In today’s fast paced business environment, corporate travel, and expense (T&E) policies are not just a set of rules but a strategic tool for managing costs, ensuring compliance, and fostering employee satisfaction. However, the dynamics of business travel have evolved dramatically over the past few years.
As we approach 2024 and full return to pre-pandemic travel, it is essential for companies to adapt to changing circumstances and seize opportunities and reassess their T&E policies. In this article, we will explore why it is crucial that your firm revisits their T&E policy as well as uncover insights that can transform your firms approach to handing travel and expenses.
Travel insights for 2024
- The global business travel industry has rebounded at a more accelerated rate than expected and is now expected to surpass its pre-pandemic spending level in 2024 (GBTA)
- 71% of US companies expect a full recovery in travel spend by the end of 2024 (Deloitte)
- 33% of spend is toward International corporate travel (Deloitte)
- The average US business trip will cost an individual $949, and $1,633 for New York City trips (Emburse Certify, Motus)
Three quarters of the way through 2023 what does seem clear is that corporate international travel is continuing to rise to 2019 levels, when it reached an all-time high.
With travel on the rise, and 2024 budget planning underway, this is a good time to review, rework, and share your T&E policy with your firm.
Concertiv’s travel procurement experts are here to help you navigate your policy and adjust where they are needed.
T&E Policy Nuts and Bolts
Okay, you’re convinced that you either need to create a formal T&E policy or revisit your existing one to ensure its prepared to meet this year’s challenges. Now what?
Ultimately, you want to explicitly tailor your T&E policy to address your unique business goals. For example, if you’re trying to double revenue in 2024, layer in a lot of flexibility. In contrast, if EBITDA is a major challenge because of market conditions, maybe it’s time to re-negotiate some legacy contracts to see if you can find some new deals.
Here are some additional T&E best practices we’ve seen many clients utilize to successfully rollout a 2024 worthy travel strategy:
1. Look holistically at your entire range of T&E expenditure.
The key here is to have a detailed explanation for every expense category, so your employees aren’t left guessing, or wasting cycles asking their colleagues what to do -- whether they are on the road or in the office (or WFH).
On the road: Travel has a lot of moving parts. A business trip alone involves everything from booking hotels and flights to client meals, entertainment, and an evolving world of ground transportation (everything from rental car scarcity to employee opinions on ride share apps’ executive politics).
Questions like, “Do we cover alcohol at dinner?”, “When will we pay for flights versus driving?”, “How much can I tip to get reimbursed?”, and “Can I expense wifi on my flight?” are all relevant questions employees at any level need to know before they hit the field.
And at home: T&E policy isn’t only a consideration away from the office. Most organizations also cover specific personal expenses inside the office (or for those working from home), which can include:
- After hours meals
- Client and partner gifting
- Birthday or anniversary celebrations
- Digital networking, i.e., guided cooking or wine tasting classes
- Team “bonding” or casual dinner expenses for visiting clients or colleagues
- Above-and-beyond at home employee recognitions (such as sending cleaning or meal kits to a teammate who has put in significant overtime)
- Discretionary printing for client events or presentations (one partner at Accenture also scented his presentations in the 90’s, but that’s not a universally budget-friendly approach)
As you can imagine, each of these categories will have different policies that need to be broken down and detailed (and in the case of client gifting, explicit IRS limits and disclosure requirements). Ultimately, we recommend firm, structured policies, rather than suggestions like “use your best judgement” which have the potential to get misconstrued.
But remember the goal – to allow employees to clearly understand what expenses will and won’t be covered, as well as highlighting available options for appreciating hard-working employees.
2. Clarify Deductibles and Disclosure Rules.
When developing your expense policies, you will also need to consider what kinds of expenses the IRS allows businesses to deduct. (Because, contrary to what some employees might think, not everything spent on a business trip is considered business-related.)
You’ll want a final vetting with your CPA or tax professionals, but here’s a quick list of what’s generally considered a deductible expense:
- Hotels and ground transportation
- Client meals
- Employee spot bonuses (within a reasonable range)
- Client raffles with defined and published rules and a randomized selection process
And what isn’t:
- Corporate gifting over $250 per individual per year
- Tips over 20% (sometimes)
- Specialized incentives that could be seen as a kickback
- Non-itemized receipts
Ultimately, well-structured expense policies also lead to higher corporate tax deductions – another great bonus.
