Why is travel expense compliance important?

What is travel expense compliance?

Travel expense compliance is the process of ensuring that you have active control of business travel expenses.

Why is travel expense compliance important?

Travel expense compliance is important, financially, because travel expenses often make up  a significant component of your employee business expenses, so it’s important that these costs are visible, within agreed spend limits, and under control. 

And, in terms of tax laws, there are specific regulations governing the tax treatment of travel expenses, so it’s vital that that your travel expenses operate within HMRC requirements.  

What is a travel expense policy?

A travel expense policy is an important document in educating your teams on how travel expenses are regarded and managed in your business. 

Your travel expense policy is also critical in ensuring that there is no confusion or ambiguity regarding permitted travel expenses. 

Most of all, a well-documented travel expense policy should encourage your teams to spend company money wisely, within the permitted tax limits, and ensure the best value for your firm. 

What are the categories in a travel expense policy?

The categories in a travel policy expenses would usually include guidance on spend limits for a range of travel spend, including air travel, local travel, accommodation, food and drink. 

First of all, your travel policy should clearly explain why the policy exists, and what benefits you hope to gain from it. It should also stress the importance of all colleagues adhering to the policy.

When mapping out your travel expense policy, be sure to provide clear guidance on important elements, such as the approval procedure for travel expenses; required booking channels; and appropriate methods of payment including personal and corporate credit cards. Your policy should also make clear which travel expenses are not permitted under any circumstances.

What are the practical issues with managing travel expense claims? 

At a practical level, travel expense compliance can be a real chore. Colleagues who incur lots of travel expenses  will often sigh ahead of the expenses submission date because they realise that making a claim involves gathering a range of receipts, tickets and travel documents. 

And for their finance teams, a paper-based validation process can be time consuming and at risk of errors and unnecessary re-work. 

How can expense management software simplify my travel expense compliance? 

Expense management software can yield benefits in travel expense compliance, including claims processing and reimbursement, visibility and reporting. 

Expend provides an inclusive expense management platform. The platform capabilities include automated receipt and invoice management, employee payment cards, operating on the international Mastercard platform, and the Mobile App. This is designed to track and verify employees’ business travel purchases, track company mileage and review employee expenses. 

The key to control is visibility. Expense management software from Expend seamlessly integrates with account management software such as Xero and QuickBooks. This provides the comfort of knowing that your travel expense policy is made operational through your expense management software. 

More importantly, the data underpinning your expense management can automatically be integrated with your accounting solution to provide real time visibility of your compliant travel expenses process. 

Disclaimer: This is not legal, accounting, or tax advice – it's simply a guide. If you need help, check with your accountant or contact HMRC directly.