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Best practices for developing travel and expense policy

Posted by Indrajit Palit | Oct 10, 2019

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What are Travel and expense policies?

Travel and expense policies of an organization are a comprehensive set of rules which define how an organization will reimburse employees for all expenses necessary, reasonable, and incurred when traveling on company business or executing business transactions.

Why don’t businesses have a travel policy in place?

Lack of documentation- This happens because of the absence of a person or function in the organization who would be responsible for creating and implementing the policies.

Difficult enforcement - This is especially true for companies that are still using manual spreadsheet-based systems to manage expenses. Companies who have achieved some level of automation also struggle with the problem due to the high volume of receipts.

Employee satisfaction - Some organizations choose to believe their employees that they will stay frugal and not indulge in fraudulent activities. They put trust in their employees and don’t see a need for these measures.

Best practices for designing Travel and expense policies

There is a lot of material regarding travel policies ( real and sample) all across the web, however, one size does not fit all in this case.

Every business is unique in its own right and needs to design policies around its context. With employee empathy as a directive here are some key things that should be kept in mind in while designing a policy.

Define the parameters:

Expense categories - Define the categories where employees expense the most often. These could be travel, telecom bills, office supplies, meals, etc.  You need to list every category that sees expenses from even a single quartile of actively expensing employees.

Spending mediums - You should drive your employees to divert all their expenses to a single mode of payment. This can be achieved by driving a corporate card program to move your employees from cash which can be unaccounted for

Spending limits - You should benchmark and define the spending limits for each category of expenses across various hierarchy levels of your organization.

List out non-refundable - It will is also important to list out what things are non-refundable so that employees are not surprised later on.

Build a robust process:

Keep company hierarchy in mind - Design the workflow policy keeping the hierarchy structure in mind so that it’s easy for line managers and employees to understand the approval process.

Define the critical path - Critical path defines the minimum number of checks an expense has to go through before being processed for reimbursement. This helps in policy checks and audit runs once it has been processed.

Allow bi-directional flow - Expenses when rejected need to go back to employees for correction. This will also be required when pre-authorization goes from approver/manager to employee.

Make it comprehensive:

Be explicit- Detail out the expense categories and types that are considered and not considered for reimbursements. You should highlight any common error/inefficiency in the process as part of the policy document.

Set expectations - Provide employees visibility into the amount caps and budget thresholds, if any. This ensures your process doesn’t come up as an unpleasant surprise to employees.


In this day and age, considering your business, there is no case standing manual expense management. The expense management software market is booming and it’s time for companies to join the digital wagon. Here are some common features available these days that can help implement policies very easy:

Real-time policy checks - Inform employees of policy violations as soon as they submit their expenses.

Powerful checks not possible manually - Checking for geographical checks using third party data us possible through automation

Audit logs - Carefully curated digital footprint of a receipt once it’s inside the system which can be used later for compliance risks and audit purposes.

Source transaction matching - Map expenses claimed by the employee back to the expenses in their corporate card.

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