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What is a travel and expense policy?

A travel and expense policy provides guidelines for employees who are booking business travel or claiming business expenses. Business travel means going somewhere other than your main working location for the purposes of your job. Business expenses are goods or services purchased by employees to help them do their job.

Organisations create their travel and expense policy to govern business travel. This is a vital activity in many organisations – it can also be a significant cost. Sales professionals may need to travel to visit customers and prospects to bring in revenue. Staff in all functions may attend conferences or off-site meetings and training, they may visit branches, sites, outlets and suppliers. They may need to go to competitor sites or carry out research in other locations.

Business travel isn’t just the cost of getting from A to B, it’s also the cost of staying in hotels or lodgings and buying food and drink while away on business. The travel element can include rail, taxi, bus or air fares. It may also include fuel reimbursement for employees using their own or a company car, or the cost of a rental vehicle.

Business expenses is a blanket term that can include business travel. Other expenses might include stationery, consumables, books and subscriptions, electronic items, room bookings, course fees, repairs and services that an employee pays for directly then reclaims from their employer.

With such a wide range of allowable expenses, organisations need to control what employees claim back and make clear what’s permitted. The expense policy sets this out. Depending on the size and nature of the organisation, it might be a set of general principles, such as always choosing the most cost-effective option and getting comparative prices before booking. Or, more commonly, the expenses policy might set out rules for each type of common expense. For example, the class of travel for different journey lengths, the maximum nightly rate for a hotel or the mileage rate for journeys in a private car. It may stipulate that bookings or purchases may only be made through certain companies, systems or outlets.

The expenses policy may also set out rules that ensure employee safety and compliance to rules and regulations. For example, there may be rules about alcohol consumption and claims for activities that fall outside company insurance, such as some adventure sports in teambuilding exercises. Expenses need to be fully documented and approved for audit purposes.

On a practical level, the expenses policy will set out how employees should claim expenses – usually using a special form or online app. It will say how they should present receipts, for example, scanned or photocopied. It will explain where to send completed claims, who signs off expenses and when and how they will be reimbursed.

Before claiming expenses, employees need to refer to the policy to understand what is allowed and how to follow the process correctly. This ensures that they don’t spend on unauthorised items and services and that they’ll be repaid quickly.

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