Determining Reimbursable Travel Expenses for Employees
March 13, 2023
Innovative Travel Management Company
Altogether, there are more than 1.4 billion people who travel around the world every year for work, leisure, or relocation. With a global marketplace coming closer to workers than ever before, corporate travel has maintained itself as one of the main reasons for travel planning throughout the world. Developing a clear plan for corporate travel is paramount to a business’s operations — Without it, you may find your schedule falling to pieces around your travel plans. Fortunately, with careful preparation and knowledge of corporate travel policies, travel mishaps can be avoided, ensuring that employees can focus on work, and not getting to work. Through travel management companies, careful planning, and ensuring peace of mind for employees through allowances and declarations, corporate travel can become an easy task for any business.
Travel Management Companies (TMCs) have become increasingly important to the commerce of a business. While they can assist with a variety of needs for corporate travel planning, a TMC’s main function is to streamline the process of corporate travel, and provide clarity on travel policies.
More specifically, TMCs are able to provide a plethora of amenities and quality-of-life changes for a business, such as making sure that employee travel preferences are taken into account, along with flight schedules, hotel availability, lower pricing, and many more benefits. TMCs allow executives and business owners to take the load of travel planning off their already quite busy plate, providing a middleman to manage employee and corporate travel. Some TMCs will even analyze certain risk factors, such as canceled or delayed flights, hotel lodging issues, or missed transportation from hotels to worksites. When it comes to corporate travel planning, TMCs are equipped with advanced options to assist employees in booking airfare at the lowest prices possible, as well as offering preferred seating and error management, should anything go wrong during the trip.
A great TMC is an ally in corporate travel and will work to find your business the best deals possible while saving time and money in the process. Long relationships with a strong TMC can result in thousands of dollars in savings and may enable even more savings through rewards and loyalty points through corporate cards and lodging.
While a TMC can certainly run the logistics of travel planning, it is still up to the individual to plan their day-to-day travel. To save money, time, and energy, plan ahead — The further out a trip is on the calendar, the more you tend to save. Ad hoc or last-minute bookings often suffer from price gouging and high competition, causing your business to spend more money on tickets and lodging than if the trip has been planned earlier. Further, last-minute bookings are often largely inflexible, and may not comply with a business’s travel policy, rewards programs, or loyalty cards. Business calendars outlining business trips and budgetary restrictions are another good way to independently engage in corporate travel planning, and can also assist a TMC in finding options that best fit your corporate budget. Planning ahead in this way can also indicate the necessity of a business trip overall, and help plan if better arrangements can be made further out to better fit a business’ commercial needs.
A corporate travel policy is an outline of travel approval processes, accommodations, incidental allowances, and reimbursement policies. The more strict a travel policy is, the more a business can save when planning corporate travel. An unclear travel policy can incur unnecessary costs, such as ad-hoc fees, over-budget spending, or loss of money through wasted time when filing for reimbursement. As such, setting a clear policy on what is and isn’t included in the corporate travel budget will help corporate travel planning in the future, giving a clear indication of where the business can afford to spend money, and when a business is close to breaking its budget.
A good travel policy should adapt to the needs of a business and its employees, while also being easy to comply with. If a travel manager or executive needs to spend hours collecting receipts or itemized deductions from employees, time and resources are being wasted on processes that could be clearly outlined for employees in a corporate travel policy. Drafting a policy for planning corporate travel shouldn’t be complicated, and working with a TMC can often streamline this process for a business as well!
Airfares and hotels often result in the most frustrating part of corporate travel planning. Comparing prices, dates, flight arrivals and departures, and maintaining seat preferences for employees can be a headache, costing time and money from an employee who could be staying productive. While it is certainly possible to do independently, utilizing a business’ TMC often results in cheaper deals that hit all the marks for the corporate travel plan. To do this, TMCs use their specially-curated industry relationships to find the cheapest deals on the market, as well as custom-built search engines that will indicate when an airline runs a sale, as well as sometimes re-booking tickets if cheaper options are found. Businesses that have corporate mileage or point cards, or loyalty programs with certain hotels or rental companies, can declare that to a TMC, who will use their search engine to combine their low prices and planning tools to save as much money as possible for a business.
Many corporate travel policies also come equipped with an incidental allowance, enabling employees to enjoy their business trip without concern for food, drink, entertainment, or transport costs. Offering an allowance to employees can incur more travel savings in a variety of ways, depending on how the allowance is set up. Allowances often come in two forms: Per Diem or Accountable Plan.
Some companies may opt to use a per diem allowance, giving a daily limit an employee can spend during the trip. Typically including meals, transportation, and lodging costs, a per diem allowance can be an excellent way to allow employees to complete their trip without excessive record keeping, instead looking only at the overall amount. Per diem allowances can vary nationally or seasonally, however, so care should be taken when defining a per diem allowance that will be reimbursed during tax filing.
Alternatively, other corporate travel policies will engage in an accountable plan, instead using itemized receipts and records of corporate spending to decide on which specific items are eligible for reimbursement. Accountable plans offer more flexibility for a business but require more trust in the employee when planning for corporate travel.
Regardless of which allowance you use, be sure to check with local IRS regulations on what can or cannot be declared — These guidelines can change between nations or seasonally, and a budgetary restriction one year may not be applicable the next. Some items also cannot be reimbursed at all, such as personal spending, or particularly lavish or extravagant costs like resort lodging or some first-class trips.
While an individual can set up a corporate travel plan, it takes the effort of a whole team to reduce corporate travel spending. Booking cheap flights and finding deals on hotel rooms do well to reduce spending, but employees can help to share costs as well. Encouraging employees to carpool to and from the airport, for example, is one way to do so. You can even advise local employees to utilize their own vehicles, reimbursing them for mileage and gas instead of spending money on an entire rental. In some circumstances, sending only one employee, instead of two, may be more cost-effective as well. There are a variety of ways to reduce costs from employees through careful corporate travel planning, though each sector of business may find unique circumstances that enable them to do so.
There are many ways your company can save money when planning for corporate travel. Planning ahead, clearly outlining corporate travel policies, and finding ways to save on airfares, hotels, and transportation are just a few of the many options an individual can use to save money. A Travel Management Company can assist by offering real savings an individual entrepreneur can’t find elsewhere, offering peace of mind as well as peace of budget. Request a Demo today and learn how Telios Travel can help your business save money on corporate travel.
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