Travel and Expense Management 101
When it comes to managing your travel expenses, the focus should not be on cutting down, but rather on maximizing the funds available.
In this guide, we’ll cover the best ways you can optimize costs and enhance compliance in travel and expense (T&E) management, and in turn enable you to achieve greater financial control.
After all, travel should be seen as an investment. We’re here to help you get the most out of it.
What is travel expense management?
The short answer: T&E management controls costs and makes travel more convenient for employees by maintaining expenses and reporting on travel behaviors.
More accurately, its an umbrella term that encompasses various responsibilities aimed at overseeing and optimizing travel spend, such as by:
- Aligning company goals to business travel
- Creating and enforcing corporate travel policies
- Tracking and analyzing expenses
- Building approval processes for travel requests
- Ensuring the safety and satisfaction of travelers
- Measuring how much profit yields from travel-related investments
- Establishing the reimbursement process
- Employee expenses reimbursement
It also involves the crucial task of documenting and processing business travel expenses for tax deduction purposes. What is and isn’t considered a tax deductible expense varies by the country your organization is based in. Regardless of locale, it is essential to report all eligible expenses to optimize and lower tax liability.
What are the types of travel expenses?
Now that we’ve covered the importance of travel expense management, let's explore the most common travel expenses categories that businesses of all sizes should encounter. By understanding these categories, you can identify how to claim tax relief and optimize your overall spending.
In addition to airfare, transportation expenses include fares incurred while traveling to and from business-related events (i.e., shuttles, buses, trains, taxis, and ride-sharing services). Employees who rent or use their own car during business trips can also submit expense claims for mileage deductions based on standard mileage rates, which varies by country.
Any costs related to overnight lodging, such as hotel stays or alternative accommodations, are considered travel expenses. Of course, lodging costs do need to be within reason, or at least justifiable in case of an audit. So unless you’re accommodating for a company-wide retreat, don’t expect to be able to claim a 5-star resort stay!
The IRS states that meals are a deductible travel expense when you’re away from home for longer than an ordinary workday and it’s necessary to stop somewhere to sleep. So multi-day trips are clearly applicable, but if you’re on a half-day trip to the next town over, it probably doesn’t count. Generally, you can deduct about 50% of the cost of a meal while traveling away from work.
While transportation, airfare, lodging, and food are the most common travel expenses, they’re far from the only ones. Be sure not to overlook these costs and more:
- Shipping and handling costs for luggage or work-related materials
- Electronics and other essential gear
- Parking fees
- Visa fees
- Laundry and dry-cleaning
- Business related communication (international calls, faxing, etc.)
- Tips on work-related services
How do you manage travel costs?
Ready to effectively manage your corporate travel spend? Well, you’re going to need a game plan and a whole lot of tools. Here’s our top tips for managing business travel costs:
Level the spending field
When it comes to creating travel spend guidelines, it’s best to apply the same rules across your entire workforce. When your travel spend policy is consistent at every level of your business, you help maintain transparency and avoid any potential misunderstandings that could lead to unintentional, but costly, out-of-policy travel bookings.
Plus, no one likes to feel like they’re getting the short end of the stick. If you give managers and high-level administrators significantly more spending allowance and flexibility on travel and expenses than other team members – especially when booking the same trip – be prepared for some pushback.
Drive compliance with a people-first policy
It's not uncommon for employees to veer from policy from time to time. But while some companies may be quick to wield the disciplinary stick, travel policy adherence doesn't have to be a battle. Instead, a more effective approach is often to identify the reasons behind traveler noncompliance and launch initiatives to foster a culture of support.
It might also be worth considering how you can adjust the policy itself to cater to their needs while still saving money.
By finding the right balance and working with your people, you can drive traveler compliance and provide travel spend management that is both cost-effective and employee-friendly. It's all about finding creative solutions that benefit everyone involved.
Real-time data for real-time results
Data is the beacon of light guiding organizations toward smart decision making – but to make it work, you’ll need the right technology.
By supporting your corporate travel management with expense management software, you unlock the insights hidden within your spending data. With just a few clicks, you can uncover trends in spend and identify what you're getting in return. Benchmarking and forecasting functions take it a step further, allowing you to identify potential savings and efficiencies.
Plus, by consolidating data from various platforms, you'll have a live view of your travel expenses, empowering you to make smarter financial decisions at the highest levels of your company’s future spend and travel preferences.
Let automation do the heavy lifting
With automation on your side, you can say goodbye to financial headaches and wasted hours spent on a manual expense reporting process, and welcome efficiency into your daily routines. By automating expense reporting with advanced technology solutions, you can safeguard your finances, detect program leakage, and seize missed savings opportunities.
A cutting-edge custom dashboard like the FCM Platform seamlessly integrates compliance and expense information, giving you a comprehensive view of travel expenses and enabling your traveling employees toward informed decision-making. It's like having a personal assistant who always has your back, keeping your finances in check while you focus on the things that truly matter: your business.
Now put it to action
The secret’s out on efficient travel and expense management. A well-written travel policy coupled with all-in-one, proprietary technology is the key you need for a cost-effective, people-first travel management program.
But easier said than done, right?
Don’t stress just yet. FCM is here to help – and lucky for you, we’ve done this before. A lot.
Click here to check out some case studies on managing travel spend, including how we transformed travel for one of the largest iron ore producers in Australia.