What is T&E?

Travel and expense (T&E) management is an important part of your overall expense management process. But as your business grows, it becomes more complex. Creating the right policies and processes is essential to accurately reimburse travel expenses and correctly deduct them from your taxes.

In this post, we'll dive into T&E, explore some of the most common T&E expenses, and discuss how to effectively manage T&E for your business. We’ll also cover common challenges and how to overcome them.

What does T&E mean?

T&E means "travel and expense" or "travel and entertainment." It refers to the expenses that arise while employees are traveling for business or entertaining clients. Common T&E expenses include meals, hotel bookings, and transportation costs such as flights, car rentals, and ride shares.

Traditionally, employees submit expense receipts for their T&E transactions and purchases as part of an expense report. If the employee paid for the expenses out of pocket, they’d typically get reimbursed.

‍Is T&E an operating expense?

Yes, T&E is considered an operating expense, which covers costs such as business travel expenses and entertainment expenses. In accounting, operating expenses represent the costs incurred as part of your day-to-day operations.

You record operating expenses, including all T&E expenses, on your company's income statement below gross profit. This recording helps stakeholders understand your company's operational costs and financial health.

What is T&E in a contract?

T&E in a contract refers to the policy for claiming travel and related expenses during the contract's execution. It outlines reimbursement rates, approval processes, and who bears these costs.

This section of a contract helps you make sure you manage expenses fairly, providing a clear framework for both parties to understand and agree upon the allowable travel costs for business purposes, which helps you avoid potential disputes.

Why is T&E management important?

T&E expenses add up quickly and can constitute a significant portion of your company’s operational costs. Here are 4 key reasons why travel and expense management matters for your business:

1. Tracking T&E effectively can prevent unexpected costs

Without a system to track and control costs, you can quickly blow your T&E budget, and accounting teams can get backed up dealing with costs they didn’t anticipate. These uncontrolled expenses directly eat into profit margins, making it harder to hit financial targets and forcing difficult decisions about other business investments.

2. Inaccurate or insufficient T&E reporting can result in tax issues

T&E costs are tax-deductible, but because they can span such a wide range of expense categories, it’s necessary to demonstrate to the IRS that each purchase was business-related. Incorrect expense reports can trigger audits and even fines, so accurate reporting is crucial.

Be thorough with your recordkeeping, using an organized log of relevant invoices and paper or digital receipts for all T&E transactions. A well-structured workflow for managing receipts and approvals can significantly streamline and improve the reporting process.

3. Controlling what can (or can’t) be purchased is critical for reducing T&E costs

It may be tempting to send employees on their way with a business credit card to cover expenditures on a business trip. But without controls or restrictions, it can result in excessive or unnecessary spending.

You may find it helpful to use cards with predefined or actively managed permissions. These specify what employees can or can’t purchase on behalf of your business and which vendors they’re allowed to make those purchases from. That way, you don't lose control over your T&E budget.

4. T&E management supports employee satisfaction and business growth

Well-managed T&E programs boost employee morale by eliminating reimbursement issues and approval delays. When employees focus on their work instead of wrestling with expense reports, productivity increases. Clear policies also help attract top talent who value streamlined processes.

Accurate T&E data reveals which business activities generate the best returns, enabling smarter investments in client meetings, conferences, and team development that drive revenue growth.

Effective T&E management keeps your finances on track while supporting your team's success. By implementing smart controls and streamlined processes, you'll protect your budget and create a better experience for everyone involved.

What qualifies as a T&E expense?

Before you can claim a T&E expense, you must accurately categorize it as such. The IRS has specific guidelines about which travel and entertainment expenses qualify for business deductions. Here's what typically counts and what doesn't.

Common T&E expenses include:

• Airfare, train tickets, and other transportation costs
• Hotel accommodations and lodging
• Rental cars
• Parking fees and tolls
• Business mileage
• Business meals with clients or colleagues
• Conference and seminar registration fees
• Shipping materials for a business meeting
• Entertainment expenses for business purposes
• Taxi, rideshare, and local transportation
• Business-related phone calls and internet access
• Tips and gratuities for business services

Expenses that don't qualify as business T&E:

• Personal vacation travel
• Meals during regular workdays at your usual workplace
• Entertainment for family members
• Extravagant or lavish expenses
• Personal shopping or souvenirs
• Spa treatments and personal services
• Traffic violations and parking tickets
• Alcoholic beverages (with some exceptions)
• Personal phone or internet charges unrelated to business

Keeping clear records of business purpose helps ensure your T&E expenses meet IRS requirements and qualify as business tax deductions.

How to effectively manage T&E

Managing travel and entertainment expenses well keeps your business running smoothly while maintaining financial control. Here are some proven strategies to streamline your T&E processes and keep everyone on the same page.

Set clear T&E policies

Well-defined policies provide the foundation for effective expense management and help employees make appropriate spending decisions.

Key elements every T&E policy should include are:

• Allowable expenses: Specify which travel, meal, and entertainment costs qualify for reimbursement and highlight any spending limits
• Approval workflows: Define who needs to approve expenses before and after travel, including dollar thresholds for different approval levels
• Documentation requirements: Detail what receipts and supporting documents employees must submit with expense reports
• Booking procedures: Establish preferred vendors, advance booking requirements, and guidelines for flight, hotel, and car rental selections
• Per diem rates: Set daily allowances for meals and incidental expenses based on travel destinations
• Prohibited expenses: Clearly list what you won't reimburse, such as personal entertainment or excessive meal costs
• Spending limits and categories: Define maximum amounts for different expense types, such as hotel rates by city tier and entertainment budgets
• Exception and dispute procedures: Outline the process for requesting policy exceptions and how employees can appeal rejected expenses or resolve disagreements

Clear communication ensures your policies actually work. Share updates through multiple channels and provide easy access to policy documents so employees can reference them when making spending decisions.

