Guide to travel and expense management

What is T&E? Understanding Travel and Expense Management

T&E stands for Travel and Expense, which refers to the costs employees incur while traveling for business purposes.

T&E expenses include travel costs, fees for renting meeting spaces, accommodation, business meals, overseas phone charges, and more. They include any necessary spending, previously agreed upon in a travel and expense policy, to work while traveling successfully. HR and finance departments are usually responsible for a company's travel policy and T&E processes.

Travel and expense management is a massive undertaking, whether you have 50 employees who travel for business or 5,000. Accurately collecting and reporting on all travel-related expenses is a challenge for finance managers worldwide.

Perk’s latest research shows that 83% of employees struggle with travel expenses, often due to delayed reimbursements, confusing policies, or needing to front costs themselves. For finance teams, these employee struggles quickly translate into extra workload, delays, and fragmented financial reporting.

Fortunately, in recent years, things have changed. Today, modern software eliminates the need for paper expense reports, manual reimbursement processes, and back-and-forth approvals.

Pain points of ineffective T&E processes

If your travel and expense management processes are inefficient, your employees  will experience a lot of frustration. High processing costs and inefficient workflows are just some of the challenges facing small businesses without a travel expense management solution.

Nearly 1 in 5 employees (19%) say they don’t know what’s reimbursable, and 1 in 4 (25%) worry about going over budget. Without a clear travel and expense policy that clearly outlines your guidelines on business travel expenses, including rules on accommodation, meals, entertainment expenses, and reimbursements, the entire process becomes unwieldy, expensive, and inefficient.

• Unauthorized bookings: When you rely on manual processes, unauthorized travel bookings can easily slip through the cracks. Even though you might have pre-approval processes in place, it can be difficult to identify which bookings fully comply with your travel expense policy guidelines.

• Paying too much for business travel: Every business wants to keep travel costs down. However, smaller businesses might find it more difficult to establish corporate partnerships with hotels and airlines to get the best deals.

• Endless expense admin: Corporate travel generates several administrative tasks that are more challenging when relying on manual expense processes. Without a travel management platform and corporate credit cards in place, travelers will have to pay for things upfront and manually file a reimbursement request later. Plus, finance managers working without automated reconciliation must spend hours reconciling expense reports against corporate credit card purchases.

• Lost receipts: The loss of paper receipts is a huge challenge for those in charge of small business expense management processes. In fact, 1 in 4 (25%) business travelers admit to losing receipts while on the road. When employees lose receipts, your business cannot reimburse them without risking compliance issues with the IRS.

• Inaccurate T&E spend reports: Expense report processing is a costly exercise, especially when these processes need to be repeated due to inaccurate and/or late expense form submissions. Outdated, manual systems consist of slow and laborious submission workflows, as well as multiple opportunities for human error.

• Slow reimbursements: Reimbursement processing is time-consuming when done manually, leaving business travelers out of pocket. This could be challenging for managing their own personal finances and leave employees feeling disgruntled especially if they had to make a large purchase for business purposes.

• Lack of real-time T&E cost tracking: Manual travel expense management processes prevent you from gleaning insights and data into your travel costs and expenses. Not only can this manually managed data be recorded inaccurately, but you also cannot access a higher level of visibility offered by digital platforms. When your expense processes are slow, your data collection is slow too. Without tracking expenses in real time, you can’t make informed business decisions or predict and plan for future travel costs. Plus, instances of expense fraud can easily go unnoticed.

What are the benefits of a T&E policy

Without an effective travel and expense policy, organising corporate travel can be time-consuming, frustrating, and lead to frequent overspending. A T&E policy, when it is accurate and automated, helps control costs for business-related travel without micromanaging your team, Integrating policies into the latest travel solutions can reduce the repetitive questions your administrative team need to answer and ensure that your finance team has continuous access to the data and reporting they need.

Without the right T&E policy, there will be unnecessary work with the approval process, reimbursements, expense report collection, and more.

We asked Katharina Wodischeck from Adsquare when she thinks it's time for a company to automate their travel expenses. Here's what she said:

What should a T&E policy cover?

To follow widely regarded best practices, your travel and expense policy should cover:

• Allowable business purposes for travel

• Booking tool and process (for air travel, hotel rooms, public transportation, and car rental)

• Basic spending guidelines for each category including details of eligibility for upgrades tobusiness class or first-class airfares

• Best practices for reimbursable expenses, including necessary supporting documentation (for food, ground transportation, and other small expenses)

• Examples of non-reimbursable expenditure e.g. personal entertainment and policies for alcoholic beverages and non-employees joining business trips for leisure purposes

• The disciplinary action that will be taken if business travelers fail to comply with your policy

A T&E policy needs to clarify three elements for business travelers. First, the company policy around what business reasons will be acceptable for approving a work trip.

Secondly, the process for booking travel arrangements, including what travel expenses the employee will need to get approved first. Finally, the policy should outline budgets allowed for different business travel-related expenses and the consequences of deviating from these guidelines.

T and E policies also state tax obligations, reimbursement processes and give an overview of expense management. Policies may vary depending on your business home base and destination of travel.

For example, international travel may rack up credit card surcharges for U.S. employees—tiny details like this need to be considered in a T and E policy.

Your travel and expense policy might consist of a document to teach travelers what tool to use for travel booking, how to file an expense reimbursement, and their per diem amount. But to optimise your corporate travel, integrating your policy into the latest tech tools can help you automate many of the processes.

How T&E management tools can help

Using the latest travel and expense management solutions like Perk can revolutionize your company's corporate travel. A comprehensive tool will assist with:

• Full visibility into real-time travel spending: With automated expense reports and consolidated travel booking, your finance team will have real-time expense tracking to help them better understand your travel program.

• Options and autonomy for travelers: By integrating company policies, a travel management solution empowers business travelers to choose their own trip options.

• No need for travelers to pay upfront: Big business travel purchases like airfares and rental cars shouldn’t require travelers to request a reimbursement. When booking on a business travel platform, the company can pay one monthly invoice and reduce admin for everyone.

• No need for travelers to fill out expense reports: The right expense management solution will automate T&E  workflows. A mobile app can scan receipts so travelers don’t have to enter data into the expense management tool manually.

• Fast for office managers to collect invoices: When you consolidate your travel costs into one corporate travel management system, you receive just one invoice at the end of each month.

• Automated purchase reconciliation: Expense data from receipt scans and corporate credit card purchases should be automatically reconciled.

• Automated reimbursement approvals: Automate your company’s T&E  policy with rules so that food or taxi purchases under a certain amount can be automatically reimbursed without needing approvers to review manually.

• Quicker reimbursement funds for travelers: Even with consolidated business travel booking, the odd per diem expense will still be generated on the road. But with an automated expense reimbursement process, your employees won't be left waiting.