We identified six effective strategies that will help you increase your compliance rate, which will in turn reduce overall T&E costs, employee confusion and frustration.
Do you really understand why your employees are not complying with your travel policy? Check seven reasons why your employees are not complying with your corporate travel policy before, to have the full vision. Now that you understand why your employees don’t comply with your travel policy, you can address the issues.
- STRATEGY 1: Write a clear and concise travel and expense policy
- STRATEGY 2: Communicate, communicate, communicate
- STRATEGY 3: Automate your expense management
- STRATEGY 4: Reconsider the way your employees book travel
- STRATEGY 5: Analyze your expense data
- STRATEGY 6: Use sticks and carrots
STRATEGY 1: Write a clear and concise travel and expense policy
A good corporate travel and expense policy should ensure your business travelers are clear on what is expected of them at every point of their business trip. It will cover all aspects of T&E such as accommodation, meals, tips, entertainment, airline booking, ground transportation and rental cars. There needs to be clear guidance on issues such as approval procedures, key points of contact, preferred booking channels, rules for using company credit cards, gifts and favors and a list of expenses that will and that will not be approved under any circumstance.
A good travel policy will answer questions such as: Will room service or laundry service be reimbursed? What happens if an employee extends a business trip over a weekend? What is your policy concerning home-office expenses for employees that can work from home? Will business class airfare be reimbursed if it is the same price as economy?
Crucial is to explain the core principles of your corporate policy to your employees, so they understand the rationale behind the rules. Moreover, your T&E policy should define clear expense parameters that are aligned with your organization’s company culture, budgetary goals and business objectives. These parameters should be precise enough, so your employees know what is expected of them, but should also be flexible enough to take allow for the dynamics of business travel. Also, conditions under which exceptions can occur and how they should be reported should be included in your policy. Good practice is to create a clear audit trail for any exceptions granted. Finally, provide a detailed explanation of payback periods so that employees know when they will be reimbursed for expenses incurred.
While the content of your T&E policy is the most important part, do not overlook design. A nice-looking report will be more effective than a messy Word document.
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STRATEGY 2: Communicate, communicate, communicate
Your travel and expense policy is only effective if employees know about it. Emailing the policy to your employees is not enough; it is unlikely most of them will read it. Rather, engage actively with your business travelers to make sure they understand your T&E policy. Your employees will be more willing to learn about your expense guidelines and procedures when you actively explain it to them and make it an ongoing conversation rather than a lengthy document.
Moreover, this will present your employees with an opportunity to ask questions, which in turn will help you improve your travel policy and boost compliance. Which channel is most effective to reach your employees – company event, corporate training, workshop, team meetings, lunch sessions – will depend on your organization.
Also, keep in mind that every opportunity is a good opportunity to remind your employees of your corporate policy. Make sure your employees can easily find a copy of your travel policy on your intranet or server in case they want to consult it. Include your policy in your expense management platform dashboard, making it available for employees every time they expense something. Make sure to include corporate travel in your company’s onboarding process for new hires, or send your employees a reminder email with your policy when a big conference or trade show is coming up, or right before they travel for the first time.
STRATEGY 3: Automate your expense management
Ensuring that your company’s travel policy is accurately applied and enforced can be a nightmare when managing expenses manually. Automating your expense management is an essential tool when trying to improve your company’s compliance rates. An automated expense management tool is tailored to your company’s travel policy and has built-in controls, which will automatically flag non-compliant expenses. Using an automated expense report app effectively increases the average rate of T&E compliance by 26 percentage points according to a study by Aberdeen Group (2016), while reducing confusion and conflict about why a particular expense item has been declined.
For organizations that have different tiers of allowable expenses or different policies across countries, best-of-breed expense management solutions are simply indispensable. It can be very confusing for employees that are traveling often to different countries to remember their daily expense allowance in every single country. T&E management tools that allow unlimited configuration of business rules, such as Rydoo, enable you to clarify your corporate spending rules in a very simple way. Every individual user will immediately see how much they can spend in every country and which expenses are out-of-policy. They can then add an explanation for non-compliant expenses or remove them altogether.
As an added benefit, automating your expense management will increase employee happiness and productivity as your employees no longer have to waste precious time on tedious and frustrating tasks such as collecting receipts and submitting expense reports. Choosing the right travel expense management tool is important, however, as high adoption/attachment rates of the tool are crucial for simplifying processes, optimizing internal and external compliance, maximizing cost-savings and ensuring accurate reporting. With an adoption rate of over 90% and overwhelmingly positive end-user reviews, Rydoo has the best adoption rate of the sector.
STRATEGY 4: Reconsider the way your employees book travel
Rather than asking your employees to follow the rules of your corporate policy, why not enforce it before they book anything?
