How to develop a well-crafted
business travel policy.
Regardless the size of your company, you need to have a business travel policy in place to let employees know what is considered acceptable and expense-accoutable.
A business travel policy is necessary to not only help you control business costs, but to give employees guidelines on what kinds of expenses are acceptable and allowable.
But before you sit down to write the policy, I’d recommend you meet with some of your most frequent travelers and get their input and feedback on what works, what doesn’t, and why.
If you’re not at the place yet in your business where there is a lot of travel, recruit some friends or colleagues who travel frequently for business. Ask them the following questions:
- What are the best airlines for business travelers?
- What are the best hotels for business travelers?
- Who are the best local travel agents?
- What are the best rental car companies?
- What are the most cost-effective times to travel?
- What are some miscellaneous costs that you always run into?
Use the answers to these questions to help you develop the bones of your policy.
Designate a preferred airline, and explain when coach, business class or first class is appropriate. I would recommend not using first class unless you are traveling more than four hours, or can get a free upgrade. It’s ridiculous how much they charge for those seats. Be sure to have your employees sign up for the carrier’s frequent flyer program. In addition to frequent flyer miles, these programs sometime allow members to board early. I’d also recommend letting your employees use the frequent flyer miles they accrue for personal use, as opposed to funneling them back into the company. It’s a nice perk, and makes being away from home and family a little more tolerable.
Even though I belong to both American Airlines and Delta frequent flyer programs, I usually book their flights through an online travel site. My favorite one is CheapOair.com because, quite frankly, I'm a cheapskate when it comes to airfare. I don't want to have to pay any more than I have to! If you'd like to check them out, just click the banner below:
Decide which car rental agency you want your employees to use and have them sign up for the agency’s “frequent driver” program. This will save both time and money. Also, decide what size and type of rental cars are acceptable and include this in your policy. You’ll also want to do some research on rental car insurance, because if they use a company-issued credit card with a rental car insurance clause, it may not be necessary to purchase additional insurance.
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When employees use their personal vehicle for business, you need to reimburse them for the gas they use as well as the wear and tear on their cars. According to the IRS, the current average mileage reimbursement rate is .585 cents per mile. However, with the price of gas skyrocketing as it is, it would be prudent to check their website periodically and adjust your reimbursement accordingly.
Meals, Lodging & Entertainment.
The best thing to do here is to give your travelers a per diem (a specific amount they are allowed per day) for meals. The average per diem varies from state to state, and ranges anywhere from $39 - $64. (For more information on this, click here to visit the
US General Services Administration
website.) Keep in mind special circumstances like when an employee needs to take a client out to dinner - include enough for expenses you deem acceptable, like cocktails. Spell it out so there will be no misunderstanding.
My recommendation is to pick three acceptable hotel chains and ask your frequent travelers to sign up for their VIP programs. VIP programs let you accrue points for discounts and free stays; plus, most allow you to pre-select the type of room you want which saves time and helps ensure a better stay. You will also want to specify a price range for your employees to stay within. Here’s a word of advice: Don’t be a cheapskate. You’re asking your employees to take time away from their homes and families…don’t make them stay in a cheap room in a cheap hotel! Be sure to specify what in-room charges are acceptable as well (i.e. internet, min-bar, movies, etc.).
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These should be due at the same time every month. I recommend using pre-printed forms that are easy to fill out. The easier to fill out, the more compliance you will have. Have them tape all receipts to an 8 1/2 x 11 sheet of paper, and attach it to the expense report along with their corporate credit card statement. There will be expenses that they won’t have a receipt for, so you need to decide whether or not this will be reimbursed, and how they should report it on the expense report. Important: Have a specific day each month when employees can expect their reimbursement checks.
Corporate Credit Cards
I recommend issuing all frequent travelers a corporate credit card to make tracking business travel expenses easier. Depending on the card you use, you might also qualify for discounts on hotels, rental cars, etc.
This is a little bit of a touchy subject. Behavior that’s perfectly acceptable for one person, may be abhorrent to another. You need to remember, however, that how employees behave while traveling for business directly reflects on the business. Formulate behavior expectations be sure to put in your business travel policy.
Spouses and families often decide to accompany the business traveler. There are different schools of thought on this. Some feel it distracts the employee from the task at hand, while others think it adds to the employee’s sense of well-being. Decide where you stand on this and include it in your business travel policy.
There will probably be some expenses that don’t fit into any of he above categories. Brainstorm this with your panel of experts and decide which will be reimbursed. These expenses can include taxis, faxes, copies, in-room movies, mini-bar, etc. Be sure to put these in your business travel policy as well.
The more specific you can make your business travel policy, the happier everyone will be. Employees want to know what is and isn’t acceptable so they won’t risk running up unreimburseable expenses.
One last piece of advice: Review your business travel policy on a regular basis. – at least every couple of years.
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Business Travel Tips
Go here to read about some of my favorite business travel tips that will make being on the road easier, and more enjoyable.
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