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Corporate Travel Policy Reimbursement & Approval Process

Build an effective corporate travel policy in 5 steps

6 min
Posted: 15 May 2024
Woman Traveling for Work with Luggage

Keeping up with best practices for travel policy is crucial for your corporate travel program, regardless of whether you manage a few dedicated frequent travelers or oversee a large fleet of employees who frequently travel for work. Your travel policy demonstrates your commitment to meeting the needs of your employees and enhancing their travel experience.

Download the guide to access travel policy insights and recommendations for flight, hotel, car rental and rail.

What is a travel policy?

A travel policy is a set of guidelines and rules an organization establishes to govern employee travel. It outlines the expectations, procedures, and limitations for business-related trips. A formal corporate travel policy is the foundational building block for your business travel program.

Why create a business travel policy?

Historically, corporate travel policies have primarily been used to manage the travel budget. Today, however, corporate travel policy is vital in mitigating risk and supporting traveler wellbeing. It is a framework for consistency and employee wellbeing.

Here are three benefits of a corporate travel policy:

It saves time. An agreed upon policy provides clarity and consistency for employees, ensuring they understand the expectations and procedures when traveling for work.

It saves money. Travel policies help manage costs by setting limits on expenses, preferred vendors, and reimbursement guidelines.

It improves employee satisfaction: Travel policies protect not only the organization with legal and regulatory requirements but also mitigates risks for the traveler. Duty of care is not just a term we throw around, but a commitment required by all organizations and businesses with traveling employees. Learn more about why your human resource team should be concerned with corporate travel policy here.

Why is your current corporate travel policy not effective?

The last thing travelers need (or want), is to have to memorize a lengthy set of travel policies. For many companies, the travel expense submission and approval process remains overly cumbersome and frankly… behind the times. Low policy compliance is one of the biggest factors behind the high cost of corporate travel, so be sure to look out for the following reasons why your travel policy is an afterthought.

Some of the reasons your employees are not complying with your corporate travel policy include:

  1. Your employees don’t know you have a travel policy.
  2. Your policy isn’t easy to find, or it’s difficult to understand.
  3. Your policy doesn’t align with your company culture.
  4. Your policy doesn’t align with your business objectives.
  5. Your policy is outdated or too rigid.

Travel policies should be periodically reviewed and updated to adapt to changing circumstances and evolving needs.

Per diem travel policy

Per diem rates for corporate travel refer to the daily allowance given to employees to cover their expenses while on business trips. This allowance typically includes costs for meals, lodging, and incidental expenses. Per diem rates are set by the government or company policy and are meant to simplify the reimbursement process for employees while also managing costs for the employer. This way, employees do not need to keep track of every receipt and expense for business purposes.

In the United States, the per diem rate for Salt Lake City remains at $183 throughout the year. In comparison, in New York City, the per diem rate is significantly higher and varies monthly, with the lowest at $239 and the highest at $374. In London, the per diem rate an average of around $180 for meals and incidental expenses and $360 for lodging. These rates can vary based on the cost of living in each location.

There are two main methods for calculating per diem rates:

  • Standard method: uses fixed rates set by companies or government agencies, such as the General Services Administration (GSA).
  • High-low substantiation method: allows for different rates based on high-cost and low-cost areas.

Per diem allowances aren't considered taxable income. They also allow employers to manage costs while allowing employees to budget for travel expenses. However, there is a potential for abuse if employees do not spend the total allowance and misrepresent their actual expenses to pocket the remainder.

At the end of the day, business trip expenses must be in-policy for expense reimbursement. Read more about why you need a travel expense policy here.

Travel management companies (TMC) improve compliance and simplify the approval process.

Streamlines travel arrangements

Approvals provide an added layer of oversight, but employees may get frustrated if the process is overly complicated. There are many variables to consider. The recommended options for car rental, airfare, and hotel rooms based on price and safety are always changing.

You should have the flexibility to set approval requirements visible to your travelers in the travel booking tool. When you partner with Amex GBT Egencia (Egencia), you can manage the approval settings so that your travelers see recommended options based on your industry, company size, number of travelers, geographic location, international or domestic travel, and travel budget.

Manages travel costs & expenditures

An automatic policy filter provides cost-effective decisions by travelers and less oversight by travel managers. Built-in policy guidance is critical for cost savings. Look for a TMC that provides the following benefits:

  • A TMC that lets travel managers and arrangers create detailed policy guidelines—with a wide array of traveler preferences and the ability to create traveler groups.
  • Travel policy options that let you reflect your company’s culture—and allows for easy updates that deploy instantaneously.
  • A digital booking system that integrates policy directly into the booking path—to guide travelers’ choices with visual cues (like red flags and alerts) to increase policy compliance effortlessly.
  • The ability for employees to create and submit expense reports—from their mobile devices for administrator approval with a simple click

Supports centralized frequently asked questions (FAQ) for travelers and travel managers

A TMC can clarify on miscellaneous questions that can come up, like “Does my dry cleaning count as an actual business expense when I travel for long periods of time?”

Your employees should easily be able to find the following company travel policy information:

  • Reimbursable business expenses.
  • Non-reimbursable expenses or personal expenses.
  • Price range of airline tickets based on destination.
  • Maximum cost for lodging expenses per night.
  • Business class or first-class upgrade permissions.
  • Minimum number of days booked in advance.
  • Travel reimbursement method (if not using a corporate credit card).
  • What types of travel insurance is provided.

Clear duty of care protocols

TMCs provide travel risk management resources that can help set risk tolerance frameworks and duty of care policies. They also apply traveler security guidelines and keep travelers informed in real time about events and developments worldwide.

EgenciaTM provides to following travel risk management solutions:

  • Monitor: An up-to-date global map of high-risk situations that could impact travel.
  • Mitigate: Built-in travel risk management policy to prevent international travel to high-risk destinations.
  • Track: Quickly locate your business travelers with the Egencia Traveler Tracker.
  • Alert: Keep your travelers safe and up to speed with alerts.
  • Support: 24/7/365 customer service in more than 32 languages in over 66 countries available to travelers and arrangers.

Booking tools can flag business travelers for any non-compliant bookings and guide them to compliant choices. That interface can also communicate appropriate traveler security information about a destination or itinerary. Travel managers can set the company’s duty of care policies in one place and instantly apply them across every booking channel.

Download our exclusive travel policy guide for tips from corporate travel professionals on travel policy for air travel, lodging, and ground transportation.

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