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2021 guide to travel and expense management

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What Is a Travel and Expense Report? (Plus How to Automate Them)

The global business travel industry is worth about $1.28 trillion dollars, with the US responsible for spending more than one third of that amount. No matter where your business is located, chances are that travel is one of your three largest expenses, with salaries and SaaS also in the lead. 

All of that spending means that it’s essential to track where that money is being spent, and why. In this guide, we walk you through how to create a business trip expense report, and how to optimize your business travel spending. 

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What are T&E reports?

Travel and expense reports are physical or digital documents that include all of the relevant details for a travel-related expense, including the amount of the purchase, the date, and expense category. Original receipts are typically also included with T&E reports so that if a tax return is ever audited, the business can provide evidence of reimbursable expenses. 

Elements of a travel and expense report:

  • Date of purchase
  • Vendor purchased from
  • Expense categories such as the client, project, account, or department 
  • Name of employee who purchased the item
  • Any additional notes about the purchase
  • The subtotal of the purchase
  • Any tax or VAT associated with the purchase
  • The grand total (including tax)
  • A PDF, JPG, or PNG file for the receipt or invoice

Why are travel and expense reports important?

Travel expense reports are important for several key reasons that matter to a company, whether a global corporation or a small business. 

Tax preparation

In most countries around the world, travel is fully deductible, as long as it has a justifiable business purpose. That purpose can be professional development, recruiting, sales, procurement, on-site customer support, and more. But in order to deduct your expenses legally with the IRS or other government entity, you need proof in the form of a receipt or invoice. 

Business intelligence

Reporting is not just for the tax entity of the governments whose countries you operate in. Understanding travel costs is important for your business as well. For example, with real-time insights into travel spend, you can make in-the-moment decisions to stick to your budget. And with monthly and quarterly reports, you can identify projects or teams that are overspending. 

Fraud reduction

Unfortunately, travel reimbursement is subject to employee fraud. With the right procedures in place (including the requirement to attach receipts), you can reduce your company’s risk of fraud. 

Best practices for tracking and reporting on travel expenses

In 2021 and beyond, a travel and expense report is no longer a physical form. Expense reporting should be digital, and integrated with your business travel software.

Here’s how to streamline your T&E reports with receipt scanning, invoice consolidation, and reimbursement request reduction. Check out these dos and don’ts:

Implement the right software

  • DO use software with automation capabilities: Use an expense management software that offers receipt scanning, so that expense report form data is automatically imported. 
  • DON’T manually collect invoices and T&E reports: Forget about a paper expense report template. This will only cause manual work for your travelers and your administrators. Instead, your expense policy should detail how to use your expense tracking software. 

Book travel in one place

  • DO book business travel with a travel management platform: When you encourage employees to book in an approved business travel management software, you can better control their spending and consolidate expenses into one monthly invoice. This reduces the need for expense reporting. 
  • DON’T book business travel on consumer websites: If your employees book travel on consumer sites (used by vacationers), then your business-related expenses are spread all over the place, requiring expense reports. 

Integrate your tech

  • DO integrate your travel management platform with your expense management platform: You can integrate your business travel platform with your expense management platform, so that all of your deductible travel expenses are in one place. 
  • DON’T rely solely on an expense management platform: While an expense management platform is important for every type of expense, it doesn’t actually help you spend money. It just shows you what you spent after the fact. You need a business travel platform for embeddable policies and invoice consolidation. 

Use corporate cards to your advantage

  • DO offer corporate credit cards to frequent travelers: Many companies still require employees to create an expense report even if they use their corporate card, so it might not seem like a corporate card saves time. But it does. Modern expense management platforms reconcile expense reports with credit card transactions, so your finance team doesn’t have to. 
  • DON’T require travelers to constantly request reimbursements: Employees don’t want to pay with their own money and then fill out expense reimbursements. With a corporate card, there’s no need to. Having fewer reimbursement forms saves time for travelers and administrators. 

Digitize your travel policies

  • DO include your T&E policy in your travel management system: One reason why a business travel platform is so important is the ability to digitize policies. These policies take effect during trip searching and booking, so they actually control spend. 
  • DON’T rely on a policy document to help you manage spending: Employees forget to read policy documents. If your T&E policy only exists in a document, it might be able to teach employees how to scan receipts, but it won’t control spending in the moment it really matters. 

Smart strategies to save money on travel expenses

Of course, streamlining your travel and expense reporting is only one part of the puzzle. You might also want to reduce your business travel expenses. 

Analyze travel spend by person, team, project etc.

Use your business travel software to set up tags, categories, and cost centers. This will allow you to accurately calculate the ROI of business travel and set better budgets in the future. 

Track trip cancellations and recoverable VAT for cost optimization

TravelPerk allows you to track trip cancellations and recoverable VAT. If you find a high amount of trip cancellations (due to uncontrollable circumstances), you might choose flexible, refundable travel instead. You can also track all of the required details to reclaim VAT

Create unique travel policies for certain teams or projects

The better that your travel policies match your company, the better they will work. Set different policies for different travel reasons (such as recruiting), or for different teams (such as sales). 

Use dynamic travel budgets for policy accuracy in every city

It’s impossible to set an accurate per night hotel budget if your company travels to multiple cities. With TravelPerk, you can set dynamic budgets that allow your employees to spend a certain percentage higher than the cheapest option available. 

When you digitize T&E reports as part of your travel management strategy, you save time for everyone at your company while collecting real-time, valuable data. And when you book travel using travel management software, you consolidate your vendor, so travelers don’t even need to create reports for those bookings. 

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