With the impact of inflation, the COVID-19 pandemic, and other global events, it seems like prices are going up on everything. From food to toiletries and other necessities, many are finding it harder to pay for essentials, as countries like the
US
, Canada
, and the UK
experience a cost-of-living crisis.If you’re struggling to pay bills or just trying to save money, and your boss has asked you to spend your own money on business travel costs, you might be understandably annoyed. Even if you’ll receive a reimbursement later on, having to put down the money up front could cause you financial problems.You may find yourself wondering if this is legal. Can companies really ask their employees to
pay for business travel out of pocket
?Read on to learn more about this issue, and how you can avoid financial strain because your company asked you to pay for business travel.Why might your employer ask you to pay for business travel?
There are a few reasons why an employer might ask you to pay for your own business travel (airfare/plane tickets, train tickets, rental cars, hotel rooms, parking fees, visas, and related travel costs) out of pocket.One is that they may want to encourage you to be more cost-conscious while traveling. If you are paying for expenses from your own personal credit card or bank account, the reasoning goes, you’ll opt for cheaper airline tickets, hotels, food, and other products and services. Even if you’re being reimbursed, you may end up choosing less expensive options than if you were using a company credit card.Another reason is that your employer may simply not know of any other way to do it. Without a modern
business travel solution
in place, they may rely on manually reimbursing your business expenses
as the only way of paying for your travel.What are the negative effects of having to pay for business travel up front?
Regardless of the perceived benefits, having to pay for company travel up front on your own credit or debit card can be pretty stressful for you as an employee. Here are some of the negative effects it can have, both for you and your employer:
- Financial strain: You’ll suffer a temporary loss in your personal finances, and then have to wait until your company pays you back. This can put a dent in your financial planning for the month, especially when you don’t know exactly when the payment is going to come in. If you’re struggling with the cost of living at the moment, this can be especially challenging, if you don’t have enough money to pay for these expenditures on top of your personal expenses.
- Interest: If you pay for travel on your own credit card rather than a corporate card, you might rack up interest as you wait for your reimbursement. It could be complicated to get this back from your employer. This could also impact your credit score.
- Inconvenience: Searching for and booking travel options, keeping track of expenses, organizing your invoices, and submitting expense reports manually is very time-consuming. And if you’re doing everything yourself, there’s a greater chance of making a mistake—potentially causing an even more delayed payment.
- Harder to stay within policy: Having to book everything yourself makes it harder for you to stay within policy. You may not be familiar with every detail of your company’s travel policy, so you could end up accidentally exceeding your travel budget.
- Dissatisfaction: The ultimate consequence of all this stress is that you will probably feel less satisfied, since business travel will feel like a burden instead of a privilege. This may have consequences for your employer, in the form of reduced employee retention—you may start looking for a new job.
79% of North American business travelers say their business travel experience impacts their overall job satisfaction at least somewhat, so creating processes that work for everyone is a win-win situation.
Global Business Travel Association
Is it legal for your employer to ask you to pay for travel?
Laws on business travel vary from country to country, and within countries. In general, it is sometimes legal for employers to ask their full-time or part-time employees to pay for business travel up front. However, this depends on the country you are located in.Under US federal law,
employers are required
to pay employees for any time they control, including travel time, according to the Department of Labor
. But federal law does not require reimbursement for travel expenses.Many EU member states have national legislation governing business travel, including expense reimbursement. For example, in Czechia (the Czech Republic)
, employers are required to reimburse employees for certain travel expenses, and these expenses should be reimbursed in advance, or the employee should be given a traveler’s check or company credit card.In the UK
, employers are not required to reimburse employees for travel expenses. However, employees may be able to claim travel expenses for tax relief.If you are concerned about the legal status of your company’s business travel program, you’ll have to check the laws that apply in your specific country, state, and region.How can you avoid having to pay for business travel up front? What’s the alternative?
If you’re concerned that your employer is asking you to pay for business trips up front, you can make the process easier for both you and them by encouraging them to adopt a
business travel management solution
, sometimes known as a travel management company (TMC)
.These days, many companies opt for software rather than travel agencies to manage their business travel.One example of a modern TMC software solution is TravelPerk
.How TravelPerk can benefit you as a traveler
If your company gets TravelPerk, your employer will be able to easily manage their business travel program, and you won’t have to pay for business travel out of your own pocket anymore.
You can also easily book policy-compliant travel using the software, without having to memorize every detail of your company’s policy. You’ll have access to an extensive, industry-leading travel inventory to choose from when booking.
How TravelPerk can benefit your employer
With TravelPerk, your company will gain full control of their travel policies, budgets, bookings, and more, all in one place.
TravelPerk offers flexible payment options, including credit,
via consolidated invoicing
. Your employer will be able to easily understand and categorize invoices in one centralized place, keep track of VAT and tax data, and create custom expense reports.They’ll also be able to configure built-in travel policies and approvals
, so they can gain control, while leaving you the freedom to book on your own. In addition, they’ll benefit from advanced travel and expense dashboards
, VAT recovery solutions
, risk management
, carbon offsetting
, and more.Is your company already using expense management software, but doesn’t have all the functionality they need? Good news: TravelPerk integrates with many
popular expense management platforms
, so they can stick with their existing partners while enjoying seamless expense management processes.Want to learn more about TravelPerk? Talk to your manager or human resources department today, so they can get your company signed up for a free demo
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