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Business Travel Allowance

What is a business travel allowance?

A business travel allowance is a payment made to a corporate traveler by an employer to cover expenses incurred on a business trip. The most common expenses are accommodation, food, drink, and transportation. The approach to an allowance will vary from one company to the next, depending on the corporate travel policy that is in place.

What is a business travel allowance for?

While this will vary from one business to the next, travelers will find that a collection of common expenses are covered, such as:

  • Additional travel such as flights and taxis
  • Food and drink that is consumed while on the trip
  • Accommodation that is required
  • Morning and evening meals for overnight stays

The definition of business-related travel expenses will vary from one business to the next. Some businesses might have a strict limit in place for meals, for example, while others might be more generous.

Where can employees learn more about the business travel allowance?

Every company that engaged in corporate travel should work to maintain a clear and updated corporate travel policy. This document will clearly outline the rules and regulations covering corporate travel, including how business travel allowances are treated. The corporate travel policy will define, for example, the difference between a business and a personal expense.

In some countries, companies have a legal responsibility to provide an adequate away from home allowance. The amount and mechanics will vary from one country to the next, in addition to the way that these expenses are treated in terms of tax.

What is a per diem rate?

Some companies and organizations may decide to provide travelers with a flat “per day” rate rather than reimbursing individual receipts and purchases. This can make things simpler for both parties and also means that travelers are given the flexibility to travel to their own level of comfort. Companies may also find that this is a more cost-effective option.

How can companies standardize a business travel allowance?

Companies will find that travelers use their business travel allowance in different ways. Standardizing the amount can help to keep things fair, and the corporate travel policy is essential to ensuring that this is the case.

It is also important for employers to establish a pre-trip approval process, whereby the travel plan is approved before the trip takes place. This can help to avoid unexpected expenses and non-compliant corporate travel.

What is a realistic business travel allowance?

The answer to this question will vary according to a range of factors. The destination is perhaps the most critical, but also the seniority and preferences of the traveler themselves. Ensuring a comfortable yet cost-effective trip is a challenge for businesses, and this is why they need to develop a strong corporate travel policy.