What are the key things I need to know about business travel expenses?

Why is it important to manage business travel expenses? 

One of the golden rules of business management is to manage every variable cost very closely, to get the right balance between spend and value. And that’s particularly true when thinking about business travel expenses.

It’s difficult to over-emphasise the importance of managing travel expenses carefully, particularly if travel is a significant part of your operations. The costs of business travel can soon escalate, and it makes good sense to manage them closely.  

If you understand how to categorise, track and control these business travel expenses, it will help lead to more accurate financial reporting and better cost management.

How can I categorise and track business travel expenses?

Categorisation is really important for cost analysis, and this will help you to assess where costs can be reduced. The first level of business travel expense management is to group the travel expenses in your business into clear categories such as accommodation, transportation, meals, and incidentals.

Expense tracking software can automate and simplify this process, ensuring that all expenses are logged accurately and promptly.

Why is a business travel policy important and what should be in it?

A business travel policy is a necessary part of controlling travel costs. Your travel expenses policy should set the rules and limits on accommodation and meal expenses, preferred suppliers, as well as guidelines for booking travel.

A clear business travel expense policy will also help to control costs as well as ensure fairness and consistency across your business. If you’d like to learn more, take a look at our blog, which gives more details on what should be in your business travel policy. 

It’s really important to make sure that each of your employees understands the importance of your business travel expenses policy. So, do ensure that your implementation plan includes staff training and ongoing communications.  

What are the best ways to approve and reimburse travel expenses?

Travel expenses often have several elements, including transport, accommodation, meals and perhaps business entertainment. So, the process of approving and managing travel expenses needs to be simple and transparent. 

Digital expense management tools can help with the automated approval of travel expenses. As the business owner, you can determine the spending rules in the software, based on your travel expenses policy.

Make sure that more complex business travel, for example overseas trips, have their costs pre-approved. And consider the value of using a digital tool for the submission and approval of expenses.

Why is timely reimbursement important with travel expenses?

We’ve already said that business travel can be expensive. So, ensure that your approval and reimbursement processes are speedy and accurate. It’s unfair to ask your employees to wait weeks for travel expenses to be refunded. If they regularly incur significant costs for, say, vehicle fuel, think about providing a pre-paid employee expense card that can be used to cover specific expenses, on the move. 

How can technology help me to manage travel expenses?

There is a range of technology available for managing travel expenses, including expense management software and mobile apps.

These tools can help you to automate the expense reporting process, making it easier for employees to submit expenses and for managers to approve them.

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.