The Complete Guide to Corporate Travel Policies for Small Businesses
tl;dr: It’s common for large corporations to have a long, detailed, corporate travel policy, but what about small businesses?
It’s common for large corporations to have a long, detailed, corporate travel policy, but what about small businesses?
It may not seem like small businesses need as extensive guidelines around travel and expense management, but specific and easily accessible travel policies can actually benefit companies in many ways. Not only can a travel policy help you cut travel costs, but it can also give your business travelers more confidence and clarity when they are booking trips.
It may seem overwhelming to create a corporate travel policy from scratch, but we’re here to help!
What is a corporate travel policy?
A successful corporate travel policy supports every aspect of your travel program, from trip planning and booking to on-the-road support, travel expense capture and reimbursement, as well as data collection that facilitates budgeting and business planning.
A well-conceived corporate travel and expense policy is an investment in business growth, more agile financial management and better employee relations...if it’s based on best practices.
When you develop a travel policy that covers all aspects of corporate travel you are showing your employees that you care about them and their travel experience.
You are also giving them guidelines to make their lives easier and a process to get their travel and incidental expenses reimbursed more quickly. And who doesn’t want their money back faster?
Why does a small business need a corporate travel policy?
Even if your company doesn’t do a lot of travel, the earlier you start developing a travel and expense policy, the better the situation you’ll be in.
Why? Because if you can get your business travelers bought into your travel program early, you will increase compliance and ultimately save your company money.
But that’s not all. There are a ton of benefits to a corporate travel policy for small businesses.
- Small businesses grow into medium and large businesses, and if you have a corporate travel policy in place already, new employees will come in knowing about your travel policy, so you won’t need to worry about backtracking when you have tons of travelers used to booking however they want.
- Travel bookings will be completed much faster and you won’t waste time going back and forth deciding whether to approve a certain flight or hotel.
- Employees will all book in the same place, in the tool wherever you’ve highlighted in the travel policy. This eliminates unnecessary (i.e. out-of-policy) spending and expenses that shouldn’t actually be reimbursed.
- Travel spend forecasting becomes much easier when your travel program is organized within a policy that has clear policy guidelines.
All of these things are great for the Finance team, but why should your travelers care?
A lot of companies that don’t have a managed travel program find it hard to get travelers to stop booking directly with airlines and hotels.
They like their familiar booking strategies and don’t want to change their ways.
But a formalized corporate travel policy actually benefits your employees as much as it benefits your Finance team.
- You can give your employees access to a corporate card and not worry about them overspending. This will eliminate the need for them to fill out travel-related expense reports every month. (This is a bonus for you too!)
- Travelers can have independence and book whatever works for them within the travel policy. They don’t need to go through a long approval process.
- If you roll out corporate travel management software with your travel policy, your travelers can see all options in one place, and don’t need to scour the internet looking for the best deal.
Small businesses usually have a tighter grip on budgets and expenses throughout the company.
When you implement a formal travel policy you are able to cut costs where they need to be cut, and make sure your employees are booking within your forecasted travel budget. Travel-related cost are typically the second highest expense for a company, behind only payroll. Imagine how great it would be to spend less money on travel expenses and actually have a more organized, formalized process too.
But how do you get there?
How to write an effective corporate travel policy
When you start to put together a travel policy, there is a lot of information to go through and evaluate. Take it step by step so you don’t feel overwhelmed.
1. Ask around
Talk to the employees who travel most often now. Find out what they like about the current process and what they don’t like.
What's "key" to your frequent travelers might be different than what is most important from a management standpoint. Getting their input ensures your travel policy will be relevant and practical. Your team will be far more likely to follow it.
2. Include all the important elements
- Transportation: Parameters around air travel, rental cars, trains, and anything else your travelers might use.
- Lodging: Make sure they understand what to spend on hotels per night, and whether or not they can book an Airbnb for business travel.
- Food: Some companies go with a per-diem based on government regulations, others are more flexible. Determine what your company’s guidelines are.
- Incidental expenses: A lot of things come up when you’re on the road. Maybe the hotel someone is staying in doesn’t have wifi. Maybe they need to tip a taxi driver. These things are harder to set guidelines around, so make sure to include examples of approved incidental expenses as well as things that wouldn't be approved. And then trust that your travelers will follow these examples and make the best possible decision.
