What’s the best process for managing travel expenses?

For most organisations, travel expenses come in several different wrappers and the processes and policies for managing them vary. However, it is possible to simplify even the disparate expenses that are submitted for hotels, flights, train travel, mileage and so on.

A policy is a must

Organisations need to be seen to be fair to employees, and if there's any question of anyone falsifying what’s been spent, a clear policy and procedures will enable a fact-based audit to be carried out.

Some of the largest organisations have policies that treat all their travelling employees as equals. What does this mean in practice? A typical policy might state that whether you are an admin assistant or the head of the business function, if you are travelling within a continent, you travel standard class and if you are travelling between continents, you travel business class.

This type of policy recognises that mitigating jetlag and the need to arrive in a suitable state to work when you get there is not dependent on your grade in the organisation.

A similar approach - and this is from major organisations - is that they hold lists of hotels with which they have negotiated deals. Employees are booked into those hotels. The lesson here is that they didn't get to be leading lights in their sector by ignoring where their cash was being spent.

Policies for suppliers and contractors

Some businesses need to get contractors to stay in hotels nearby to work on a project, and this involves paying their travel and hotel expenses. This will be negotiated as part of the contract; however, a policy is equally important so that contractors understand the limits of their spending.

Often, it makes more sense for business travellers who have an assignment abroad to stay there until the project is finished, rather than spend money going back and forth. Other companies explicitly forbid this, on the grounds that spouses tend to get invited out, the money spent on food is suddenly doubled, and it's an invitation for breaches of the travel policy. But this wouldn’t come to light until the trip is well and truly over and not much can be done about it.

By far the easiest way to deal with these types of expense claims is to use an employee expenses card. There is no reason why a temporary card of this kind can't be issued to a contractor or to those that need to travel for work. Our company spending platform, for example, allows rigorous control of what is paid for on a Soldo card. The business owner or finance team can set rules, limits and procedures for using the card so spending needn’t get out of hand.

Managing mileage claims

In government, local authorities, charities, voluntary organisations and some businesses, the mileage allowance is set by policy. It's extraordinary how many organisations still process mileage claims by using paper claim forms. The process is often further complicated by the fact that the employees' payments are taxable and that a P11D must, therefore, be issued and filled in.

However, the mileage allowance is seen as an employment perk by many employees and therefore is unlikely to go away very soon.

Some businesses allow employees using company vehicles to use a petrol card for petrol purchases only. A far easier way to manage this is to use Soldo’s prepaid Mastercard, which can be used in tandem with our expense management system. This means that just one type of card is in use in the organisation, greatly simplifying the analysis and reporting of all spending.

Mileage claims can be extremely time-consuming to process. However with our spend management system, the mileage rate can be held in the system and the journey date, start and finish points can be entered. The money spent is automatically calculated and sent to the company's accounting software for payment.

How to manage travel expenses efficiently

1. Make sure you have policies in place for each type of journey, and for both employees and contractors.

2. Use an expense management application to issue prepaid business cards that can be used for agreed travel.

3. If for any reason, the employee has to pay cash and reclaim the travel later, they can take a photo of the receipt using their phone and send it through to the expense management application.

4. Use the dashboard to analyse and compare different travel expenses. Even simple rail journeys can cost vastly different amounts.

5. Use the business intelligence provided by the expenses application for forecasting to get an accurate forward estimate of cash requirements.

The investment in an excellent expense management application will pay for itself many times over, in a short space of time. To discover the benefits, click here to find out more about our market-leading spend management platform and get the expense headache under control.

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