3 travel policy recommendations to boost employee peace

Two things are clear about business travel. First, based on the results of the travel policy survey by AP Now and PDG, it can be challenging for organizations to manage the related expenses and applicable policies. As the lead researcher for the survey project, I am seeing firsthand the pain that reimbursement teams often encounter. Besides regular battles over missing receipts and other infractions, there are, at times, outrageous expenses to address. More on this below. The second thing about business travel emerged during a lively weekend dinner party with friends. In short, travel is not pleasant (my friends used stronger language) and employers’ policies can make things more difficult on travelers. What can organizations do to help alleviate everyone’s sore spots? Keep reading to learn more, including some insights into the survey results.

Characteristics of a Strong Travel Policy

Consistent enforcement should be a given. Beyond that, here are three elements that appear to be lacking in some organizations, based on the survey results I’m currently analyzing.

Regular Reviews and Updates

Your policy should keep pace with the changing travel landscape. Reviewing it at least annually and making updates as necessary can prevent headaches. The survey results reveal there is room for improvement; for example:

  • Only 56% of organizations have reviewed their policy within the past 12 months
  • 72% have not updated their policy to reflect employees’ use of Uber, Lyft, and similar

Unfortunately, even the diligent organizations can overlook things. Among those who have done a review within the past 12 months, 60% said the policy does not address Uber, Lyft, and similar. 

Clarity and Specificity

It is not possible or recommended to try and address every potential situation within a travel policy. There are too many variables. However, many survey respondents—from the perspective of someone on a reimbursement team—expressed a desire for more details in their policies to minimize conflicts and debates with travelers. I completely agree.

While reviewing outrageous expenses described by respondents, I took the liberty of compiling a list of what an organization could specify in a “prohibited expenses” section of the policy.

ABC Company will not reimburse/pay for: 

  • tickets for driving violations or parking infractions
  • personal car repairs
  • gifts for family and/or friends
  • personal services (e.g., spa services)
  • personal items (e.g., clothing, medicine)
  • personal entertainment (e.g., concert tickets, gambling)
  • pet care or child care
  • expenses incurred by non-employee guests of the traveler
  • expenses occurring during non-travel days

Based on this list, you can imagine what respondents shared!

Help bring some peace to both your reimbursement team and travelers. Make your travel policy current and clear, but also flexible.

Help bring some peace to both your reimbursement team and travelers. Make your travel policy current and clear, but also flexible.

Flexibility

This third piece may sound like a contradiction to consistent enforcement. What I mean by “flexibility” is to allow reasonable exceptions when approved by an appropriate management member, especially when the traveler saves the organization money overall. For example, a traveler taking a red-eye flight when it is the cheapest option, but then purchasing a seat upgrade to be more comfortable. It also saves the cost of another night of lodging. 

I know “reasonable” can be subject to interpretation, which is why it is important to be clear about prohibited expenses (things for which exceptions are not allowed), as well as train your management-level travel approvers in order to convey your expectations. Having the flexibility within your policy to make things a little better for travelers can ease their stress and increase job satisfaction. 

Webinar Opportunity

If you are not a survey respondent, but want to hear more about the survey results, AP Now is offering the related webinar for a fee. Please visit http://www.ap-now.com/products/item126.cfm

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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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

Subscribe to the Blog

Receive notice of new blog posts.

Why mandate card use for T&E?

Results from AP Now’s 2016 T&E Survey reveal some things I did not expect. Namely, nearly 20% of respondents’ organizations do not offer Corporate Cards or any type of Commercial Card to their employees for business travel expenses. Besides the obvious issues of making employees pay out of pocket up front for some or all expenses, this arrangement can increase the risk of T&E fraud. The same is true when Corporate Cards are available, but not required. To explore this topic further, following are observations from an executive whose organization does not offer cards for travel purposes, as well as additional statistics from AP Now.

Organization without a Card Program

The executive with whom I spoke (“James”) works for a national company that uses a well-known travel technology system, so it is surprising that their approach to payments is so outdated. They are not alone. According to AP Now’s study, organizations of all types and sizes are among those without a card program for travel expenses; this designation is not limited to small companies.

Fraud Potential

James admits that an employee could easily commit fraud. For example, an employee could submit a reimbursement request for airfare:

  • soon after making the purchase to avoid a financial burden in conjunction with paying their personal credit card bill, and
  • again after the trip is complete

Catching the fraud is up to the approving manager, who might not remember the initial reimbursement request, as the timing gap is likely weeks, if not months. In regard to airfare in particular, a best practice is to use a Ghost Card or Virtual Card (or similar) for these purchases.

Mary Schaeffer, AP Now, points out another fraud example. An employee could book a trip (airfare, conference, etc.), pay for it out of pocket, and request reimbursement. Meanwhile, he or she could cancel the trip and pocket the money. If the employee used a company card (with corporate liability), the refund would automatically go to the company. In addition, Commercial Cards of all types provide visibility of employee expenses, making fraud easier to catch.

Another Drawback

In the category of “obvious issues,” James shared a recent example of an employee who had to take a business trip, but did not have a personal credit card or the funds to pay up front. The employee’s manager had to use her personal card to pay for some of the employee’s travel expenses. His company also had to create a cash advance for the employee—even though they do not have a cash advance program—so the employee could pay for meals and incidentals. Inefficient, to say the least.

One option for infrequent or one-time travelers is Declining Balance Cards; learn more

I asked James why his company does not have Corporate Cards. While he is not part of the financial management team, he guessed that they do not want to deal with managing a card program. He added they lack the staff/expertise and have other priorities to address. I can’t help but wonder about the savings they are missing and the potential fraud that might be occurring. 

Take a bite out of T&E fraud and the inefficiencies of cash advances by requiring the use of a company card.

Take a bite out of T&E fraud and the inefficiencies of cash advances by requiring the use of a company card.

More from the AP Now 2016 T&E Survey

Among the 80% of survey respondents with card programs, only 41% insist on card usage. As shown below, larger companies are most likely to require cards. Within this “insist on card usage” group:

  • 53% do not offer cash advances, which helps reinforce a card mandate
  • 36% make cash advances an exception
  • 9% still do cash advances regularly

Finally, there are organizations who truly make employees pay out of pocket: 7% of respondents’ organizations do not offer cash advances or a company credit card. This just isn’t right.  

When it comes to T&E expenses, consider how/where your organization can improve, making things easier on business travelers as well as AP.


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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