Guide to business travel and expense management

A productive business trip can give your company new insights, stronger relationships and more. But while the benefits may be priceless, every corporate trip comes with expenses. Luckily, with some planning, organisation and clear communication, you can optimise 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 travellers 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 organisation understands what qualifies.

Most common business travel expenses are:

• Airfare
• Accommodation
• 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 do not cover things like commuting to a local office, clothing for trips or personal entertainment costs while travelling for work.

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

Travel and expense management is the process of setting travel policies, as well as making sure that employees keep records while travelling and submit their travel expense reports properly upon returning from a trip. 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 travellers themselves also have an important role to play. They’re responsible for making sure they understand and follow the travel policy, keep records of their expenses and submit claims in a timely manner.

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 (T&E policy) that includes expense management so that 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 travellers book and pay for everything themselves and are reimbursed later.

• Benefits: travellers have the ultimate 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: travellers must know the travel policy in detail to make sure they are making compliant decisions, as no automatic notification can warn them. To mitigate 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, travellers must wait for reimbursement – which can lead to difficult situations depending on individuals’ financial situation. There’s also a bigger administrative burden on business travellers to track all their own expenses and records manually, and on the HR team to process proof of expenses.

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

• Benefits: it’s simple and clean to have all expenses on one card and prevents the temporary financial burden of employees paying out of their own pocket. 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. Additionally, a physical credit card could be lost or stolen.

3. Business travellers, 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 organisation.
• Challenges: travel management platforms are usually used for booking flights, accommodation and possibly transportation, so you’ll still need to use corporate cards or reimburse business travellers for costs accrued during their trip. 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 as it addresses the typical pain points that come with 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 any non-compliant expense or you prefer to go for a more manual process, having an expense management system in place will require a very clear and well-communicated travel policy that business travellers 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 travellers get their money back as soon as possible if they had to pay upfront.
3. Cost control and financial stability – the goal of T&C should be for you to control the costs of business travel and understand in which areas 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 one-stop-shop software solutions that allow you to book the different legs of your trip. They help to 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, accommodation and rental cars all in the same place. Business travel platforms support multiple travel service 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 for convenience.
2. Expense tracking and reporting – integration with travel expense solutions is possible for efficient expense reconciliation. Expenses are visible in real-time and business travellers can capture their expense receipts automatically in the tool, reducing the need for manual paperwork. Some platforms include an analytics dashboard to have a better understanding of travel expenses and where you can spend less money to make informed decisions about the budget.
3. Integrated travel policy – business travel solutions allow you to integrate your business travel policy and get automated notifications in case of violation. You can set up customisable approval workflows both for 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 traveller and the finance or HR team’s life easier as some tasks are automated.

T&E management process

The optimal way to track business travel expenses and submit claims will vary depending on business travellers’ 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 the 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 hotel and plane tickets can be booked in advance. Other expenses such as meals or transportation will occur during the trip. These can be paid for with a corporate card or the employee can be asked to pay for them out of pocket and be reimbursed later on.

3. Report expenses

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

• An expense management tool – the best way to streamline your processes is to use a spend management app. There are lots of options available depending on the size of your team, but look for one that offers features like receipt scanning, mileage tracking and approval workflows. Travel expense management solutions can be included in business travel platforms.
• Organised records – this is the most important aspect of tracking business travel expenses. Be sure that every expense has been categorised based on its type so that you managers can file taxes correctly and have insight into where the company is spending the most money. This can be automated if you rely on a business travel platform with a built-in expense tracker.
• Clear processes – whatever method you choose, your travel policy should set clear expectations of how business travellers should track expenses, what needs to be submitted and timelines for when expense reports need to be submitted.

4. Expense reimbursement

Reimbursement is the final stage of the T&E management process. Depending on what your expense reimbursement policy says, employees can be reimbursed directly on their payslip or via bank transfer. Asking for feedback is also part of the process and it’s important to gather employees’ thoughts at the end of every trip to understand where you can improve your process.

How to set expense limits

In general, business travellers and corporate travel managers share the same goal: to maximise trip productivity while minimising business travel spend.

The key to setting expense limits is to balance restrictions with 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 may prioritise being in a specific location. Some people may need a big breakfast, while others prefer several small meals throughout the day. Keeping things flexible empowers business travellers to make choices that improve their productivity while on the road – which is 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 allow business travellers to decide how they want to split the allowance between breakfast, lunch, dinner and snacks.
• Accommodation: set parameters around room type, hotel star rating and/or maximum price per night, but allow employees to pick their own hotel within those guidelines.
• Transportation: provide clear advice about how to choose cost-effective transportation methods, but keep in mind the time lost to travel. For example, it may be worth paying a bit of extra money 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 markups and take a moment to look ahead. If your company has a conference that 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 may save money in the long run by booking flights and accommodation that you can move around without paying fees. You can even seek out cancellable, refundable bookings for the ultimate flexibility.
3. Look for accommodation amenities. When choosing a hotel or other accommodation, be sure to check out the amenities it offers. For business trips, free WiFi is essential. Other amenities that can save you some money are free breakfasts, 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 programmes. Sometimes sticking with one hotel chain or airline can pay off in the long run. Look out for special business rates, memberships and loyalty programmes that can cut down costs for multiple bookings.
6. Negotiate with vendors – don’t hesitate to negotiate your contracts with vendors to get a discount. Whether it’s with accommodation providers, rental car companies or airlines, your organisation 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 organisation 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 organisations:

1. Use technology to keep organised

There are plenty of travel and expense software options to streamline the process of submitting claims and staying organised. You can also ask business travellers to take photos of receipts and invoices immediately and upload them to shared folders on the go – it’ll 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 when they must submit 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 per year to ensure your budget is keeping with inflation and local fluctuations for frequent travel destinations.

4. Communicate your travel policy well

Try to make your travel policy easily understood by everyone at your organisation. When creating your policy, keep the language simple and make sure there’s no ambiguity about what expenses can be claimed. After your policy is created, you should also have a plan to communicate it to the organisation and give people regular reminders to keep the information fresh.

Administrative tasks like travel and expense management can often feel lower priority when things get busy. But a little bit of planning, organisation and communication goes a long way. A clear strategy does more than just driving administrative and financial efficiency, it reduces confusion and anxiety so that your team can focus on what matters: achieving the goals of their business trip.