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Business Travel Policy

Updated on March 29, 2011

Determing A Business Travel Policy

As a business grows so do the headaches.  When a small business first starts to travel it is not even a concern, just a part of doing business.  However, growth brings employees and expansion of sales territory.  Travel once was limited to tanks of gas, now it becomes overnight stays and meals, possibly even airlines travel.  With all this a business travel policy needs to be established for a small business.

The main purpose of a business travel policy is to reign in expenses.  Establishing a travel perimeter will help keep everyone in check about where they set their sites.  Indeed, one's business may be national but does travel need to be done nationally?  A good idea is to check with a regional carrier (e.g. Southwest, Jet Blue) in the business's area and see where they go, how often, and how much can help establish the boundaries.  Or perhaps a tank of gas or travel time is the perimeter.  Almost all vehicles are set to travel about 400 miles regardless of mileage (varying size of tanks), so a round trip perimeter would be 200 miles (400 miles round trip).  Outside of that area is not permitted.

There are times when travel outside of perimeter is needed, especially for conferences and tradeshows.  However, these should not come as a surprise and should be placed into an annual budget.  Because they could be their own line item in a budget, hopefully they do inflate travel expenses.

The business travel policy also covers other issues than could affect the bottom line.  Like travel miles or points.  The travel industry has lead the way in loyalty reward programs and the question is who gets those points?  Will the business keep tally and use those points for later travel?  Or could those points go to the employee and be considered a bonus?  If a business decides to keep the points, most airlines and some hotels have small business programs that will pool the miles/points for the business rather than award them to the traveler.

Another business travel policy issue assured to arise, who pays?  Does the business pay upfront or reimburse for travel?  Each has problems, as a pre-pay with per diem leaves open the question of cost if they come under or above per diem amounts.  Does the employee have to return unused per diem money?  Can an employee be reimbursed if they spend above a per diem amount?  Reimbursement helps reign in expenses as the employee is out their money until reimbursement, but this could cause low morale among employees who travel.  For accounting purposes, having company credit cards for travel is a good business travel policy, just be sure to address issues of personal use and the cards should not have a credit limit higher than employee's average paycheck.


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