Foreign travel policy for employees
A foreign travel policy (FTP) for employees is a high priority for organizations with employees traveling the globe for business purposes. It acts as a clear and simple guide, helping employees understand the nitty-gritty of expense reimbursement, travel safety, and personal well-being.
For the company, it improves employees’ travel experience and control over business travel expenses.
If your organization has employees traveling twice or more in a year, an effective foreign travel policy is crucial for offering a seamless experience to your traveling team members. Dive deep into what this policy should cover, the best practices, and more in this guide.
What is a foreign travel policy for employees?
A foreign travel policy and international travel policy are used interchangeably at many organizations. The policy outlines different business travel aspects, focusing on employee experience, well-being, safety, and business budget. For example, a well-defined foreign travel policy for employees contains:
- Processes and tools for making reservations (airline, railway, car & hotel) and travel arrangements
- Travel expense limits and restrictions for different categories
- Protocols to follow in case of unaccounted incidents
- Incidental expense allowance
- Expense reimbursement policies, including formats for expense receipts and reports
- Business travel insurance details
Companies with clearly established foreign travel policies for employees can easily prevent overspending and avoid fraudulent activities. Moreover, they can reduce hikes in travel spending while ensuring employees’ autonomy and flexibility during business trips and the booking process.
What to include in your foreign travel policy for employees?
The more detailed and streamlined a foreign travel policy is, the more seamless it becomes for your employees. When creating these policies, you must consider different business aspects to help both employees and finance teams.
Here are the main areas that your policy should cover:
1. Expense categories and limits
Listing expense categories and limits for international travel helps businesses to protect their financial health. Some of the most common international travel expense categories are:
- Hotel bookings
- Personal car mileage
- Ground transportation, including rental car expense
- Tips to waiters and bellhops
- Room service
- Incidental expenses
- Per diem rates or daily allowance for miscellaneous spending
- Cash advances
- Visa expenses
- Public transportation allowance inc. trains, buses, and trams
- Airline ticket cancellation
Clearly communicate limits on specific expense categories so that employees are aware of permissible travel expenses during an international business trip.
2. Non-reimbursable expenses
A company may not cover certain expenses during the course of international travel. These are known as non-reimbursable expenses. Your foreign travel expense policy must mention the non-reimbursable items clearly.
Some of the most common items are:
- Hotel upgrades
- Airline ticket upgrades from economy class to business class
- Airport lounge fees
- Foreign transaction processing fees
- Duty tax
- Expenses due to negligent traveling
- Personal travel expenses
3. Expense claim reporting policy
Expense reporting can quickly become a nightmare when you don’t follow standard operating procedures. Collecting receipts and logging all transactions during foreign travel isn’t exactly a walk in the park. That’s why businesses should have strong policies and procedures for reporting expense claims.
A well-defined expense reporting policy clearly mentions the business expense reporting process and documents necessary for claiming these expenses. It must address the most important aspects:
- How can employees report international travel expenses?
- Is there a way to report travel expenses online?
- Does it need to be reported within a specific timeline?
- Do employees need to submit proof of expense? If yes, in what format (receipt, invoice, form, etc.)?
- How long will it take for employees to receive reimbursements?
Employees may spend in foreign currencies while visiting other countries. Therefore, it’s necessary to mention preferred modes of payment (company credit card, cash, etc.) and ways to report expenses.
In case you want to reclaim the VAT from employee expenses made in a VAT-related foreign country, make it the employee’s responsibility to provide proof of expenses. These documents will help you to comply with federal travel regulations and tax authorities during the verification process.
4. International travel expense approval and reimbursement process
A detailed international travel expense approval and reimbursement policy helps your company to comply with IRS regulations, maintain costs, and efficient expense processing. This offers a single source of truth for all departments working on end-to-end travel and expense management. It also helps your employees to have an enjoyable business trip!
Here are the things that you need to take care of:
- Travel request approval
- Travel and hotel expense approval
- Making air travel bookings
- Making hotel reservations
- Creating expense report (non-reimbursable amount, travel advance amount, and reimbursable amount)
- Expense auditing for identifying policy violations
- Processing expense reimbursements
- Carry forward excess reimbursements
You can manage this process in-house or you can opt to invest in a travel management company—it really depends on your specific corporate travel needs.
5. Safety and insurance policies
As an employer, you must safeguard the health and safety of your employees traveling to other countries for business. This means both you and your employer need to be prepared to handle unforeseen circumstances like car accidents, political violence, and natural disasters.
This is exactly why TravelPerk integrates alerts within the platform via a solution called: TravelCare. This enables your travel managers to receive up-to-date, verified information on locations that are important to them and their team.
Including safety and insurance policies in your foreign official travel policy helps you to mitigate the risk of damage under such cases.
In addition, a company must clearly mention different types of insurances and their eligibility. Some of the most common insurances include personal accident coverage, employee benefits program, health insurance, employee compensation, and more.
For example, an employee injured abroad during a business trip may be eligible for different types of insurance. That’s why your policy must contain all insurance information, emergency contacts, tips on handling emergencies, and any other additional information you may deem fit.
Better yet, with a travel software app, you’ll have integrated duty of care solutions, to give travelers and booking managers peace of mind before, during, and post-trip.
Best practices for creating an international travel policy
Balancing the interest of employees and the company is crucial to creating a strong foreign travel policy. Here are some of the best practices you can follow:
- Use an approved business travel tool to consolidate travel plans, automate spend approval, and reimbursements
- Create an easy-to-understand and handy policy guide outlining details of SOPs for emergencies, reimbursement procedures, and travel support
- Leverage automated expense management solutions for gaining deeper insights into the financial health of your company
- Allow self-booking so that employees can choose the flight, layover, and accommodation they want
Creating an FTP helps companies to make travel arrangements, streamline travel expenses, and manage reimbursement processes smoothly. If you are looking for an all-in-one platform to manage business travel, get in touch with TravelPerk. From 24/7 customer support operating at a target 15-second response time to the largest booking inventory in the world, TravelPerk makes corporate travel management simple.