While attending the Global Business Traveler’s Association Expo last summer, we learned from industry experts about a number of best practices for building an effective travel and expense policy. We share these with you here and expand upon them to help you build or refine a company-wide spending policy.
There are a number of considerations to explore before you even begin to write the first “rule.” First and foremost is to understand there isn’t a cut and dry formula for writing a company travel and spending policy. You want your policy to reflect your corporate culture and balance the needs/wants of employees who travel and spend money while effectively managing company spending.
Start by thinking about what type of policy makes the most sense based upon your organizational style. Consider your company objectives, vision and goals.
Market conditions always play a role into the type of policy you will design. If your company is affected by a tighter economy, it is more likely that you will want to tighten policy; if the economy is flowing more freely, you may be more likely to loosen policy.
Next, think about the platform upon which your company operates. How does your company manage spending now? Is this where you want to be, or do you need something with a little more structure and more depth? One expert identified four silos that move from a loosely defined policy through to the most restrictive. You’ll want to decide where on the spectrum you believe your company may be. As a point of reference, most programs fall somewhere in the middle of this chart:
|Limited guidelines||Policy defines spend guidelines||Policy w/controls; limited & defined managerial discretion||Tight policy w/front-end controls/trip compliancy|
|Managerial discretion post expense||Managerial discretion post expense||Pre/post expense management||Senior management support|
|Limited technology without online travel booking; Reimbursement tied to receipts||Limited technology with low-level of online booking||Integration of travel booking & expense||Integration of travel booking & expense|
|< Least Strict||^
Most programs fall here
|Most Strict >|
You will also want to think about who in your company should be a part of the policy development process. Who will own the policy and who are key stakeholders? People in your organization who have responsibility for the following areas may offer valuable insights into policy creation and should be invited to participate in the process: human resources, corporate communications, security/risk business continuity, travel, legal, treasury, procurement/supply chain and finance.
Now it’s time to being mapping out what your policy is going to cover. Keep in mind that traveling is only one portion of a spending policy. You may also want to include how employees buy goods and services within your organization. As an addendum to this article, we’ve provided a list of the areas you may want to consider as you write the specifics of your policies.
There are a few things worth noting that can really help drive the biggest savings. One is to evaluate trip value or the ROI of travel. How much of your travel is generating revenue for your company vs. how much of your travel simply moves employees between offices? Are there other alternatives to inter-office travel?
How much can you leverage technology to manage your compliance. For example, spending management software, like ExpenseWatch.com, lets you building vendor/supplier catalogs into a purchasing system to take advantage of volume pricing discounts. It also allows you to link into travel booking data enabling traveling employees to build expense reports much faster, and company execs to gain better controls over travel and expense spending.
A final note on the travel and entertainment portion of your policy: be sure to review the IRS publication on what needs to happen to ensure your T&E reimbursements are compliant. Go to www.irs.gov and search on “accountable plan” or publication 463. And remember, if you get push back from employees when you build your plan, you can always use the IRS as the “bad guy” and say it’s a requirement so that we as a business can deduct these expenses on our corporate tax returns.
Areas to consider including in a spending policy document:
620 W. Germantown Pike
Plymouth Meeting, PA 19462
See for yourself why thousands have automated organizational expense reporting processes using ExpenseWatch, and how you too can save time and money while providing complete visibility and control for expense spending.
Fill in all of the fields in the form to the right to activate your free 14-day trial. The information you provide will help us to create your company profile. And don’t worry, you won’t have to provide a credit card to get started.
Just sign in to continue using ExpenseWatch
This 14-day free trial is only available for the ExpenseWatch Expense Reports module.
Is your organization starting to feel the growing pains associated with processing more expense reports, purchase requests and payable invoices? When you automate these processes, you can reduce and even eliminate the paper, and you can easily manage the increasing number of transactions your organization processes without adding more staff. What's more you can put in the controls you need while gaining unprecedented visibility to effectively manage company spending.
Fill in the form to the right and we'll contact you to set up a personalized web demonstration of how ExpenseWatch can give you the tools to empower your organization to Spend with Confidence.
Our goal is to provide information and solutions that help your organization Spend with Confidence. Sign up today for our quarterly newsletter full of information that will help your organization to just that.
We’ll connect you to useful information that will support your efforts to manage company spending, keep you up to date on product enhancements and new features, while also injecting a little fun along the way. Plus, we’ve partnered with some great companies to be able to offer great ideas to help you grow your company and control spending. We promise we won’t inundate your inbox with too many emails!
Fill in the form to the right and we'll add you to our newsletter email list.
HOW SMBS CAN MANAGE COMPANY SPENDING
NEW WHITEPAPER from Ardent Partners. Download now for compelling insights and recommendations on how your small or midsized organizations can best manage company spending.
Plus, we have a lot of other information available to support your business strategy and improve how your company manages spending, including:
Fill in all of the fields in the form to the right to access these useful whitepapers. They'll help you understand how automating spending processes can empower your organization to Spend with Confidence!
Do you still have questions we haven't been able to answer for you on our website?
Please fill in the form to the right and let us know how we can further assist you. We'll contact you to get you the information you need and answer any additional questions you may have on how ExpenseWatch can give you the tools to empower your organization to Spend with Confidence.