Developing a Travel Policy

The goal of an effective travel policy is twofold: It should help you control business travel costs, and it should provide your employees with clear guidelines about the types and amounts of allowable expenses. Although developing an effective travel policy requires some time and forethought, these

Membership Privileges
Sign up for frequent-flyer programs and corporate membership programs to take full advantage of discounts and other privileges. Then instruct your employees to book reservations through your company's preferred carriers. If you concentrate your air travel with one or two carriers, you can reap greater frequent-flyer rewards.

Corporate Cards
Issue corporate credit cards to employees who travel frequently. Corporate cards can help you track business expenses with a consolidated bill and entitle you to discounts on hotels, rental cars and other services.

Reservations
If possible, designate a single employee or a travel agent to execute your company's travel arrangements. An agent can make sure your firm is getting the best deals and ensure employees are abiding by the policy. If employees make their own travel reservations, make sure they have a copy of your travel policy and a clear understanding of how it works.

Documentation
Whether you use preprinted forms or create your own spreadsheets, give employees easy access to expense forms and make sure they know how to fill them out and submit them. Also specify how to report tips, public transportation fares and other miscellaneous expenses for which they may not have a receipt. Explain what they should do if they lose receipts.

Approval
Let employees know if they need to get written approval for their travel expenses and who will sign their expense report.

Deadlines
Set deadlines for employees to turn in expenses. Make all expense reports due on the same day — the first of the month, for example — to help employees remember the date.

Airfare
Ask employees to consider Saturday night stayovers to save money on airfare. Describe when coach, business class or first class is appropriate. Let employees know if frequent-flyer miles are company property, or if they can use their dividend miles for their personal travel.

Transportation
Describe what sizes and types of rental vehicles are acceptable, and advise employees about rental car insurance. They may not need to purchase additional insurance if they use a corporate card to secure the reservation. When personal vehicles are used, outline the reimbursement procedure. Most companies pay employees between 28 to 35 cents per mile.

Lodging
Let employees know which hotel chains are appropriate, and give price ranges for rooms in metropolitan and suburban areas. Clearly state which in-room charges — movies, Internet access, phone calls, mini-bar — you will cover.

Entertainment
Outline the types of acceptable expenses — meals, cocktails or sporting events — and give a price range. Employees should know how much they can spend when they entertain clients.

Meals
The easiest way to account for food expenditures is to offer your employees a per diem. Between $30 and $50 a day is average. Also establish guidelines for partial travel days.

Miscellaneous Expenses
Some expenses won't fit neatly into any category. Start out with some common expenses — fax and copy costs, travel insurance, dry cleaning and health club charges — and add new expenses to your travel policy as they arise.

Give specific examples of what types of expenses are acceptable. Don't state that you won't pay for "most" in-room expenses; explain that you won't pay for mini-bar expenses, dry cleaning or movies, for example.