An effective Travel and Expense reimbursement policy acts as a systematic guide for the reporting and reimbursement of any travel-related or other business expenses incurred during furthering the business interests of an organization. It lists out the stakeholders in the process and details every step and activity that must be undertaken by the concerned stakeholders. It also has details about the approval flows, the kind of reporting and its frequency, and the different types of expenses that are reimbursed by the organization.
Without an effective policy, organizations will find it hard to complete the process systematically and giving scope for inefficiencies and fraud to creep in. We’ll look at the important tasks involved in defining and building an effective travel and expense reimbursement policy and how travel expense reimbursement software helps with policy enforcement.
Approvals and approval flow: This is an important task that must be clearly defined. The policy must tell the employee whom he must get approvals from. It could be the direct supervisor, the head of the business unit, or the CEO of the company. It should also state whether the approvals and authorizations should be taken pre-trip or post-trip.
The next step is the approval flow. It must be clearly stated if the organization follows a single, double, or multi-approval policy. If that is the case, the approval flow, whether one after the other or simultaneous, must be defined.
Limits and thresholds: Some companies impose limits on the amount that can be spent by the employee. Some others have a threshold after which multiple approvals must be sought. All these must be laid out clearly in the policy.
Reimbursed and non-reimbursed expenses: This is the most important task in the exercise. The policy must clearly and exhaustively list down the expenses that are considered legitimate business expenses and hence reimbursed and those that are personal and hence non-reimbursed. This list includes transportation, boarding, lodging, gifts, training fees, entertainment fees, etc. If there is any ambiguity in this list, the whole purpose of the policy will be defeated.
Documentation and reporting: The policy also must mention the kind of documentation and reports that employees must submit along with their expense claims. It should also define the period and frequency of reporting, if necessary. Also included will be details of those to whom this report is to be submitted.
Timelines: The policy should state the deadline by which the reports are to be filed. It should also convey to the employees the time it generally takes to reimburse them.
Online expense reimbursement software gives organizations a platform to manage their expenses and reimbursements. The limits and thresholds can be configured within the software so that there is no scope for the employee to go across the limit. In the same way, as only the reimbursed expenses are listed, employees can only fill in legitimate expense line items.
In today’s competitive era, a lot of organizations still manage their travel expenses in a very unorganized manner. The traditional way wastes employee time and productivity and increases the stress on the Account payable and Finance team in managing the process manually. To gain a competitive advantage, organizations need to move to a travel expense reimbursement platform that integrates travelers, approvers, travel desks, travel agents, accounts payable, and finance on one portal to reduce miscommunication and streamline the process. Unnecessary trips and wasteful cancellations are decreased, travel is only with authorized vendors and travelers function within the recommended procedures and systems. This saves both time and money. Below mentioned are a few benefits of efficient Travel Expense Management Software:
Structured Travel Policy
Earlier when accounting for travel expenses was done manually, it was difficult to keep track of all the expenses and costs incurred. With the travel expense management software, the travel policies will be very clear, and erroneous payments can be highlighted. Common travel expenses including hotel and food ought to be written down clearly. This helps in preventing issues in the future.
The finance and accounts payable team can get clear visibility on the spending made. They will have all the related information available in the system with details of the same. They can easily know which department is spending how much and can put budget control wherever needed.
Entering expenses manually into a spreadsheet can be tedious and can tend to be inaccurate. It becomes difficult for the accounts payable and finance team as well if you have several hundred employees in an organization. This is where travel expense management software comes into the picture. The software allows employees to report their expenses in the system which automatically follows the workflow and goes for approval. Post approval it goes to the relevant department for authenticating and processing the payment. The entire process is seamless, automated, and quick for employees and internal departments.
On-Time Employee Reimbursement
If you take too much time to reimburse your employee, it will lead to growing resentment. It could also lead to employees being hesitant to go on business trips and maybe even flat-out refusing, which would ultimately affect the business. The software allows the employees to report their expenses on the go and it immediately goes for approval and payment. The entire process is quick and automated which saves a lot of time and helps to reimburse employee expenses on or before time.
Employee Travel Expense Trends
With a spreadsheet, it is difficult to say if an employee’s expenditure is atypical of the normal pattern. The software helps to capture data and analyze the trend based on historical data. Management can run multiple reports and get analytics to help them make business decisions. For example, it is easy to look up different trips and find out whether inflation is bringing up the expenses or if the employee is skirting along the edge of allowed expenses. Both the Travel Expense Management Software and the Procure to Pay Software help to bring financial control to the organization saving a lot of cost and time.