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A travel policy is the organized collection of rules and regulations that an employee will observe when engaging in some type of travel on behalf of his or her employer. A sound company travel policy will provide instruction on what type of expenses will be absorbed by the business and which expenses are the responsibility of the employee. Typically, limits are set on certain line items in the business travel policy, such as the total allowance for meals per day, costs of hotel accommodations, rental car and airfare rates, and even on the amount of money that can be spend on entertaining clients. A sound policy provides the resources needed to accomplish the task, but still keeps the costs of the business trip within reason.
In many instances, the corporate travel policy is defined in writing and presented to an employee prior to his or her leaving on a business trip. The idea is to make sure that the employee understands what type of expenses the company is willing to assume, and which ones are not allowed. This is actually a help to the traveling employee, since he or she will know whether the company will pay for a meal ordered from room service, or will cover the costs of flying in first-class rather than in business or coach status. At that juncture, the employee can determine whether to go with the amenities the company is willing to underwrite or upgrade and pay the difference out of his or her own pocket.
The travel policy of a company may include the necessity of using specific vendors as part of the travel plans. For example, a business may have a discount plan with a given rental car provider, a specific airline, or even a particular hotel chain. When this is the case, the employee may be required to make use of those discounts when and as possible. Choosing to not make use of the discount programs could mean that the employer covers only a portion of the business expenses. For example, if the employee decides to stay in a hotel that does not have a discount arrangement with the employer when the hotel across the street does have that type of arrangement in place, the employer may only pay a fixed percentage of the hotel bill, rather than covering the entire expense.
Increasingly, companies make use of corporate credit cards that are issued to employees who travel regularly. When this is the case, the travel policy will include a laundry list of what type of expenses may be charged on the card, and which expenses must be handled out of pocket and submitted on an expense report later. This approach can often benefit both parties, since employees can use the corporate card for major expenses rather than using cash or their personal credit cards and waiting for a reimbursement. At the same time, the company benefits from the fact that some employees will focus more on using the cards for allowable expenses and refrain from incurring costs that have to be paid out of pocket.