Guide to business travel and expense management

A productive business trip can give your company new insights, stronger relationships, and more. While the benefits may be priceless, every corporate trip comes with expenses. Luckily, with some planning, organization, and clear communication, you can optimize your business’s travel expense process to save time and money.

What are business travel expenses?

Business travel expenses include most costs incurred during a business trip – specifically, costs of products and services that are necessary to achieve the goals of the trip. As a loose rule, business travelers can usually claim expenses that relate to their basic needs or enable them to do their job while abroad. These subsistence expenses can have tax implications, so it’s vital that everyone at your organization understands what qualifies.

Most common business travel expenses are:

• Airfare
• Accommodations
• Food
• Car rentals
• Fuel for rental cars or personal vehicles
• Mileage allowance when a personal vehicle is used for a business trip
• Parking fees and road tolls
• Public transportation
• Costs associated with entertaining clients, prospects, and partners
• Other miscellaneous business costs – anything from printing materials for a tradeshow booth, props for a photoshoot, or renting tech for a presentation

While there’s a wide scope of expenses eligible for reimbursement, there are also limits. Business travel expenses generally don’t cover things like commuting to a local office, clothing for trips, or personal entertainment costs while traveling for work.

What’s travel and expense (T&E) management?

Travel and expense management is the process of setting travel policies, as well as ensuring employees keep records while traveling and submit their expense reports properly upon return. Robust travel and expense management is important to provide clarity for employees, find corporate travel savings, and ensure accurate accounting.

In smaller businesses, these tasks may fall under your Legal Team, HR, or office managers, or be outsourced to a travel management company.

At larger companies, there may be a dedicated corporate travel manager who is responsible for overseeing travel planning, establishing and enforcing travel policies, and managing budgets and expenses.

No matter the size of your company, business travelers also have an important role to play. They’re responsible for understanding and following the travel policy, keeping records of their expenses, and submitting claims on time.

The travel and expense management process often relies on the use of a T&E management solution.

How to manage the travel and expense process

Every company should have a travel and expense policy that includes expense management so employees understand how to submit expense claims, which expenses are appropriate, and what to expect from the reimbursement process.

There are several ways to manage corporate travel and expenses, each with their own benefits and challenges:

1. Manually: Business travelers book and pay for everything themselves and are reimbursed later.

• Benefits: Travelers have the flexibility to make their own decisions and changes on the go. This approach also requires less investment or infrastructure to set up the process.
• Challenges: Travelers have to know the travel policy in detail to stay compliant since there aren’t any automatic notifications to warn them. To minimize this risk, the company should offer training sessions and clear documentation. Non-compliance can lead to overspending and impact the company budget. With manual T&E management, travelers have to wait for reimbursement, which can lead to difficult situations depending on their financial situation. There’s also a bigger administrative burden both on business travelers to track all their own expenses and records manually, and on the HR team to process proof of expenses.

2. Business travelers book and pay for everything using a corporate travel card

• Benefits: It’s simple to have all expenses on one card, which prevents the temporary financial burden on employees paying out of their own pockets. By choosing the right corporate credit card, you can also take advantage of rewards.
• Challenges: Businesses need to have a lot of trust in their employees to ensure they’re using their corporate cards appropriately. If several people are sharing a physical corporate card, it can be difficult to separate expenses and prepare claims. A physical credit card could also be lost or stolen.

3. Business travelers, travel managers, or administrative support book and pay via a business travel platform

• Benefits: Provides flexibility both in terms of who can book travel and the options available. The right platform can also help enforce your travel policy and provide transparency about travel booking across the organization.
• Challenges: Travel management platforms are usually used for booking flights, accommodations, and transportation, so you’ll still need to use corporate cards or reimburse business travelers for costs during their trips. Integration of other corporate systems such as HR or accounting can cause problems, so you should choose a platform that offers seamless integration with your existing systems. *

Why is travel and expense management important?

Travel and expense management is particularly important for companies because it addresses the pain points of business travel planning:

1. Better compliance with the company’s travel policy – Whether you decide to use a T&E management solution to automatically flag non-compliant expenses or you prefer a more manual process, having an expense management system in place will require a very clear and well-communicated travel policy that business travelers must respect.
2. Accurate reimbursement of the expenses – A solid T&E management process will ensure that expense reports are easy to submit and process, and that business travelers get reimbursed as soon as possible if they paid upfront.
3. Cost control and financial stability – The goal of T&C is for you to control the costs of business travel and to understand where you’re potentially overspending. A robust T&C management system can help you achieve financial stability.

How can business travel platforms help manage expenses?

Business travel platforms are software solutions that allow you to book the different legs of your trip. They streamline and manage the different aspects of business travel, including managing expenses.

Here are the main features and benefits that business travel platforms can offer:

1. One-stop-shop solution – You can book flights, accommodations, and rental cars all in one place. Business travel platforms support multiple travel providers, and you don’t have to struggle to collect invoices from different vendors. You can also get an overview of the entire trip, and itineraries are accessible on mobile devices.
2. Expense tracking and reporting – Integration with travel expense solutions is possible for efficient expense reconciliation. Expenses are visible in real time. Business travelers can log their expense receipts automatically, reducing paperwork. Some platforms include an analytics dashboard that help you understand travel expenses and where you can spend less money by making informed decisions.
3. Integrated travel policy – Business travel solutions allow you to integrate your business travel policy and get automatic notifications in case of violation. You can set up customizable approval workflows for both travel requests and expenses.
4. Negotiated discounts – When using a business travel platform, your company can negotiate deals with travel service providers and save money.