3. What’s a good price point?
One of the hardest parts of setting up a T&E policy is determining how much your team can spend in each category, and for each level of seniority in your firm.
You want to save the company money, but not at the expense of employee comfort and productivity – or angering your partners or rainmakers by forcing them to sit in the back of the plane.
An effective strategy is to work with a partner or consultant to evaluate and benchmark your spending against your peers and common travel locations to determine appropriate reimbursement costs. Because, of course, a steak in Las Vegas generally costs more than it does in St. Louis.
Once you have established benchmarks, you can also work with those same partner or consulting teams to find and negotiate travel deals and partnerships with top airlines, hotels, and more. Doing your homework and capitalizing on aggregated spending networks and negotiated benefits can help secure the best deals for your corporate travel budget.
4. Communicate early and often
Your T&E policies need to be easy to find with zero surprises. To avoid making enemies in the field, paperwork and reimbursement strategies should be as quick and painless as possible.
Telling your team about your travel policies might seem like an elementary recommendation, but remember the adage about what people think they say versus what others hear? Burying your T&E policies in an employee handbook and adding a single slide to a three-day onboarding does not contribute to communicating the strategy.
Understand the working styles of your most critical constituents (or their EA’s), and tailor your communications to meet your employees where they live. For example, while you might have quick access to the handbook on your desktop, most field teams live on their phones – where a searchable email reminder might be the best message vehicle.
Depending on your policy’s complexity, consider adding designated training sessions (bonus points if delivered by the team’s hard-line manager), regular updates during scheduled all-company meetings, or those reminder email blasts to fill employees in on any changes to the existing policy or with implementing a new policy.
Finally, understand that your policy announcements are not happening in a vacuum. Your rules and rollout plans will also be seen in context of all the other company announcements your employees are absorbing at the same time. For example, if you change your travel policy to be more restrictive right as health benefit changes are announced, some inside the company will potentially get a sense that “the company is in trouble” – when, really, two independent economic strategies were being deployed in different departments, but the messaging wasn’t coordinated. If your firm has an internal communications calendar, vet your messaging with that team. If not, you might want to quickly reach out to the HR or Marketing teams to get a little support on your message and confirm there’s nothing else major going on.
Pro tip: Be human when you’re rolling out your policies. A golden rule in communication is to explain to your audience what’s in it for them. As such, your messaging should not only remind the team about policies and how to get reimbursed, but also highlight any perks they can take advantage of, or other fun facts to keep them engaged.
5. Automation is your friend
A smart way to head off reimbursement issues is to automate as much of your travel process as possible. (Offering up terrific pre-negotiated deals “above the fold” of your travel booking interface to guide people to find the deals you’d like them to use, is a lot easier than telling people they won’t be compensated after they’ve spent their own money.)
Many of our clients limit entropy by setting up an internal travel portal. This software enables employees to book travel by showing only preferred booking vendors.
Automation can also be leveraged for other partnerships, including:
- Uber or Lyft partnerships
- Meal delivery partnerships such as Seamless, Doordash, or Grubhub
- Expense management software like Concur
- Detailed booking instructions for your travel agency, etc.
Effective automation will generally cut down the time employees spend researching and planning their trips, as well as hold the team accountable to your policies (by only serving them pre-approved options).
6. Data-driven decision-making is (also) your friend
Finally, use your actual spend data to make future decisions, by aligning every aspect of your company's T&E policy towards evaluation. That means ensuring you are effectively collecting and tracking your expenditure data against clearly defined metrics to determine how the policy is functioning.
Many of our clients also consider a series of non-financial metrics or SLAs, such as how quickly employees are reimbursed, or overall ESAT post policy changes. Work with your leadership team today to gather peer benchmarks to understand which metrics will be most relevant to your firm.
Interested in learning more about procurement-as-a-service for your firm?
Learn how leading firms are partnering with Concertiv to reduce spend, minimize risk, and save time across key spend categories.