing travel expenses. Most companies assign the finance team to these tasks or use automated software, though.
The steps in the travel and expense management workflow are:
- Trip planning and booking: Employees, often in collaboration with the travel and expense manager, plan their business trips, making reservations for flights, accommodations, and any other necessary arrangements.
- Recording expenses: During travel, employees document receipts for various business-related expenses. To streamline this process, many companies assign corporate credit cards with preset budgets, which automatically log expense data and remove the need for reimbursements. Employees might also use mobile apps to track their spending.
- Submitting: Once employees return to the office, they typically need to submit an expense report. This report serves as the official record of all expenses charged during the trip.
- Approval: The finance team checks that the expenses submitted follow company policy, such as per diem limits and allowable expenses.
- Expense reimbursement: The team then verifies expense reports against the company's financial records and starts the reimbursement process for employees' out-of-pocket expenses.
What is expense management software?
Expense management software automates several processes, including submitting, approving, and reimbursing expenses. In the context of travel and expense management, this software is often built into corporate cards that employees use on their business trips.
Here are some examples of what travel expense management software can do:
- Easy travel booking: Expense management software can integrate with popular booking platforms. Employees can book their travel arrangements using their preferred platforms while staying within company guidelines.
- Real-time visibility: Travel expense management software provides finance teams and travel managers with real-time visibility into employee trips. Itineraries and expenses related to a trip are neatly grouped, making it easy to track expenses efficiently.
- Spend management: Admins can define travel policies, covering aspects like maximum airfare costs, booking requirements, and daily spending limits for meals. The software automatically flags transactions that breach these policies.
- Travel dashboard: A travel dashboard offers a simplified view of all company travel activities. This dashboard provides insights through map views, metrics summaries, and detailed trip lists. Managers can track active and upcoming trips, track spending trends, and view top spenders and merchants.
- Expense categorization: The software categorizes expenses, simplifying financial analysis. It segments costs into categories like flights, hotels, ground transportation, per diems, and miscellaneous expenses.
- Receipt integrations: Travel expense management software offers receipt integrations that minimize the time employees spend submitting expenses manually. When employees forward their receipts, the software will automatically generate trip data, reducing the burden on both employees and finance teams.
- Employee card management: Expense software is often built into corporate cards, which can be set up to enforce your company’s expense policies.
- Automated reporting: This software can automatically generate expense reports, giving you full visibility into business travel spending for future budgeting and any reimbursements.
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.
- Travel itineraries: Ramp automatically generates travel itineraries when employees forward their airline confirmation emails. All transactions during the trip are seamlessly linked to create a consolidated trip report, providing valuable insights to managers and administrators.
- Better employee experience: You can 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.
Ramp is an expense management solution for businesses of all sizes. With our corporate card, managing employee expenses is simple and effective.