Automate T&E tracking and reporting

Expense management software offers significant benefits, including faster processing times, better data accuracy, and improved visibility into spending patterns. Automated systems also reduce the administrative burden on both employees and finance teams while providing real-time insights into travel spending.

Features to look for include:

• Real-time monitoring: Track business expenses as they occur rather than waiting for monthly reports
• Mobile receipt capture: Allow employees to photograph and upload receipts instantly from their smartphones
• Integration capabilities: Connect seamlessly with accounting systems, credit card feeds, and payroll platforms
• Automated approval routing: Send expense reports to the right approvers based on your established workflows
• Policy compliance checks: Flag potential violations before expenses are approved
• Analytics and reporting: Generate detailed insights into spending patterns and policy adherence

The right expense management platform pays for itself through time savings and improved compliance monitoring.

Maintain compliance and prevent fraud

Proactive measures protect your organization from financial risks while maintaining trust with employees and stakeholders.

Here are some tips for bolstering compliance:

• Conduct regular audits: Review expense reports periodically to identify patterns and ensure policy adherence
• Create clear documentation standards: Require detailed receipts and business justifications for all reimbursable expenses
• Establish segregation of duties: Separate expense approval authority from expense processing responsibilities
• Offer training programs: Educate employees on proper expense reporting procedures and policy updates
• Set expense limits: Set reasonable spending thresholds that align with business needs and industry standards

Common risks include duplicate submissions, personal expenses mixed with business costs, inflated receipt amounts, and missing or altered receipts. Address these through automated duplicate detection, clear policy communication, and regular spot checks of submitted expenses.

Streamline reimbursements

Processing expense reports quickly really comes down to setting clear expectations up front. When you establish submission deadlines and review timelines, employees know what to expect and can plan accordingly. Direct deposit makes reimbursements much smoother for everyone involved and lets people know when they can expect their payment.

You can also save yourself a lot of administrative work by setting up automated approval workflows for routine expenses under certain dollar amounts. And corporate credit cards for your frequent travelers can eliminate the whole reimbursement process for many transactions, which means less paperwork for employees and less processing for you.

With the right policies, tools, and processes in place, T&E management becomes a smooth operation that supports your business goals while keeping employees and finance teams happy.

Common T&E challenges and how to solve them

Managing T&E can be particularly challenging for small businesses, especially as the Global Business Travel Association predicts increased T&E costs in 2025. The more your team is on the road, the more it costs, and the more expenses and reports there are to keep track of. These things often become even harder to tackle as your business grows.

Here are a few common challenges around managing T&E expenses and how to address them.

Reimbursement delays

Expense reimbursement is complicated, and delays in repayment can strain operations and damage employee trust. Expense management software with expense reporting automation features can help employees log their T&E purchases more efficiently and accelerate the reimbursement process.

Unclear expense policies

Many businesses fail to maintain specific corporate travel policies, leaving rules around T&E spending open to interpretation.

Having clear company policies around T&E allows employees to spend responsibly and with more confidence, protecting your bottom line and eliminating the need for managers and finance teams to constantly dispute individual purchases.

Error-prone reporting and data entry processes

Manually updating spreadsheets to track expenses is inefficient and error-prone. It also places an unnecessary burden on employees to double-check entries when they should be focused on more important tasks, such as entertaining valuable clients and positively representing your business.

Instead, use expense management software or apps that allow employees to easily track their T&E expenses and automatically add them to expense reports, which also helps the finance team.

Missing receipts

Employees might not always be careful when it comes to saving receipts. These are important both for reimbursement and for tracking expenses and tax deductions. Expense management tools often come with receipt scanners that can help automate the process.

Why Ramp is the best tool to manage T&E

Managing travel and expenses is a constant challenge for businesses of all sizes. From tracking down receipts and expense reports to ensuring policy compliance, the process can be time-consuming and error-prone. Ramp's best-in-class expense management software streamlines T&E management, saving your team hours of manual work while giving them real-time visibility and control.

With Ramp's receipt matching, employees simply take a photo of their receipt and submit it to the platform. Ramp's powerful OCR technology extracts the merchant name, date, and amount, automatically matching the receipt image to the corresponding Ramp card transaction—no more chasing down paper receipts or manually reconciling expenses.

On top of simple options to submit via web, mobile app, or email, Ramp also offers text message receipt capture. On-the-go employees can simply text a photo of their receipt to a dedicated Ramp number.

Ramp also makes it easy to create and enforce expense policies to keep spending in check. With category-based controls, you can set granular spend limits by merchant category code, giving you fine-tuned control over where and how much employees can spend. For example, you could allow hotel expenses up to $300 per night while restricting entertainment expenses.

Ramp's AI-powered fraud detection adds another layer of protection, proactively flagging suspicious transactions for review.

By automating key parts of the expense management process, Ramp frees up your team from tedious busy work while providing the real-time oversight needed to keep budgets on track. With receipt matching, mobile expense reporting, and granular spend controls, Ramp transforms T&E management from a time-consuming headache into an efficient, compliant, and controlled process.

Modernize your T&E management

Once you define your company’s travel and expense policy, the best way to streamline your travel expense management process is to use Ramp.

Our corporate cards let you set custom vendor controls and spending limits, and our automated expense management system tracks and categorizes your employees’ expenses in real time. Ramp lets you upload your T&E policy directly to the platform so you can get instant notifications about out-of-policy spending—or block it before it even happens.

Check out our interactive demo environment and see why companies that choose Ramp save an average of 5% a year across all spending.