Travel & Expense Policy: Best Practices to Ace Your Audits By Mesh Content Team If you need to reimburse your employees’ expenses, or if they are using a corporate card when traveling, then setting up a travel and expense (T&E) policy is absolutely necessary. It covers the entire expense reimbursement process and helps to ensure compliance with legal and tax requirements. When creating your policy, you need to cover all the bases—but you also have to make sure people will actually adhere to it. Here are some best practices to help you set up a strong T&E policy. Contents hide Communicate Your Policy Concisely & Unambiguously Clearly Define Ownership of the Policy Stipulate a Time Frame for Expense Claims Automate Wherever Possible Adopt Smart Travel Payment Solutions Update Your Policy Regularly Focus on Adoption Travel & Expense Management Made Easy Communicate Your Policy Concisely & Unambiguously Your T&E policy should clearly and comprehensively state your expectations for employees who are traveling. It should also be easy to read and skim through to find specific information. To improve readability, incorporate subheadings, bulleted lists, and visual aids like flow charts and tables. Make sure to use straightforward language; employees won’t be able to follow the policy if it’s filled with terminology they don’t understand. During an audit, you’re attempting to verify that employees have followed your travel and expense policy. It will be much easier for them to do so if the policy is documented in a crystal clear way—and it will also be easier for you to plan the audit ahead of time. Clearly Define Ownership of the Policy You’ll need to determine who will be responsible for developing your policy. One option is to create a committee of team members from various departments who play a role in the expense claims process. Including departments like accounting, sales, and marketing will ensure that the needs of all stakeholders are considered. Once the policy is implemented, someone should be assigned to oversee its management, like the controller or lead accountant. Defining the owner of your T&E policy will greatly improve the efficiency of audits. If any issues arise during the process, the auditor will immediately know who to contact to ask questions or suggest policy updates. Stipulate a Time Frame for Expense Claims Your T&E policy should specify how much time employees have to submit their expense claims, as well as how long they can expect to wait for reimbursements. After all, no one wants to wait months for claims to be submitted or for reimbursements to be processed, and it negatively impacts employee experience. A submission deadline also reduces cash flow issues and provides more insight into actual expenses for the period. Enforcing a deadline for expense claims helps to ensure that your data is accurate, complete, and supported by source documents. Employees who submit expense reports on time are more likely to have all their supporting documents—and less likely to submit fraudulent claims. Automate Wherever Possible Automated solutions like travel payment and expense management software can streamline the T&E reimbursement process, or eliminate the need for reimbursements altogether. These solutions can pull in spending data, compile those charges into standard expense reporting templates, and give employees a way to attach receipts from anywhere. You’ll get more accurate reporting and better internal controls. A 2018 study by the Association of Certified Fraud Examiners concluded that businesses with fewer than 100 employees are more susceptible to expense fraud due to the lack of internal controls. Automation reduces manual work and human error, and gives you more control over your T&E process, reducing the likelihood of fraud. Adopt Smart Travel Payment Solutions When employees are traveling, they often need to make in-person purchases. You can use virtual-physical cards to give them the convenience of a traditional corporate card, paired with the security and control of virtual spend management. Virtual-physical cards allow you to give employees company cards for travel that enforce your budget limits and policies, while giving you total visibility into their spend. Cards are allocated a predetermined amount for business travel, ensuring compliance with your policy and completely eliminating the need to submit claims for reimbursement. Update Your Policy Regularly Specific travel conditions—such as destinations and costs—are likely to change from year to year, and you’ll probably need to update your policy accordingly. Consider holding regular sessions with your committee to review any potential problems or changes, at least once per year. This will also give you the chance to implement your auditor’s recommended changes to your T&E policy—and prevent the same issues from arising during your next audit. Focus on Adoption To ensure that your T&E policy will be accepted, you’ll need buy-in from your team. Including employees in the process of creating the policy will help them understand why it’s necessary and motivate them to follow it. You’ll also need to provide training to everyone involved in carrying it out. Finally, the policy should include a section devoted to enforcement; make it clear that employees who don’t follow the policy won’t receive reimbursement. By encouraging employee buy-in and strictly enforcing your policy, you can significantly reduce the number of suspicious transactions and compliance issues discovered during audits. Travel & Expense Management Made Easy Leverage these best practices to ensure that your T&E policy is clear, fair, and ultimately effective. The process for travel expenses should be simple and easy for your employees to follow; this is the first step toward streamlining audits and eliminating non-compliance. To make the process even smoother and help you stick to your budget, consider travel expense management software like Mesh, with built-in controls and automatically enforced T&E policies. Get the latest blogs from Mesh by subscribing to our newsletter Manage Your Payments With Full Control & Visibility Get Started Mesh Content Team
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