A travel expense headache.

Does your travel policy invite issues by leaving too much room for employee interpretation? A big headache for those who manage travel and entertainment (T&E) expenses—often accounts payable—is employees who incur unreasonable or out-of-policy expenses. Keep reading to see one such example (it involves alcohol) plus what your organization can do to minimize these headaches. Finally, if you’re wondering whether your organization is typical when it comes to what is and is not allowed related to T&E expenses, you can take an easy survey to find out; see link below.

They Did What?

The Travel & Entertainment Policy Survey going on now, sponsored by AP Now and PDG, includes a question about the most outrageous expense report situation encountered. One respondent shared that two employees purchased a $350 bottle of wine at dinner (no customers were involved) and requested reimbursement. The employees thought it was completely reasonable. 

Speaking of alcohol, early survey results show a notable percentage of organizations don’t reimburse for liquor. It is too soon to tell if this will remain the most common answer.

What Your Organization Can Do

Regardless of which scenario below applies to your organization, travelers and approvers alike should receive related training and be held accountable for their respective role. If there are no consequences for outrageous expenses, then nothing will deter them from being a repeat offender. In the case of the $350 bottle of wine, I have to wonder about the manager who approved it. 

Scenario 1: Employees Submit Reimbursement Requests

When employees pay for T&E and submit reimbursement requests, the way to prevent issues is by using per diems. Employees can spend what they want, but your organization only reimburses “X” amount, based on your per diem rates. Personally, I am a fan of this approach, as it eliminates battles about what constitutes a “reasonable” expense. However, travelers may feel too restricted by per diems, even when they are adjusted to accommodate higher costs in large markets. 

Scenario 2: Organization Pays for T&E Directly 

When employees use Commercial Cards (e.g., Corporate Travel Cards) for which the bill is paid directly by your organization, it is even more critical to specify, within your policy, what is and is not acceptable. For out-of-policy expenses on a card, the traveler should be required to reimburse the organization.  

With both scenarios, the caveat is AP must spot an out-of-policy expense first in order to take action against the traveler and/or approver. The use of some type of auditing technology can really help. 

Take the Survey

As the lead researcher for the T&E Policy Survey, I’m eager to see what organizations are doing. Survey respondents will receive an executive summary of the results and be invited to a complimentary webinar to see more results, including some best practices. Click here to take the survey.

No need for pain reliever when your organization has a comprehensive travel policy that it consistently enforces.

No need for pain reliever when your organization has a comprehensive travel policy that it consistently enforces.

How Comprehensive is Your Travel Policy?

Does your current policy prevent outrageous expenses? While “comprehensive” is subjective, AP Now’s 2016 T&E survey (www.ap-now.com) revealed that the majority (44%) of respondents rated their policy as comprehensive. Others were more negative; 37% said it is somewhat comprehensive and 11% said not at all. Does your policy overlook certain topics? Take the current survey to help you begin to evaluate your policy status.

See also travel-related resources offered by Recharged Education.

About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

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