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How To Create an Effective T&E Policy

By Kathleen Burns, published on Mar 10, 2020
How To Create an Effective T&E Policy

 

Did you know that 1.3 million business trips occur each day, just in the United States? Travel is a significant expense for corporate America. 

With so many employees on the road and in the air, spending company money, how do businesses ensure that they stay on budget? By creating comprehensive travel and expense (T&E) policies that are accessible and easy to understand throughout every part of the travel process - from booking to filing expense reports.

So how can you create an effective T&E policy? In this guide to T&E policy we’re explaining everything you need to know to do just that. You’ll learn what a travel and expense policy is and how to create one for your company with the help of tools and examples. 

What is a T&E policy?

We’re covering the basics in this introduction to travel and expense policy.

What is a T&E policy comprised of?

A comprehensive travel and expense policy covers everything business travelers need to know when booking travel and spending company money during a business trip, as well as how to submit expense reports to receive reimbursements for out of pocket expenses made while on the road.

Travel and expense policies are made up of rules that answer the following questions:

  • How can employees book travel and accommodations for business trips? What platforms, vendors, and tools can they use to make bookings?
  • How much are business travelers are allowed to spend on flights, accommodations, and meals? Do these spending limits vary based on the destination?
  • Can business travelers book direct flights if they are more convenient, or must they always choose the cheapest option?
  • What counts as a work-related expense?
  • Can business travelers get access to a corporate credit card for making work-related purchases while on the road? If not, how can business travelers make purchases during business travel?
  • How must employees show proof of purchase for expenses made while on a business trip?
  • What’s the process for reporting travel expenses?
  • How can business travelers get reimbursements for out-of-pocket purchases?

 

We’ll cover the components of a T&E policy in more detail in the “examples of T&E policy” section below.

What kinds of businesses need T&E policies?

You may think that only large companies with thousands of business travelers need travel and expense policies. However, this assumption is incorrect. Businesses that conduct any volume of travel should have some kind of T&E policy framework.

Even a two-person startup should create a travel and expense policy. Why? By establishing these guidelines while the company is still small and agile, the startup is facilitating its future growth. As the number of employees in the startup grows and more employees travel for work, there will be questions about how much can be spent on travel, how employees should submit expenses for reimbursements, etc. If the company has already anticipated these questions in their T&E policy, then their business travelers can travel without confusion or a lack of clarity getting in the way.

Companies small and large can benefit from having a T&E policy in place.

Why are T&E policies important?

Travel and expense policies are important because they lay out the rules for how company money can and cannot be spent during business travel. Travel is costly, and T&E policies help companies stay on budget by making sure that travelers know what they’re doing.

T&E policies also facilitate easier business travel. When employees don’t have to struggle to understand whether or not they’re allowed to buy something for work because the rules are clear and easy to find, they can focus more on the reason for their travel - landing a new client, presenting at a conference, making connections, etc.

Travel and expense policies help companies stay on budget and facilitate business travel.

How to create an effective T&E policy

These are our best tips for creating a travel and expense policy that will be adhered to by business travelers.

How does a T&E policy work?

First, key stakeholders, like the finance team, HR, and departmental budget holders, collaborate to create a corporate travel policy, of which the T&E policy is a main component.

Once the policy is created, it’s rolled out company-wide. Then travelers are expected to obey it when they book travel and while they make purchases during the trip. When business travelers get back to the office, they refer to the T&E policy to find out how they can get a reimbursement for business expenses they paid for out of pocket.

What makes a T&E policy effective?

All effective T&E policies have several things in common. They are:

  • Easy to understand - Effective travel and expense policies avoid jargon.
  • Accessible - They’re distributed around the office and digitally so that employees can’t use not being able to find the policy as an excuse to disobey it. Place printed copies of your company’s T&E policy in the HR office, finance office, and in the employee handbook. Make digital copies available on the company’s intranet, a cloud-accessible drive, and via your travel booking tool.
  • Comprehensive - Effective T&E policies anticipate all possible traveler questions. Illustrate these scenarios with examples and FAQs. 
  • Facilitated by the right tools - Comprehensive travel and expense policies are paired with tools that speed up the booking and expense reporting process so that employees can spend less time on those administrative tasks and more time on what they were hired to do.

 

When you put time and care into your company’s T&E policy, you end up with effective travel and expense management practices.

Examples of T&E policies

We’ll dive into some examples of travel and expense policies and learn how to use templates to build your policy more quickly.

What are the different parts of a T&E policy?

Before you see examples of and templates for travel and expense policies, you should familiarize yourself with the components in these documents. You’ll find variations on these categories in most T&E policies:

Booking

This section will cover policies and procedures for booking business travel. It should explain to business travelers which platforms they can use to make bookings, how much they can spend on air travel, car rentals, accommodations, and which preferred vendors, if any, they’ll need to use. 

Making purchases

In this section you will outline what kinds of expenses made during business travel the company will cover and won’t cover. Cover things like ground transportation (taxi or rideshare?), daily per diem rates for meals, expensing internet access, and others.

Expense reports

The expense management section of your T&E policy lets travelers know how to show proof of purchase for business expenses they paid for out of pocket and would like to be reimbursed for. This section will include guidelines for showing proof of purchase and creating and submitting expense reports. Don’t forget to include workplace policies on disciplinary action that will be taken if employees try to abuse the system.

Make sure to internally market your policies to get employee buy-in.

How can you use a T&E template?

Travel and expense policy templates can help guide you when you want to build a new policy or rework the one you currently have. A template can help you consider your priorities - such as flexibility vs. saving money vs. saving time.

We’ve created a free T&E policy template. We offer two versions - a shorter “flexible” policy template and a more detailed “expanded” template. You can download that template here or use one that’s built in to your corporate travel booking software.

Where can you find examples of T&E policies?

It’s easier to create a travel and expense policy when you have examples to look at. Here are several comprehensive T&E policies to look to for inspiration when creating your own:

 

Tools for creating a T&E policy

Here are some resources to help you create, refine, and distribute your new travel and expense policy.

Where can you find video tutorials on creating T&E policies?


Want to see it in action? Here’s a quick video tutorial on creating T&E policies in Lola’s platform

What are some software programs that can help create T&E policies?

Fortunately, the leading corporate travel software also doubles as policy management software and has a tool built in that can help guide you through the creation of your company’s travel and expense policy.

Lola.com’s platform lets administrators input a customized travel and expense policy. When employees book travel, in-policy options are highlighted, which speeds up the decision-making process and increases compliance. Furthermore, our Expensify integration simplifies T&E policy management, thanks to a mobile app with digital receipt scanning capabilities and automated expense report creation.

Where can you learn more about T&E policies?

We offer a variety of guides on T&E policies. Check out our other resources to get you started:

 

When your company builds comprehensive travel and expense policies and procedures that are easy to understand and find, compliance rates will be high and travelers will be able to do what they were sent on the road or the skies to do, instead of stressing over purchasing decisions and expense reports.


About the Author: Kathleen Burns