Business travel policies explained

Quick insights

• Business travel policies outline rules and procedures for when employees travel for company business.
• These policies often help reduce travel costs, enhance employee safety and satisfaction, mitigate risks and simplify travel-related processes related to accounting and booking.
• A travel policy might include airfare and hotel booking procedures, per diem rates for meals and deadlines for submitting expense reports.    

Business travel policies are designed to manage employee travel. These policies often cover areas like accommodations, expense coverage and reimbursement policies to ensure compliance with company standards.

However, developing these policies can be challenging due to the unique travel needs of each company. Creating an effective policy requires collaboration from stakeholders across the organization. A well-crafted policy can potentially benefit both the company and its employees.

Read on to learn about business travel policies, their benefits and common guidelines.

Business travel policies explained

A business or corporate travel policy is a set of guidelines that a company establishes to manage employee travel for business purposes. This policy typically includes written instructions detailing what’s permissible, the process for booking travel and how to handle expenses. 

Travel policies aim to ensure that employee travel is efficient, safe and cost-effective. These policies are also often aligned with the company’s business objectives. For instance, a company may allocate resources for trips to key markets to support its expansion goals.

Travel policies are generally developed with input from multiple stakeholders. Finance, legal and HR stakeholders—in addition to frequent travelers—are often consulted.

Benefits of a corporate travel policy

A well-structured corporate travel policy can offer several potential advantages. Here are some of the ways in which managing employee travel may be beneficial:

• Limits travel costs: By negotiating rates, selecting cost-effective travel options and setting spending limits, companies can often more effectively control travel expenses.  
• Provides a consistent travel experience: These policies encourage all employees to follow the same rules, promoting fairness and consistency.
• Manages risks and promotes compliance: Guidelines typically include measures to mitigate risk and facilitate adherence to legal and regulatory requirements.
• Creates streamlined processes: Simplified procedures for booking, approval and reimbursement may reduce administrative burdens and minimize employee frustrations. Providing employee credit cards for frequent travelers can also help streamline expense management.
• Promotes employee safety: At many companies, travel policies encourage safe travel practices, such as emergency protocols and travel insurance.

Ideally, a corporate travel policy will address the travel needs of both the business and its employees.  The “4 C’s”—cost, compliance, comfort and convenience—offer one approach to managing employee travel. This approach caters to both employee and employer needs.

Common guidelines for business travel policies

While every company has unique travel needs, many business travel policies share common guidelines, particularly regarding air travel, lodging, meals and entertainment and employee reimbursement.  

Air travel

Air travel costs can add up quickly, and effective rules and processes regarding employee travel may help manage these expenses. Air travel policies may include guidelines for the following:

• Booking procedures: Policies may specify how far in advance flights should be booked. While last-minute travel is sometimes necessary, encouraging advance booking can generally result in lower fares and better availability. Policies may also include approved tools or travel agencies.
• Preferred airlines: Companies may negotiate rates with certain airlines and require employees to book flights with these preferred carriers.
• Class of service: Policies often specify the class of service employees may book. For example, companies may direct employees to book economy class for short flights, but permit business class bookings for flights over several hours. In some cases, employees may book business class if economy is unavailable.
• Frequent flyer programs: Guidelines usually clarify whether the employee or the company accrues and uses frequent flyer miles earned during business travel.
• Flight changes and cancellations: Companies may outline procedures for handling changes and cancellations.

Many policies also address rules regarding in-flight purchases. If employees use company credit cards to book air travel, the company may manage employee credit card usage by limiting purchases within specific spending categories.

Lodging

Many processes for lodging aim to balance comfort and cost. Here are few guidelines companies often have:

• Booking procedures: Companies often provide instructions for booking hotels, including recommendations for timing and the use of approved tools or travel agencies. 
• Preferred hotels: If a company has negotiated rates or partnerships with certain hotel brands, employees are usually encouraged to book stays with these hotels.
• Accommodation standards: Policies may detail room types and maximum nightly rates, with different limits potentially set based on an employee’s level within the company.
• Hotel changes and cancellations: Procedures for handling any cancellations or changes are typically outlined to avoid fees.

Some policies may specify whether charges for internet access or parking are reimbursable.

Meals and entertainment

The following are examples of entertainment policies that many companies have:

• Meals: Policies that include per diem rates or meal allowances tend to encourage employees to stay within reasonable spending limits.
• Events and entertainment: Employees may need to entertain clients, and guidelines often address these expenses. In highly regulated industries, there may be restrictions on what can be purchased for clients.
• Alcohol consumption: A travel policy usually includes rules for reimbursing alcohol expenses.

Employee reimbursement

How will employees get reimbursed for expenses like airfare, lodging, meals and entertainment? Having clear guidelines can simplify this process. Many companies establish employee reimbursement policies that specify eligible expenses, expense limits, documentation requirements and submission procedures.

Key components of employee reimbursement policies may include:

• Travel software: Companies often require employees to use designated travel software for booking trips. This software facilitates real-time tracking and reporting on expenses, captures digital receipts and integrates with accounting systems.
• Receipts: Policies typically mandate that employees retain and submit receipts for all eligible business travel expenses.
• Expense reports: Employees may be required to submit an expense report after a business trip. These reports usually detail each expense, including the date, type and amount, and are accompanied by copies of receipts. 

For employees using company-issued credit cards for travel expenses, it may be beneficial to provide clear employee credit card policies and instructions for submitting receipts to keep things organized.

In summary

Companies implement business travel policies to establish rules and processes for managing employee travel. These policies typically aim to control travel costs, ensure compliance, streamline processes and support the company’s objectives.

An effective travel policy may improve the business travel experience and make employee travel more efficient. Common guidelines include rules and procedures for air travel, lodging, meals and entertainment and employee reimbursement.