A travel and expense policy which is known as T&E policy refers to a dynamic set of strict guidelines that companies create and enforce with the purpose of guiding their employees on any type of travel costs that are related to business. Every company is unique in the terms of expectations and requirements, and because of that business travel and expense policies are acting differently from case to case.
As a study shows, only 60% of companies who are frequently sending their employees on business trips are using travel and expense policies. When an employee works for a company, he faces different types of business expenses which can relate to a business trip, client meeting, or some events. However, the main problem is that companies in most cases do not provide their workers with a list of guidelines that will help them understand what sort of expenses are covered. Additionally, employees are not even familiar with the consequences of fraudulent expense claims.
This is exactly where a travel and expense policy comes into play. A travel and expense policy generally plays a significant role to help streamline business processes, save costs and eliminate any type of fraud while dealing with the reimbursement of business expenses. Not all travel and expense policies are created in the same way. This type of policy needs to be comprehensive and well-defined and most important of all, every company needs to have it. If you are interested to find out how a travel and expense policy can help your business, you should check blog.happay.com
Everything you need to know about a travel and expense policy
In short, every travel and expense policy must provide all employees that are going on a business trip and finance teams as well an ideally created guideline on how the company is going to reimburse its employees for business expenses. In general, it is crucial that a travel and expense policy of some companies is well-researched so the company can find out whether this document is going to cover all the areas of expense that are important for the organization. Further, this comprehensive document is helping in simplifying the process of travel expense reimbursement and addititonaly highlights the limits on business travel spending.
What happens without a travel and expense policy?
Most companies are asking what would happen in the case if they do not use a travel and expense policy. Let’s find out. As you can conclude on your own by now a travel and expense policy is aiming to address all the possible travel expense concerns of the included stakeholders. In the case some of the queries go unaddressed, a company can face a policy violation, expenses that are not included in the policy, some types of fraudulent expense claims, a decrease in policy compliance, etc. Therefore, a company can face serious and dangerous problems that can ruin it.
What challenges employers are facing without a defined travel and expense policy
Primarily, a company where the employer is working can end up spending lots of money due to hidden costs in the case business travel expenses are not under supervision. Additionally, because of the repercussions of not having a travel and expense policy employees are often spending money irresponsibly during their business trips. There is also a risk related to a rise in fraudulent expense claims in the form of duplicate, exaggerated, and misreported business cost claims. Lastly, when a company does not have a travel and expense policy, fraudulent behavior can not be controlled or addressed. In that way, it can not be stopped.
What challenges financial teams are facing without a defined travel and expense policy
Because of the lack of strict deadlines, approvers can end up constantly delaying the reimbursement process or accepting fraudulent claims. Additionally, in the case where expenses are not well-managed which refers to a compliant manner, their accounting becomes challenging. It is also worth mentioning that the entire process of verification and approval can take a long time in the case manual checks are enabled which can lead to human errors. Additionally, when they are not having a travel and expense policy, there is no settled way in the terms of recording and store expense data. This means that finance teams will not have insights into spending practices.
What challenges employees are facing without a defined travel and expense policy
When employees do not have a clear insight into the travel and expense policy, they can end up with policy violations and some expenses that are not included in the policy. Despite that, employees will not be familiar with whether some expenses are reimbursable or not. Therefore, this can lead to the outcome where workers do not report them. Because of the loss of their personal money, workers may avoid going on business trips which can have an impact on employee motivation and productivity.
What does a travel and expense policy do?
The main purpose of travel and expense policy is to eliminate or even reduce the risk of occurrence of any type of factors that are involved in the expense reporting process. Their goal is to specify the rules and necessary principles that the finance teams as well as the employees must follow while facing their business travel expenses. Additionally, this type of policy must clarify objectively any confusion regarding expense reimbursable. It does this by listing the categories of travel expenses that need to be reported by the employee. Despite that, a policy of this kind also addresses every single category in detail and states the procedure with the goal of tracking and reporting specific business expenses. Categories in a travel and expense policy include Air Travel, Local Transport, Hotel Bookings, Travel advances, Corporate credit card expenses, Medical and insurance expenses, and Per diems and cash advances.
It is necessary for employees to set guidelines and record travel spending. By accepting travel and expense policy they will accept limits and strict conditions that will help them regulate expenses.