Employers sometimes have a difficult time determining when reimbursement for travel expenses is necessary, as well as what the reimbursement covers.
That’s why it is very important for employers—as early as possible in their business start-up phase—to establish an expense reimbursement policy so that it is clear what expenses are and are not covered, and what kind of documentation is needed.
The biggest mistake employers make when it comes to reimbursement for travel expenses is not being consistent, which is why a policy is necessary.
Each company needs to look at their travel reimbursement policy and procedures for what counts as a business expense, as some businesses need more expense documentation than others do.
For example, a professional services firm (such as software engineers or lawyers) often has expenses that are billed back to their clients. In a case like this, there are usually specific parameters around what can and cannot be billed to the client. It’s also typical for this type of company’s reimbursement policies and procedures to be more rigorous and require more detailed documentation.
If you’re interested in developing an effective policy for travel reimbursements, here are two steps you should take:
- Analyze, according to your business, what expenses are necessary. Different groups of employees may have different expenses based on their job functions.
For example, a sales person might have an entertainment budget for entertaining potential customers. Whereas someone who works in a corporate office would probably not have any entertainment expenses.
In a situation like this, you would probably want to have a designated monthly dollar amount that can be reimbursed for the sales staff.
- Document the policy and procedures you decide on so that everyone is clear on what’s expected. This also helps when orienting new employees to your process.
For example, a new employee might have come from a company where receipts weren’t that important, but if they are important to your reimbursement procedure, the new hire needs to know this.
In My Experience
When I work with companies, they commonly ask me about reimbursement for travel expenses. A lot of times employers want to put a policy about this in their employee handbook so everything is spelled out.
To help them effectively do this, I suggest they look at other companies’ reimbursement policies to get ideas for how to create theirs.
I also recommend that employers become familiar with their industry and their business overall so they have an idea of the type of expenses that might come up. This will help them anticipate potential expenses or problems.
Also, there are now companies that offer a service that allows you to manage your expense reimbursements online. This is a newer way of managing expenses, but it’s a great tool because it allows for customization so that employees can enter their specific expenses and get reimbursed.
Becoming familiar with your company’s expenses will help you create a reimbursement for travel expenses policy that works for you and your employees.