What is a Travel and Expense Policy and why does it matter?
Travelling has been an integral part of business since commerce began. Organisations define policies about what they will reimburse their employees for business expenses, because these are the second largest controllable cost after salaries.
So, the first logical step is to create a travel and expense policy.
1. What is a travel and expense policy?
These are guidelines for employees to claim business expenses. It provides employees with information about what they can and cannot claim as reimbursable expenses. These policies should be built on principles and not rules, and should work in the best interest of the organisation. As per research by Aberdeen group, 43% of companies consider travel and expense management as critical strategy. Hence, it is important to have a robust, clear, and an unambiguous policy for employees to follow.
2. Why does a travel and expense policy matter?
It matters because it sets out rules and guidelines on what and how much employees can spend on business expenses. It removes any ambiguity and guesswork, and ensures fair play for all. The claimants know what they can spend on expenses/items. And based on these rules, Approvers & Finance approve and pay business expenses.
3. A Well Drafted Expense Policy Reduces Fraud:
Claimants can claim & Approvers can only approve within the ambit of the expense policy. There should not be any ambiguity. A well drafted policy stops leakages, and also acts as a strong internal control mechanism.
In today’s world, to ensure compliance, businesses can automate their travel and expense management process with online digital software like ExpenseOnDemand . We have multiple safeguards to help minimise fraudulent expenses, such as:
a. Duplicate expense checking.
b. Reconcile credit card transactions with expense claims.
c. Mapped digital mileage tracking.
d. Flag violations when an expense is out of policy.
e. Setup spending limits per diem; per item, etc.
4. Automation & A Well Drafted Policy Saves Both Time & Money:
Managing employee business expenses can be extremely time consuming for the finance teams. Hence, to reduce wasted time, clear policies and the right tools to conduct real-time monitoring are essential. Hence, It is important to set limits / budget for each expense category. Putting a per diem rate into your expense policy can give your employees a clear limit for how much they can spend every day.
Whilst the process of employee expense management is complex, automating it, together with a robust expense policy will ensure that there is clarity on who is spending on what, with whom, and why. To help with navigating through the labyrinth you need an intuitive, easy-to-use, and cost-effective tool; you need ExpenseOnDemand.
Our simple interface turns recording, approving, and paying expenses into child’s play, and is the perfect antidote to the complexity of the rules and regulations.
Image Credit: Clem Onojeghuo / Pexels