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Crafting Effective Business Travel Policies: A Guide to Efficiency and Compliance

Profile image of post author Rob Ferry
Rob Ferry · April 2024

Business travel is an essential part of many companies' operations. However, without clear policies to guide employees, the process can become riddled with unnecessary costs and complexities. A well-structured travel policy ensures optimal use of company funds, provides a smooth travel experience for staff, and keeps everything in line with regulations. The policies are usual made in conjunction by the finance and HR departments. Where the HR department will focus on things like legal compliance, consistency and fairness and employee understanding, whereas the finance department will focus more on the cost side of things. Let's delve into how to build the ideal business travel framework for your company.

First things first, setting clear limits and approval low

  • Price Caps: Define reasonable caps for hotels on a per-night basis. It's helpful to break this down by region to account for varying costs of living (e.g., a more generous cap for metropolitan areas). Do the same for flight legs, differentiating between domestic, international, and intercontinental routes. Is business / first class allowed on flights longer than 6 hours for example?
  • Defining Reasonableness: Provide clear explanations of what constitutes a "reasonable" cost for flights and hotels. Consider factors like the time of year, airline/hotel brands, advance booking timeframes, and any applicable loyalty program benefits. A frequently overlooked aspect of corporate travel booking is the disparity in travel frequency among employees. Some employees may need to travel extensively for their roles, while others may only have occasional business trips. This disparity can lead to varying definitions of what is considered "reasonable". Having this mapped out internally can prevent a lot of misunderstandings and improve overall employee satisfaction.
  • Approval Process: Establish a streamlined approval hierarchy with a limited number of steps. Identify the approvers (e.g., direct manager, department head) based on factors like trip cost or seniority. Ensure your approval process includes handling exceptions. In many organizations, the finance team is responsible for approving exceptions. The key is to automate the approval process as much as possible and provide all stakeholders with clear insights into the reasons for trips and their business impact. This transparency helps avoid delays in approvals.
  • Employee Convenience: The goal is a system that's both cost-conscious and easy for employees to use. Consider ways to streamline the booking and approval process to minimise hassle and delays for your staff. Consider allowing bookings on personal cards to be reimbursed, or only using corporate cards. This could avoid a lot of operational work for the employee to claim expenses. The right tooling and integrations can help with that, but we will get to that later.

Frequent flyer miles and hotel loyalty points

Frequent flyer miles and hotel loyalty points are important for many employees, particularly those who travel often. However, there is no global policy on this, and the tax implications of using these points for personal use are unclear in many countries. To avoid confusion, it's beneficial to establish policies. Many companies acknowledge that it's the employee who travels, not the company, and therefore, these points serve as an added bonus for the employee to utilize as they deem appropriate. Nonetheless, it's advisable to have a system that maintains an audit trail of collected points to prevent any confusion during future audits.

Reimbursement Policies

When it comes to expenses that qualify for reimbursement, it's important to be as specific as possible. Imagine an employee on a business trip who has just finished a meal or paid for their ground transportation. They know without a doubt that these, along with baggage fees, internet charges and more, are expenses that the company will reimburse. There are daily allowances and caps set for specific categories, providing clear boundaries and preventing overspending.

Now, think about the process of submitting these expenses for reimbursement. The company insists on receiving original, itemised receipts and invoices for all these costs. The types of documents required are clearly stated, leaving no room for confusion. This eliminates unnecessary back-and-forth during expense processing, making the reimbursement process smoother and more straightforward for everyone involved.

The Power of a Corporate Travel Booking Tool

Imagine a travel booking tool, seamlessly integrated into your company's systems, acting as a cornerstone for your travel policies. A solution like this is highly customisable, allowing you to incorporate your predefined price caps, preferred vendors (depending on solution used), and approval workflows. From the moment employees begin searching for travel options, a corporate travel booking tool has your policies in place, ensuring that compliance is a constant.

Picture a central hub where all travel requests, bookings, and expenses are visible. This is not merely a tool, it's a central repository that simplifies reporting and analysis, giving (finance) teams the ability to easily identify areas where you can save costs.

Now, consider the amount of time your employees and managers spend on booking travel and getting approvals. This tool automates those steps, freeing up precious time and reducing administrative tasks, allowing everyone to focus on their core responsibilities.

But the tool isn't just about the present, it's also about the future. It collects valuable data, enabling you to analyse travel spending patterns and spot trends. This allows finance and hr teams to make informed, data-driven decisions about future policy adjustments, ensuring travel policies continue to evolve and improve over time.

Selecting the right travel management tool is difficult because not all of them offer the right integrations and / or can be limited to specific travel content, for example when the travel management software company has an agreement with a specific GDS provider for its hotel content and therefore missing out on millions of accommodations or are prioritising certain airlines. There are some that do offer companies to integrate their own negotiated rates but not all.

Increasingly, accounting and spend management solutions are integrating travel booking into their services. This integration offers new opportunities for end users, namely companies, as most of these software solutions treat travel booking as a service rather than a core monetisation solution, allowing for companies to have access to a wider range of travel content, whilst at the same time have fully integrated approval flows and reconciliation processes that are directly synched with their expense management and accounting software.

Additional considerations for compliance and efficiency

Besides everything we covered there are a few additional considerations, like travel insurance, this should be outlined, detailing any insurance provided by the company and clarifying if employees are expected to purchase additional coverage for specific scenarios. It's also crucial to share the company's guidelines and best practices to ensure employee safety during travel, especially when travelling to international locations. Deadlines must be set for submitting expense reports (if this process is not fully integrated), which will facilitate timely reimbursements and streamline accounting processes. Moreover, it's important to revisit your travel policy regularly to ensure it remains aligned with evolving travel costs, company goals, and employee needs.

The Takeaway

Well-defined business travel booking policies enhance cost control, simplify travel arrangements for employees, and promote compliance across an organisation. By considering the elements discussed above and leveraging a travel booking tool, you can create a system that optimises both efficiency and responsible spending.

Duffel can serve as the bridge for B2B software solutions, integrating business travel booking capabilities tailored to their end users. As an API-first tool, it can be used as is or fully customized to accommodate specific use cases, such as enhanced travel booking policies, while maintaining compliance.

Get in touch to learn more!

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