How to develop an effective corporate travel policy

What makes an effective travel policy?

“Act in Netflix’s best interest.”

Just five simple words make up one of corporate America's most talked-about travel policies. Surprising for a company with more than 13,000 employees? Sure. Realistic? No.

Developing an effective corporate travel policy fundamentally balances fiscal responsibility and employee experience. You’re creating a framework that controls travel costs without suffocating the very business relationships your travelers are working to build.

Successful travel managers understand one thing: an overly restrictive company travel policy can be counterproductive. Extreme cost-cutting measures, such as limiting meal reimbursements to just lunch or requiring three economy flights before allowing business class upgrades, often create more organizational friction than value. It must be flexible enough to cater to the practical realities of business travel today.

To be effective, your business travel policy must meet three key requirements:

• Clear: Your policy must be clear, concise, and accessible to every employee. Complex or unclear policies will usually fail to gain traction and guide the behavior of a traveling employee.
• Fair: Your policy must be developed, implemented, and managed with a fair and responsible approach. It should empower the organization to hold employees accountable.
• Balanced: Your policy must seek to manage travel compliance, fraud, and costs while also ensuring traveler safety and comfort. Take care of your people, and they will take care of the business.

Ultimately, a great travel policy should feel supportive rather than punitive and encourage policy compliance through understanding. All while staying aligned with broader business objectives. It’s a critical investment, not a set of rules, and a statement about how your company values its people and their contributions.

Only by treating your corporate travel policy as a strategic tool for empowerment can you create one that works for both the employees and the business.

How effective is your corporate travel program?

Assess the following areas and processes for clarity, fairness, and balance:

• How is corporate travel currently booked (e.g., flights, hotels)?

• What is the process for employee reimbursement?

• Who is responsible for booking travel?

• How many days in advance is travel booked on average?

• What is the average cost of booked travel (e.g., hotel, flights, meals)?

• What is the general level of travel being booked (e.g., economy class, 4-star rooms)?

• Who is overseeing and approving booked travel?

• How many employees are being booked for each trip on average?

Understanding your company's current booking practices, though challenging, is essential for developing effective policy guidelines. These insights will provide valuable benefits as you move forward.

Key elements of a travel policy

Crafting an effective travel policy hinges on six critical considerations. These key elements—including travel expense management, travel booking, and duty of care—will ultimately determine your policy's success. Let's explore each in detail.

1. Expense reporting and reimbursement

The most foundational element of a corporate travel policy is to define what is or isn’t reimbursable, and what the reimbursement process looks like. This isn’t an exercise in describing the current state, but rather, an opportunity to make improvements.

When it comes to reimbursements, focus on answering two key questions: what documents does a business traveler need to provide, and when do they need to submit them? Most companies require detailed receipts for every expense incurred during the business trip as a baseline, and demand further information such as attendees and a business purpose for business meals with clients. For deadlines, it’s common practice to require all documentation within two weeks of returning from a trip. This timeline helps prevent delays and ensures everyone gets reimbursed promptly.

The above is typical for a company with manual reporting processes. Companies with modern travel and expense management solutions may want to prescribe more efficient processes as the standard, such as requiring a pre-approved virtual corporate card for travel bookings or expenses to be submitted through a receipt-scanning mobile app.

How do you decide which expense claims to cover? Start by setting straightforward standards that align with your travel budget. Maybe you'll only reimburse for economy flights, cap hotel stays at 3-star properties, or follow GSA per diem rates for meals and lodging. Whatever limits you choose, be transparent about the reasoning. When employees understand the “why” behind the rules, they're far more likely to follow them.

It’s also important to spell out what isn’t covered. Your travelers shouldn't have to guess whether that airport lounge pass or room service charge will be reimbursed. Be explicit about non-reimbursable items, and always explain the rationale behind these exclusions. If there are special circumstances where exceptions might apply, make those clear, too.

While corporate travel policies need to be consistent, they also need to be practical. Sometimes business realities require flexibility. The key is finding that sweet spot between maintaining standards and acknowledging that not every situation fits neatly into predetermined boxes.