Modern travel booking tools, such as Rydoo, indicate straight for every travel item your employees want to book whether it is compliant or not. This way, there is no room for confusion. If your travel policy states that hotel rooms should not be more than $150 per night for a short trip, hotels that are more expensive will immediately be flagged as non-compliant when employees are searching for hotels. Moreover, it is possible to forbid employees to book non-compliant trips or require pre-trip approval from a superior. It is up to you to make the rules as flexible or strict as you want. Rules can also be completely customized and configured differently for different types of trips, users or user groups. This way, you can have perfect control.
Moreover, booking your travel through the Rydoo expense management platform will unburden your employees from having to submit expenses completely, as expenses booked through the travel platform get pushed automatically into the expense platform. Thanks to central billing, employees no longer need to pay with their own money and there is no need for them to photograph a receipt, so they can just focus on work.
STRATEGY 5: Analyze your expense data
Tracking your expenses conscientiously will increase compliance rates by itself, as knowing that expenses are being monitored is a great incentive for employees to control their spending. Moreover, your expense data contains a wealth of information on your employees spending patterns. Mining your data for insights will help you improve your T&E policy, how you communicate about it and identify which employees you should talk to to understand better why compliance rates are low.
Which types of expenses have the highest non-compliance scores and what patterns are there across non-compliant expenses? What are the top five reasons for non-compliance? Which departments or employees submit the most non-compliant expenses? And which departments or employees are the most frugal and the biggest spenders? Maybe a certain office constantly books flights less than two weeks before travel, leading to much more expensive flight tickets. Or maybe a certain approver is a lot more lenient with her subordinates’ hotel room upgrades.
Even though the answers to these questions are crucial, they might be difficult to get, as you might have to collect data from different sources, export them, convert downloaded files into a different type of file and merge different files together. Automating your expense management will greatly simplify this process, as good T&E solutions provide you with easy to access insights into corporate spend without lifting a finger.
We've made you an editable Travel & Expense Policy template
STRATEGY 6: Use sticks and carrots
Once you have published an understandable and concise travel policy, communicated it to a great extent across your organization, asked your employees for feedback and maybe even allowed for a transition grace period, it is time to reinforce your T&E policy more strictly. “I didn’t know”, no longer qualifies as a valid excuse, and there should be consequences for employees who keep breaching your T&E policy.
The most effective way to increase compliance at this stage is by sanctioning bad behavior as well as promoting good behavior. Incentivize your employees by rewarding travelers with the highest compliance scores, or why not launch a competition to get the highest compliance score? For travelers that keep breaching corporate policy, warnings can be issued. Take this opportunity to talk with the employee in question to understand the reasons for non-compliance. Refusing to reimburse travelers for non-compliant claims is a last resort to correct behavior. This option should be used with care, however, as you don’t want to alienate your employee.
What Travel Policy Does Your Company Need?
Many employees do not abide by the rules outlined in their company’s travel and expense policy for a variety of reasons. These low compliance rates can lead to unnecessarily high travel costs and ultimately undermine your organization’s financial health. Understanding why your compliance rates are low is the first step in improving compliance. Many employees want to comply with corporate T&E policy, but don’t for a variety of reasons. Compliance with your company’s travel policy is only a worthwhile goal if said policy is well-designed, aligned with your company culture and business objectives, and your employees’ needs and lifestyle. Talking to your employees, asking for detailed feedback and analyzing your current expense data will provide you with insights on why your employees are not (always) following the rules outlined in your corporate travel policy.
Once you understand why your compliance rates are low, you can address the issues. We outlined six effective strategies in this report to help you increase your organization’s compliance rates. One of the keys to high compliance is automating your expense management.
• When implementing a T&E solution, your vendor will need a clear and unambiguous travel policy, providing you with the perfect opportunity to write, update or improve yours.
• Moreover, using an expense management software will remind your employees of the allowed expense parameters, automatically inform them when expenses are out-of-policy and make their life easier when dealing with complex country-specific regulations or per diems.
• Finally, automating your expense management will provide you with real-time visibility into spend and actionable insights.
It hence shouldn’t come as a surprise that using a T&E management tool increases the average rate of T&E compliance by 26 percentage points (Aberdeen Group, 2016), while also reducing the amount of time your employees spend on unproductive and tedious tasks like filling out expense reports.
Finally, it is important to keep in mind that increasing compliance with your corporate T&E policy is not a one-time thing. Ensuring high compliance rates in the long run is an on-going process, requiring constant care and adjustment. Your employees’ needs and wants will keep changing, as well as your organization’s business objectives and culture. To keep compliance rates high, it is therefore indispensable that you keep updating your travel policy. Your travel policy should be a living document that is updated regularly and stored in multiple places that are easy to access for your employees.