✈️ What's in your Travel Policy?
✈️ What's in your Travel Policy?
How to create a travel policy for your business that makes sense
Your employees need to travel for work but don’t know what can be a company or personal expense. Can they ask for mileage reimbursement, or can they request reimbursement for the total cost of the trip? You can choose to do everything on a case-by-case basis, but inconsistencies will start to arise. You can say no to one person or say yes to another person, or you can pay someone their partial cost. An established travel policy on what’s allowable for transportation, hotels, and meals will remove any confusion. Having this documented will help the employee plan their trip accordingly and know that some things they want to do on the trip may not be reimbursable. So, if they want to do it, they’ll have to be ok with paying for it personally. Or else stick to the company policy. This policy also helps the approvers be rational and logical.
Three sections that are important in your travel policy:
Transportation
Hotels & Lodging
Meals
Transportation
Transportation is one of the most important things to consider as a business. Do your employees know what’s acceptable to book on an airline or what circumstances they’re allowed to use public transportation, rental cars, or rideshares for work? Will the company reimburse mileage or gas fees? You can’t get angry at an employee for booking a first-class ticket when they didn’t know there was a policy against that. You can also limit the ticket price for any business trip. Would you allow your employees to book it themselves and request a reimbursement? Or is the company in charge of booking all transportation needs? Booking travel for multiple employees at once can be cumbersome, so using tools such as TravelPerk can be a lifesaver.
If an employee wants to shell out their personal money for the difference between the allowable ticket and their preferred choice, would that be ok? Thinking through these situations will make sure your travel policy is as robust as needed so there’s no confusion as to what classifies as a business expense. For rideshares, you can create corporate accounts for Uber & Lyft that allow you to send user invites to your employees. The corporate account allows you to set the general company limits so the employees know how much they have left to spend within the app itself.
Hotels & Lodging
What types of hotels are allowable for your employees? Is it only 3-star hotels, or can they book a 5-star hotel? What is the limit on the price per night? Can your employees use Airbnbs, or is that against company policy? Are you okay with your employees booking their own hotels with their corporate card, or do you want the company to book it for them? Do you want your employees to stay only at a particular hotel chain? If so, you’ll have to make sure you’ve signed a corporate contract with those specific hotels. At my old job, we got a corporate discount for one specific hotel in Houston. So, we booked every guest, employee, and participant at that specific hotel. If anyone didn’t want to stay at our designated hotel, we could only reimburse them the cost of their preferred choice based on our discounted price. It was better for us financially, and the hotel's location wasn’t too bad.
Meals
A great way to track per diem or allowable cost of meals per day is through corporate cards such as Ramp. You can also set this up in your Uber Eats or delivery apps corporate accounts. Each employee will have their own user account, which will help them see how much money they have left to spend that day on food. Will your company only pay for food, or will you pay for alcohol? If so, is one drink the acceptable amount, or do you pay for all drinks up to a limit? What types of meals are acceptable? Meals with coworkers every day or meals with business partners? If someone wants to go to an expensive restaurant that’s past their daily limit, then it’s up to them to pay for it personally.
A documented travel policy ensures your finance and accounting team aren’t bogged down with questions from employees. They can quickly approve the trip expense or flag it for the employee to pay back. I saw a message on LinkedIn complaining about an employee taking a $154 Lyft ride in New York for a business trip and the comments were asking if it was for an allowable reason per the company travel policy. If an employee wants to expense a trip to go see the eclipse, what’s the business case for it? Are they meeting a business partner or customer? Your travel policy shows, as detailed as possible, what types of trips the business can pay for and what it can’t.
🔜 The next post will be about creating a budget for your business and its importance.
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Woolichooks provides finance consulting services, which include setting up finance software systems and processes to enable companies to scale for growth.