Travel and Entertainment Expenses: Where Do You Draw the Line?

According to the Global Business Travel Association, U.S. business travel spending is expected to rise to nearly $267 billion in 2013. How much of that money will be yours?

As travel fares climb while your company is being faced with a tepid economy, you’ll want to spend wisely. So what does that mean? The answer may be in your current cache of company expense reports.

1. Does spending correlate with revenue?

How do you predict where your business spending is going? Examine where your spending has been. The data collected by your expense reports may be your most valuable source of information.

For example, if your sales team accounts for a lot of your company’s business expenses, figure out how those expenses correlate to revenue. Who on your team spends the most? The least? Are the people who spend the most also bringing in the most sales? Are they being sent to more expensive travel destinations? Or are they just spending the most? Are people who spend the least really thrifty employees or just unproductive? You may be able to spot trends within your own reports.

You can also identify the vendors who are used the most by your staff. If you notice certain hotel chains coming up most frequently, can you negotiate better corporate rates?

2. What kind of expenses will you allow?

Company culture often dictates company T&E policies. If your company is fairly frugal, you may allow expenses for modest hotel chains, but not high-end resorts. You may set a per diem rate that will cover employees’ expenses without being extravagant. Will you allow alcohol? First-class or business-class seating? Entertainment expenses like movies and airport snacks while traveling? Taxis or town cars? Do you pay for one bag on a trip but not two?

When it comes to entertaining, do you allow anyone to entertain anyone? Or are your managers and executives the only ones who may submit expenses like those?

Another big expense these days is a communication allowance. With electronic communication so critical to the lives of your road warriors, you need to decide whether monthly cell phone bills, data charges, home software and home Internet charges should be included in your policies.

And speaking of policies …

3. Do you have expense policies in place?

The best way to avoid controversy over a disputed expense is to have firm policies in place. By clearly communicating what is allowable and what isn’t, you can save your staff and their expense-account approvers a lot of headaches by warding off problems in the first place.

Once again, you’ll find a wealth of helpful information in the history of your previous reports. What charges are most common? Which ones seem out of the ordinary? Which ones can be defended by their contributions to a company goal?

Even if you already have policies set, you may need to revisit them from time to time to see if they’re still valid.

Do certain policies tend to be breached more often than others? That could be a trigger to re-train your staff about the policy or simply send out occasional policy reminders or tips.

You may also want to reconsider the policy. For example, is a $100 per diem outdated? Or is it feasible in most cities, but not enough for more expensive places like New York or San Francisco? What do your expense reports show?

If you commonly work with a travel service, you may also want to ask their experts for advice on the going rates in the cities your workforce commonly visits.

If you’re like a lot of companies, you realize that you have to spend money to make money. But you don’t have to spend more money than necessary. Find out what’s necessary by examining your current spending trends.

Don’t have the data to do that? By automating your expense reporting with Insperity ExpensAble, you’ll get more information on how you can save time and money – plus see the spending trends you need.