How to Create a Business Travel & Expense Policy (+ Free Template!)

Managing business travel expenses can quickly become overwhelming without a clear policy.

When employees aren’t sure what’s covered, it leads to confusion, unexpected costs, and delays in reimbursement - frustrating both your team members and your finance department.

That’s where a solid travel expense policy template comes in. It lays out the rules clearly, helping to keep costs under control and making the whole process smoother for everyone.

In this article, we’ll walk you through creating a simple, effective policy and provide a free template to get you started.

Why Your Business Needs a Travel & Expense Policy

If your business involves any employee travel, having a clear travel and expense policy is crucial.

Whether it’s for a quick trip to a nearby city or a flight halfway around the world, a well-thought-out policy ensures that everyone is on the same page about what’s covered and what’s not.

Here’s why having a travel and expense policy matters:

Keeping Costs Under Control

A travel expense policy helps your business keep travel costs in check.

By clearly outlining what expenses are allowed and setting spending limits, you can avoid unnecessary costs and make sure your travel budget is being used wisely.

This is especially important if you want to make sure your business trips are cost-effective.

Fair Treatment for All Employees

A consistent travel and expense policy means all employees are treated equally.

By applying the same guidelines to everyone, you remove any confusion about what’s covered and ensure that all travel-related reimbursements are handled fairly.

This consistency helps build trust in your company’s policies.

Saving Time & Reducing Hassles

With a straightforward travel expense policy in place, the process of reporting and reimbursing expenses becomes much smoother.

Employees won’t waste time figuring out what’s allowed, and your finance team can process reimbursements faster.

This efficiency means less stress for everyone and more time to focus on the core business.

Ensuring Everyone Follows the Rules

When you have a standardised travel and expense policy, it’s easier to make sure everyone is following the same rules.

Employees know exactly what’s expected of them, which reduces the chances of out-of-policy spending.

Plus, a clear policy creates transparency, so everyone feels they’re being treated fairly when it comes to expense reimbursements.

Keeping Your Team Safe

A good business travel policy also looks out for your employees’ safety.

To fully cover your duty of care as an employer, your policy should include clear guidelines on travel insurance, including business travel insurance for personal cars, and requirements for vehicle maintenance, such as up-to-date MOTs.

Also, providing instructions on emergency contacts and approved booking methods helps protect your team while they’re on the road.

This not only ensures their well-being but also minimises risks for your company.

Making Smarter Business Decisions

A travel expense policy provides useful data that can guide your business decisions.

By tracking employee expenses over time, you can:

• Spot trends,

• Optimise spending,

• And make choices that support your company’s goals.

Key Components of a Business Travel & Expense Policy

Here’s a breakdown of the key components that should be included in any business travel and expense policy template:

1. Introduction & Purpose

Start with a brief introduction that explains the purpose of the travel and expense policy.

This section should clarify why the policy exists, who it applies to, and the overall goals, such as:

• Controlling costs

• Ensuring compliance

• Providing clear guidelines for employees

2. Travel Booking Guidelines

This part of the travel and expense policy template should outline how employees should book their travel.

Include preferred booking methods, such as specific travel agencies or online platforms, and explain any requirements for booking in advance.

Also, clarify the approval process, especially for higher-cost bookings like international flights or last-minute travel.

3. Expense Categories & Limits

Define what expenses are reimbursable and set clear limits for each category.

Common categories include:

• Airfare

• Accommodations

• Meals

• Ground transportation

• Incidentals

For a more detailed breakdown of expenses, check out our guide to employee travel expenses.

Be specific about allowable costs, such as economy versus business class flights or daily meal limits, to avoid confusion and ensure that all employees follow the same rules.

4. Non-Reimbursable Expenses

To prevent misunderstandings, your travel and expense policy template should list expenses that won’t be reimbursed.

Examples might include:

• Personal entertainment

• Mini-bar charges

• Costs associated with extending a business trip for personal leisure

Clearly stating non-reimbursable expenses upfront helps avoid disputes and ensures transparency.

5. Expense Reporting Procedures

Include a step-by-step guide on how employees should report their travel expenses.

This section should cover:

• What documentation is required (like expense receipts and invoices),

• The process for submitting expense reports,

• And the deadlines for doing so.

Make it clear who approves these expenses and how long the reimbursement process typically takes.

6. Travel Advances & Per Diem Rates

If your company offers travel advances or per diem rates, explain how employees can request them and what the conditions are.

Provide details on how per diems are calculated, including variations based on location or type of travel, and clarify what expenses are covered under per diem.

7. Travel Insurance & Safety Measures

Your travel expense policy template should also address employee safety.

Include details about:

• The travel insurance your company provides,

• What it covers,

• And the steps employees should take in case of an emergency while travelling.

For employees using their own cars for business travel, make sure to specify the requirements for having valid business insurance, as well as up-to-date tax and MOT.

This section might also cover protocols for high-risk travel and contact information for emergency support.

8. Policy Compliance & Penalties

To encourage adherence to the travel and expense policy, explain the consequences of non-compliance.

This could include delayed or denied reimbursements or, in serious cases, disciplinary action.

Outlining these penalties helps ensure that employees take the policy seriously.

Step-by-Step Guide to Creating Your Policy

Creating a travel expense policy template for your business doesn’t have to be complicated.

By following a straightforward, step-by-step approach, you can develop a policy that’s easy to understand, fair, and effective in travel expense management.