Using such a solution can make both the business traveler and the finance or HR team’s life easier when tasks are automated.

T&E management process

The optimal way to track business travel expenses and submit claims will vary by business travelers’ preferences and your corporate travel policy. Here are the four main steps of a travel and expense management process:

1. Issue a travel request

This process starts with an employee making a travel request, usually subject to their manager’s approval. The manager may approve, reject, or ask clarifying questions. At this stage, if your company is using a T&E management solution with a built-in travel policy, any violations of the policy will be flagged.

2. Spend

Once the travel request has been approved, parts of the employee’s trip such as flights and hotels can be booked in advance. Other expenses like meals or transportation will occur during the trip. These can be paid for with a corporate card, or the employee can pay out of pocket and be reimbursed later.

3. Report expenses

Now is the time for business travelers to submit the receipts of all their expenses. To be successful, expense reporting should rely on:

• An expense management tool – streamline your processes by using an expense management app. There are lots of options available depending on the size of your team, but look for one that has features like receipt scanning, mileage tracking, and approval workflows. Travel expense management solutions can be included in business travel platforms.
• Organized records are the most important aspect of tracking business travel expenses. Make sure every expense is categorized based on its type so managers can file taxes correctly and gain insights into where the company is spending the most money. This can be automated if you use on a platform with a built-in expense tracker.
• Clear processes – Whatever method you choose, your travel policy should set clear expectations for how business travelers should track expenses, as well as what and when they need to submit for expense reports.

4. Expense reimbursement

Reimbursement is the final stage of the T&E management process. Depending on your policy, employees can be reimbursed directly in their paychecks or via bank transfer. Asking for feedback is also part of the process. It’s important to gather employees’ thoughts after every trip to learn how you can improve your process.

How to set expense limits

In general, business travelers and corporate travel managers share the same goal: maximizing trip productivity while minimizing business travel expenses.

The key to setting expense limits is the balance between restrictions and freedom. Everyone has different routines, diets, needs, and preferences. For some people, having a gym in the hotel could be a valuable amenity, whereas others might prioritize a specific location. Some people might need a big breakfast, while others prefer several small meals throughout the day. Keeping things flexible empowers business travelers to make choices that improve their productivity while on the road – a win-win for all.

To achieve the right balance, here are some suggestions for setting policies in key expense categories:

• Food: Set a daily food allowance but let business travelers decide how they want to split it between breakfast, lunch, dinner, and snacks.
• Accommodations: Set parameters around room type, hotel star rating, and/or maximum price per night, but allow employees to pick their own hotels within those guidelines.
• Transportation: Provide clear advice on how to choose cost-effective transportation methods, but consider the time spent on travel. For example, it may be worth paying a little extra for a direct flight rather than losing a whole work day to multiple layovers.

How to reduce business travel expenses

There’s no shortage of tips and tricks to keep business travel spend low – here are a few ways to get started with reducing business expenses:

1. Plan ahead. Avoid last-minute mark-ups and take a moment to look ahead. If your company has a conference it always attends or a client relationship that requires regular face-to-face contact, then booking flights and accommodations in advance can help you get deals.
2. Keep your bookings flexible. Sometimes it's worth paying a bit more for flexibility. Things can change fast, so you might save money in the long run by booking flights and accommodations that you can move around without paying fees. You can even look for cancelable, refundable bookings for the ultimate flexibility.
3. Look for accommodation amenities. When choosing a hotel or other accommodations, be sure to check out the amenities it offers. For business trips, free Wifi is essential. Other amenities that can save you money are free breakfast, access to meeting or conference rooms, and free parking.
4. Take advantage of credit card perks. Some business credit cards have lower fees for currency exchanges, cash-back incentives, or offer deals on rental cars, flights, insurance, and airport lounges.
5. Use loyalty programs. Sometimes sticking with one hotel chain or airline can pay off in the long run. Look out for special business rates, memberships, and loyalty programs that can cut costs for multiple bookings.
6. Negotiate with vendors – Don’t hesitate to negotiate contracts with vendors to get a discount. Whether it’s with accommodation providers, rental car companies, or airlines, your organization might be able to benefit from preferential rates.

Best practices for business travel expense management

The best corporate travel expense management strategy is one that’s tailored to you, your organization, and your team. Engage your employees in regular reflection and feedback to create an expense management process that works for your unique business.

Here are a few best practices that apply for all organizations:

1. Use technology to keep organized

There are plenty of travel and expense software options to streamline the process of submitting claims and staying organized. You can also ask business travelers to take photos of receipts and invoices immediately and upload them to shared folders on the go. This will prevent lost receipts and save time when creating expense claims later.

2. Set deadlines

It’s easy to let administrative duties pile up – especially after coming home from a busy business trip. Make sure your employees have clear deadlines for submitting their expense reports for reimbursement.

3. Adjust your budgets to the situation

Even within the same country, costs can be drastically different. Set realistic business travel budgets and consider tailoring your expense limits to the location. You should also review your travel policy at least once a year to ensure your budget is keeping up with inflation and local fluctuations for frequent travel destinations.

4. Communicate your travel policy well

Try to make your travel policy easy to understand for everyone at your organization. When creating your policy, keep the language simple and make sure there’s no ambiguity about what expenses can be claimed. After creating your policy, you should also have a plan to communicate it to the organization and give people regular reminders.

Administrative tasks like travel and expense management can often feel low priority when things get busy. However, a little planning, organization, and communication goes a long way. A clear strategy does more than just drive administrative and financial efficiency. It reduces confusion and anxiety so your team can focus on what matters – achieving the goals of the business trip.