Travel expenses are expenditures that an employee makes while traveling on company business. Company business can include conferences, exhibitions, business meetings, client and customer meetings, job fairs, training sessions, and sales calls, for example.
Expenses can include lodging, personal car mileage reimbursement, flights, ground transportation, tips to bellhops, meals, tips to waiters, room service, and other incidental expenses an employee might experience while on the road.
Expenditures that an organization will reimburse are found in the company’s business travel policy. Become familiar with your company’s policy because expenses as varied as dry cleaning and gym membership can be covered on extended trips.
Client entertainment at conferences, on sales calls, and on site visits is another reimbursable expense, but know your company’s policies so you don’t exceed the limits that are placed on entertainment costs.
Typically, organizations pay employee travel expenses in these three ways.
- Company credit cards are issued to employees who must travel frequently for business. Employees may charge most of the expenses they incur on a business trip to the company credit card. For reimbursement of incidentals such as tips and fast food, employees will need to fill out an expense report.
Charge cards are convenient for employees as they do not have to come up cash to pay for business expenses prior to reimbursement. Become knowledgeable about your company's policies, though; you may still need to turn in receipts and other supporting documentation.
- Cash: Organizations without employee company credit cards require employees to fill out an expense reimbursement report for each expenditure while the employee is on the road. They generally require receipts and some level of justification for each expense.
Only rarely would an organization ask employees to pay for the big ticket items such as air fare and seek reimbursement later. A company purchase order or company credit card pay for large expenses up front. But employees are often required to pay cash out-of-pocket for day-to-day travel expenses which are later reimbursed.
- Per diem: A per diem is a daily allowance of a certain amount of money that an employee is given to cover all expenses. The employee is responsible for making sound travel expense choices within the parameters of the amount of money that he or she is allotted daily.
Some companies pay directly for transportation and housing, but give traveling employees a per diem for all other expenses including meals and ground transportation. Employees have been known to under spend on expenses to keep the extra cash from the per diem. Companies generally allow this.
Employees who travel for business are advised to stay up-to-date on company travel policies and costs covered for reimbursement. Expenses that fall outside of the policies are generally not reimbursed or covered.
Receipts are required by most companies except for those that pay a per diem. Your company also likely has a form that they expect employees to use for turning in travel expenses.
To stay on top of reimbursable expenses, employees are often given a deadline by which they need to file an expense report and turn in applicable receipts. The finance department will have guidelines that help it stay current.
if you have questions about what constitutes appropriate travel expenses in your organization, check with your manager and HR.
You don't want to spend the money and receive a surprise later.