Here’s how to do it:

Step 1: Download a Customisable Template

Start by downloading a customisable travel expense policy template. This gives you a solid foundation and ensures that you don’t have to start from scratch.

You can easily adjust the template to fit your company’s unique needs, saving you time and effort.

Step 2: Define, Customise & Clarify Your Policy

Once you’ve downloaded your template, it’s time to tailor it to your business.

Here’s how to do it:

• Begin by identifying your company’s travel priorities. Are you focused on controlling costs, ensuring compliance with regulations, or providing flexibility to employees? Knowing your objectives will guide the rest of the process.

• Adjust the expense categories to reflect what your company will reimburse. Set clear spending limits for each category to prevent overspending. For example, you might allow economy flights for most employees but reserve business class for long-haul trips or senior executives.

• Clearly define how employees should book travel and what the approval process entails. Include preferred vendors, booking platforms, and any necessary approvals for higher-cost expenses. Ensuring that this process is straightforward will help employees follow it without delays.

• Establish clear procedures for how employees should report their expenses. Specify the required documentation, submission methods, and deadlines. Also, clarify who is responsible for reviewing and approving these reports, along with the expected timeline for reimbursements.

• Don’t forget to include guidelines on travel safety and insurance. Detail the insurance coverage provided by the company and the steps employees should take in case of an emergency. This section should also cover protocols for high-risk travel and provide emergency contact information.

Step 3: Review & Get Feedback

Once you’ve customised your policy, it’s important to review it carefully.

Share the draft with key stakeholders, such as HR, finance, and frequent travellers, to get their input.

Their feedback can help you identify any potential issues and make necessary adjustments before the policy is finalised.

Step 4: Communicate & Implement the Policy

After finalising your travel expense policy template, make sure to communicate it clearly to all employees.

Provide training sessions or easy-to-follow guides to help everyone understand the new procedures.

Consistent communication ensures that employees know where to find the policy and how to follow it.

Step 5: Monitor & Update Regularly

Finally, remember that a travel and expense policy isn’t a one-time task. It’s important to monitor its effectiveness and update it as needed.

Regularly review the policy to ensure it stays relevant to your business needs and aligns with any changes in travel practices or company goals.

How to Improve Policy Compliance

Ensuring employees follow your travel expense policy template is key to controlling corporate travel costs and ensuring consistency throughout your organisation.

Here are some straightforward steps to help improve compliance with your travel and expense policy:

Keep the Policy Clear & Simple

The easier your travel expense policy is to understand, the more likely employees are to follow it.

Use plain, straightforward language and avoid complicated jargon.

Make sure the policy is well-organised and easy to navigate so that employees can quickly find the information they need.

A clear policy encourages employees to use it as a regular reference, which leads to better compliance.

Provide Training & Easy-to-Access Resources

Even the most well-written travel and expense policy won’t be effective if employees don’t know how to apply it.

Offer training sessions that explain the main points of the policy, like:

• How to book travel,

• What expenses are covered,

• And how to submit expense reports.

Also, create quick reference guides or FAQs that employees can access whenever they have questions.

The more familiar employees are with the policy, the more likely they are to follow it.

Use Expense Management Software

Using a business travel expense app can make it much easier to ensure that employees follow your travel and expense policy.

These tools automate key parts of the process, such as:

• Tracking business expenses

• Enforcing policy rules

• Generating reports

For example, ExpenseIn simplifies the entire expense management process, making it easy for employees to submit expenses accurately and on time.

Features like automated expense tracking, digital receipt capture, and automatic policy enforcement help ensure that everyone stays within your travel and expense policy guidelines.

ExpenseIn also offers customisable approval workflows, allowing you to tailor the approval process to fit your company’s specific needs. This reduces the chances of errors or policy breaches.

Regularly Monitor & Review Compliance

Keep track of how well the policy is being followed by regularly reviewing expense reports and monitoring compliance.

Look for patterns, like frequent overspending in certain areas, and address any issues quickly.

Regular monitoring allows you to catch problems early and take steps to correct them before they become bigger issues.

Ask for Employee Feedback

Encourage employees to share their thoughts on the travel and expense policy. They might have ideas on how to make it more practical or easier to follow.

Use this feedback to make adjustments as needed, so the policy stays relevant and effective.

When employees feel that their input is valued, they’re more likely to take the policy seriously and adhere to it.

Enforce Consequences for Not Following the Policy

While it’s important to educate and support employees, it’s also necessary to have consequences for not following the policy.

Clearly outline what happens if someone doesn’t comply, like delays in reimbursements or needing extra approvals.

Enforcing these rules fairly and consistently shows that following the policy is important.

Download Your Free Travel & Expense Policy Template

Creating a clear and effective travel expense policy doesn’t have to be difficult.

With our free travel and expense policy template, you can quickly put together a comprehensive policy that covers all the key aspects of managing business travel expenses.

Our travel expense policy template includes sections on:

• Booking procedures: Outline how and where employees should book their travel.

• Expense categories: Clearly define what expenses are reimbursable, such as flights, lodging, meals, and transportation.

• Expense limits: Set spending limits to keep travel costs under control.

• Expense reporting: Provide easy-to-follow instructions on how employees should submit their expense claims.

• Approval process: Establish a clear approval workflow to streamline expense management.

This template is customisable, so you can tailor it to meet your company’s specific needs.

Whether you need a business travel expense policy template for a small team or a large corporation, our template provides a solid foundation that can be adapted to fit your unique requirements.