Travel Insights: Why Today is the Day to Revisit your T&E Policy

Every week, more reports are published stating findings that business travel has been inalterably changed forever (Forbes) or in fact, is on the cusp of returning to pre-pandemic pace (Deloitte).

But let’s not be too fast to judge pundits' confusion when looking into their crystal balls. New Covid variants, skyrocketing airline prices, and uncertain markets are challenging traditional approaches to T&E expense strategy.

Even travel statistics seem to showcase the market uncertainty. For example…  

• According to Deloitte, 49% of organizations are at or above their 2019 pre-pandemic business travel levels, and 60% say they will be more likely to travel when they’re sure the pandemic is over. However -- the same survey found that a separate 49% of organizations report they’re less likely to travel right now.
• In April of this year, Airbnb posted a record $1.5 billion in Q4 2021 earnings and announced that 2021 was the best year in the company’s history, as a new concept of bleisure (yes, blending business and leisure) finds legs.  
• However, as CFO’s pay closer attention to travel expenses (for example, requiring more senior sign-off for authorized travel), even frequent travelers have embraced the freedom of working from home and meeting via zoom. As of Feb 2022, 42% traditional road warriors told Morning Consult they’ll never return to the road.

Halfway through 2022, what does seem clear is that travel status both domestically and abroad continues to be in flux, and likely will be for the foreseeable future.

If you’re responsible for developing and executing your company travel strategy, that can be a lot to digest. With travel ramping back up, and new budgetary pressures loading, this is a good time to review, rework, and share your T&E policy with your firm.

We're here to help – especially if it’s been a while since you’ve had your T&E expense pencil out. Concertiv’s eBook, Insider Travel and Expense Strategy: Policy Do’s and Don’ts for Today’s Business Travel, discusses post-pandemic trends and illustrates how you can create a cost-effective travel strategy for your company. (See the excerpt below or scroll down to download the full report!)

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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 next year, 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 2022 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 actually hear? Burying your T&E policies in an employee handbook and adding a single slide to a three-day onboarding does not a communication strategy make.

Understand the working styles of your most critical constituents (or their EA’s), and tailor your comms 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 ensuing 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.  

Download the full report below:

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