- International travel: International flights can be long, so set up guidelines around when a traveler can upgrade their class of service. Maybe on flights over 6 hours they can fly premium economy? Do your travelers fly to Asia often? If so, you might want them to book business or first class so they can sleep on the plane.
- Reimbursement guidelines: How soon after a trip will they get reimbursed? Your employees want to get their money back ASAP so set the expectations with them upfront.
- Timing: How far in advance should travel arrangements be made? The general rule of thumb in travel is the earlier you book the better.
- Who books travel: Some companies have one person book travel for everyone, while others prefer for travelers to book for themselves. Make sure the guidelines around this are clear in your policy.
- Duty-of-care: You have a responsibility to your travelers to know where they are at all times, in case of emergency. Make sure that your travel policy explains to them how to get approval for a specific trip. This will also alert you to when they are traveling so you can maintain duty-of-care.
Every organization is different, so what is critical information for your travelers won't be the same as for another company.
The frequency, geographic range, and reasons for your employees' travel will all affect what your travel policy should highlight. In any event, focus on policy elements that affect the majority of your business travelers, most often.
3. Hit the highlights
Your corporate travel policy should be concise and clear.
Presenting the key elements as bullet points will make the one-sheet even easier to read. Although some people may be more inclined to comply if they understand the why behind your policies, you can explain all that in the full version that you post online.
For the one-pager, just say "Take nonstop flights whenever possible, unless a flight with stops is $150 less than the cheapest nonstop option."
4. Use a digital tool to make compliance easy
A corporate travel policy will be greatly appreciated by your travelers. But with everyone on the go, a mobile/desktop app such as Lola.com further streamlines the process for travelers as well as travel managers, finance folks, and other internal departments.
Everyone’s on the same page. With your company guidelines loaded into the platform, employees can easily search for flights or hotels that work for them as well as the company and they can easily manage receipts for expense reimbursement.
5. Make it easy to find your travel policy
If you aren’t able to implement a corporate travel management software, make sure you post your full corporate travel policy where employees can easily access it.
Make sure everyone knows where to find it, and organize it into sections that can be navigated to quickly. Make a table-of-contents so travelers aren’t spending a ton of extra time reading through pages of information looking for the answer to one specific question.
6. Promote your corporate travel policy
It will take some thinking to create a policy that meets both management and traveler needs. You can be sure your efforts will be appreciated, though, once word gets out. Hold a launch party, or find some other fun way to announce the existence of your corporate travel policy and get a copy into everyone’s hands. (Don't forget to thank the folks who provided input.)
How do you know if it’s time to implement a corporate travel policy?
While there’s no universal sign that tells you it’s definitely time to implement a travel policy, there are definitely indicators that will nudge you in the direction of a formalized travel and expense policy.
- You have additional people traveling each month for more than 3 months.
This is not random, it’s a pattern. As more and more employees start traveling, getting a handle on the travel spend will get increasingly difficult. If your traveler count goes up for three months in a row, it’s time to start implementing a corporate travel policy.
- You continually receive expense reports weeks after they are due. When expense reports are turned in 2 months late, it takes a lot of work on the back-end to reconcile the difference in spend. You’ve essentially reported incorrect travel spend, which is not good. If this keeps happening to you, put a travel policy in place. The more guidelines the better. If employees can’t get you their receipts in time, they won’t get reimbursed.
- Employees are asking you what they are allowed to book all the time. Clearly you have a problem if a lot of your time is spent approving travel budgets for different trips. If employees have a policy to follow they won’t need to bug you everytime a possible trip comes up.
- Someone has booked a ridiculously expensive flight or hotel more than once.
There’s always a “last straw.” If you have an employee who is continually booking way outside your company’s comfortable budget, you need to stop it immediately. Policy compliance is a huge benefit to a formalized program. It’s easy for you to immediately spot anything that is over budget and cancel it right away. And remember, this also falls into your company’s Human Resource policies. Travel is not just owned by the Finance team. Get support from HR so that your employees make sure to follow the rules.
- Reporting travel expenses has turned into half of your job (or even more!)
Unless your main responsibility is booking and/or managing corporate travel, you should not be spending half your time on it. A corporate travel policy can take a lot of that burden off of you so you have time to focus on other responsibilities.
It may seem overwhelming to create a corporate travel policy for your small business from scratch, but as you can see, it’s worth the time and effort you put into it. Simplifying travel and expense management is a huge undertaking but once you have those guidelines in place, you can look forward to increased policy compliance, reduced travel spend, and happier traveling employees!