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.
Perk’s latest research shows that 85% of UK 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.
1 in 5 UK employees (20%) say they don’t know what’s reimbursable, and 30% 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.
Unauthorised bookings: When you rely on manual processes, unauthorised 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, travellers 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, nearly 1 in 4 (22%) business travelers admit to losing receipts while on the road. When employees lose receipts, your business cannot reimburse them without risking issues with HMRC.
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 travellers 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:
With only a handful of employees, managing travel expenses is still doable using Excel sheets and paper receipts. However, when companies are growing, the whole process of approving, reporting and analysing travel expenses gets more complex, and not only do finance and accounting teams take most of their valuable time for things that could be easily automated.Companies should define what the status quo is and what they want to achieve with automating their T&E. Once the T&E process is automated, it's simple to keep up with company growth or increased employee travel, and it will save a lot of administrative costs in the long run.
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 to
business class or first-class airfaresBest 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 travellers fail to comply with your policy
A T&E policy needs to clarify three elements for business travellers. 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.
Travel and Expense (T&E) policies outline tax obligations and reimbursement workflows, providing a framework for effective spend management. These policies often shift based on where your business is registered and where the travel occurs.
For example, while a UK employee’s domestic rail travel is VAT-exempt, international trips may involve complex foreign exchange (FX) fees or specific HMRC mileage rates that need to be clearly defined to ensure accurate reimbursement.
Your travel and expense policy might consist of a document to teach travellers 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 can revolutionise 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 programme
Options and autonomy for travellers: By integrating company policies, a travel management solution empowers business travellers to choose their own trip options. No need for travellers to pay upfront: Big business travel purchases like airfares and rental cars shouldn’t require travellers 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 travellers to fill out expense reports: The right expense management solution will automate T&E workflows. A mobile app can scan receipts so travellers 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 travellers: 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.
Frequently asked questions
What is travel and expense management?
What are the main challenges of manual T&E processes?
What should a travel and expense policy include?
How does T&E management software help employees?
How does automated T&E management benefit finance teams?
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