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2021 guide to travel and expense management

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T&E Policy | Best practices to an effective travel and expense policy

The term ‘T and E’ is used a lot in business travel. In this case, the acronym can be for one of two options: travel and expense or travel and entertainment. 

In this quick guide, we’ll unpick what those two T&E phrases actually mean. Plus, how you can manage a T and E process for your corporate travel plan. 

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What is T&E? 

Travel and expense, or travel and entertainment, are essentially any employee’s spendings while traveling for work (a business trip) or entertaining a client. 

T&E expenses include travel costs, business meeting space rentals, accommodation, meals, overseas phone charges, and more. They include any expense necessary—or previously agreed upon with a compliance policy—to successfully do work while traveling. Business & finance departments usually handle T and E processes. 

Scalable T and E processes enable employees to ditch the company card and have more autonomy using their own credit card or e-card on work trips.  

Benefits of having a T&E policy (plus what happens without one)

Without an effective travel and expense policy, your company will experience a lot of frustration and probably overspending as well. A T&E policy, when it is accurate and automated, helps control spend without micromanaging, reduce the repetitive questions that your administrative team needs to answer, and ensures that your finance team has continuous access to the data and reporting they need. 

Without the right T&E policy, there will be unnecessary work with the approval process, reimbursements, expense report collection, and more. 

T&E policy automation tools

You might be wondering if there are any software tools that support a digital travel and expense policy. Fortunately, there are. When you automate your policy, you experience a few important benefits:

  • Faster approval process
  • Cost savings from better policy compliance
  • Accurate spending limits per team, department, or project
  • Transparent, real-time data on T&E costs
  • Consolidated expense reporting from a single booking tool

An automated travel policy is easier to understand and follow. For example, in TravelPerk, a hotel will state “Out of policy” if the nightly rate is too high. 

Travelers can also choose to toggle the button that only shows in-policy options, so they don’t see things that are outside of policy. This option is available to toggle on and off, so travelers with short time frames can request to book out of policy from their approver, if needed. (Since hotel rooms in popular cities tend to go up the closer you get to the date.)

Travelers will then only see options in their policy. They’ll be able to see top rated hotels first, and there are also plenty of filtering criteria to find exactly what they are looking for. 

What does a T&E policy look like?

At a high level, your policy should cover:

  • Allowable business purposes for travel
  • Booking tool and process (for flights, accommodation, trains, and rental cars)
  • Basic spending guidelines for each category of spend
  • Basic reimbursement guidelines (for food, taxis, and other small expenses)

A T&E policy needs to clarify the business traveler’s entire budget: including client entertainment expenses, transport expenses, and more. It should clearly state how much the employee can spend on certain items without needing budget approval. It should also include what travel spends the employee will need to get approved first. 

T and E policies include tax obligations, reimbursement processes and give an overview of expense management. Policies may vary depending on your business home base and destination of travel. 

For example, if the employee has a U.S. bank account, they may face credit card surcharges when traveling to Europe—tiny details like this need to be considered in a T and E policy.

You might have a digital document for your travel and expense policy to teach travelers what tool to use for travel booking, how to file an expense reimbursement, and their per diem amount. But the majority of your travel policy should be digital so it can be automated. 

It should exist in your business travel management software to lower spend and reduce the need for reimbursable expenses (as travel can be paid by your finance team, not your travelers).

Pro Tip: An automated travel policy gets compliance rates of 90% or more. They give employees autonomy and finance or travel managers transparency.  

What’s included in a T&E expense report? 

T and E expense reports are necessary to cover employee’s travel spending and minimize unnecessary costs for both the employee and your business. Any T and E expense report needs to include: 

  • The date of the expense
  • The vendor of the expense
  • The reason for each expense, i.e. travel, accommodation, client lunch, coworking
  • The billable internal account, i.e. marketing, business development
  • Proof of payment via receipt or invoice
  • Name of employee who purchased the item
  • The subtotal of the purchase
  • Any tax or VAT associated with the purchase
  • The grand total (including tax)

Documenting T&E expenses doesn’t need to be a complicated process. TravelPerk can help streamline your processes, making future business travel just as smooth. 

The tool offers a place that your employees, travel managers, and finance teams can communicate, collect the information they need, and share policies. Ensure your T&E expense reports are accessible to everyone and friction-free. 

T&E tax implications 

A lot of your employee’s business travel will be tax-deductible. As long as the IRS can recognize the activities as necessary to your industry niche. The harsh truth is that many businesses lose millions in unclaimed VAT on business travel programs. 

Your business doesn’t need to be registered in the country your employee is traveling to in order to reclaim VAT. Use TravelPerk’s VAT-friendly inventory, proprietary VAT calculator, and VAT in-house experts to guide you through setting up an automated VAT solution. It could save your entire business travel budget up to 20% every year going forward.  

5 ways to create a winning T and E process for your business

Follow these policy best practices to reduce policy violations, lower the effort required from approvers, and make auditing a breeze. What’s good for the traveler is good for the CFO too. 

1. Make it accessible 

Your process needs to be equal parts learnable as it is accessible. Ensure you store your policies and essential information in a place all employees have access to. If you’re working with contractors, you’ll need to keep in mind they may not have a company email and will need to accommodate them too. 

At the same time, your process needs to be understandable and straightforward. You don’t want someone to constantly reference how to follow the process; you want them to learn it once and for the process to stick. The simpler, the better. 

2. Be ready for mobile 

Traveling employees are on the go—the hint’s in the name. Their T and E documentation needs to be as on the go as they are. This means not expecting them to pull out their laptop and track their expenses every time they make one. Maybe they won’t have a moment to do this across the span of an entire day. 

Your T&E process needs to be mobile-friendly, so your employees can track expenses and ensure they are within policies without needing to stop the pace of their day. 

3. Create clear policies 

The word policy simply has an ominous ring to it. The thing is, they don’t need to be overcomplicated. When you’re creating a T and E policy, remember who you’re making it for. Speak to your reader, use language they’ll understand, and keep it simple. 

4. Automate your workflow (and let travelers book for themselves)

Automation makes your travel management more, well, manageable. Plus, it doesn’t take as long to set up as you may think. With TravelPerk, you can set up an automated travel and expense process with a couple of clicks. You can select an already integrated expense partner like Expensify, Yokov and Paykawk. Or, integrate your own systems with TravelPerk’s expenses API—whatever works best for your business. 

Take the time to automate your T&E workflow, and you’ll be grateful for it in the future. Doing this eradicates lengthy email chains, and ensures nothing is overlooked. 

Plus, automating T&E will feed your business valuable data, letting you know how you can optimize for financial benefit in the future. 

So long as your automated T&E policy fits your business needs, travelers should be able to book for themselves in your booking tool. This gives them autonomy over their travel experience while consolidating your business expenses for major time savings when it comes to reporting. 

5. Onboard your automation tool 

The last step on your journey to creating a smooth T and E process is onboarding your automation tool and workflow. Ensure the entire business has a good overview of how the tool functions and how they can use it. Do it well the first time, and you’ll never have to repeat this.  

Say hello to simpler T and E workflows 

That’s everything on the T&E abbreviation. Follow this simple guide to set up business-wide workflows and policies to ensure your T and E expenses are perfect. In doing so, you’ll create a smoother travel experience for everyone. Plus, you’ll be able to keep an eye on the books and potentially save your business up to 20% of unnecessary VAT spend per year.

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