Tip

Take the opportunity to challenge the status quo of manual expense reports and two-week deadlines. Consider the possibility of eliminating expense reports and what that could mean for the business.

2. Travel booking roles and approvals

Business travel is typically a company’s second largest expense after salaries, and so the process of booking travel merits extra attention in your travel policy.

Whether they need to seek out multiple approvals or not, the path travelers take to get permission to book travel must be laid out clearly and succinctly. If you have a modern T&E solution with an integrated travel booking system, it would be wise to mandate pre-trip approvals for every trip to prevent unauthorized expenses from being incurred.

Generally, we recommend keeping the number of approvals to a minimum to make the travel booking process smoother. The more approvals a travel request needs, the longer it will sit unfulfilled. To avoid a backlog of travel requests, implement a corporate travel policy that requires only one or two approvers, such as a direct manager and the travel manager. The easier you make it for travelers, the more likely they will seek proper authorization and adhere to the policy guidelines.

The most effective corporate travel policies lay out clear roles, responsibilities, and process flows. A simple three-step process like the following would be ideal for processing travel requests and approvals:

Step 1: Corporate traveler

The traveling employee will be responsible for booking travel arrangements and documenting all the expenses that are part of the trip. The traveler is responsible for filling out expense reports that include all expenses and ensuring each is within travel policy compliance.

Step 2: Manager

Managers are responsible for approving any expenses that are associated with the business trip. The manager will be tasked with assessing what is covered under the policy and disqualifying the non-compliant expenses.

Step 3: Accountant

The accountant is tasked with reconciling and reimbursing expense reports for travelers. He or she will act as the last gate for approval and double-check expenses to make sure they are covered under the business travel policy.

Tip

Streamline the travel approval process to one or two authorizations, integrating a pre-trip approval system to prevent out-of-policy bookings and reduce delays.

3. Travel partners and negotiated discounts

Individual employees comparing rates online simply can't match the buying power of corporate discounts. That's why it's crucial to establish and clearly communicate your preferred vendor partnerships and the discounts they offer.

Don't have any partnerships yet? Now's the time to start building them. Airlines, hotels, and other travel vendors are actively seeking stable corporate accounts, and they're willing to offer attractive rates to win your business. The key is finding travel management company partners who can deliver both cost savings and the service levels your travelers need.

When you're at the negotiating table, let your numbers do the talking. Use your historical travel data to showcase the volume of business you can bring their way. But don't just chase the lowest rates. Make sure you're partnering with vendors who can serve all your key destinations. A deep discount that only works for 20% of your routes isn't much of a bargain in the long run.

Remember to build in regular rate reviews with your preferred vendors—market conditions change, and your deals should evolve accordingly. And don't forget the technology piece: Your corporate travel management booking process should include features like automated rate monitoring, easy rebooking options, and rate audits to ensure you're always getting the best possible fares.

Tip

Leverage corporate buying power to negotiate discounts with travel vendors. Use historical data to secure partnerships that offer both savings and quality service.

4. Duty of care and other obligations

As business travel has become an integral practice for both domestic and international travel dealings, employers need to ensure the safety and security of travelers around the world. A well-crafted and enforced travel policy can help ensure your company is adhering to all the required legal and financial standards that may impact it.

Many countries, including the United States, have adopted legislation that defines an employer’s duty to ensure a basic means to protect employees. You must ensure your travel policy accounts for these new mandates, even if the markets you typically conduct business in do not dictate a standard safety level. As an employer, it is your responsibility to ensure a fundamental level of safety for employee travel for business purposes..

When accounting for employee safety, the focus tends to be centered on more dramatic events such as natural disasters, terror attacks, or kidnappings. The reality is that employee safety also includes car rental accidents, medical situations, or something as simple as booking a hotel in a safer part of a city. Business travel can also be a stressful event for employees with many unpredictable occurrences.

While organizations cannot eliminate all the stresses of business travel, safety should not be a concern for travelers. Consult with your company experts, legal counsel, and travel management for all the necessary reporting and documentation needed from business travelers. To make it easier for the business traveler, create a bulleted list for all the documentation that is needed. Also, highlight the specific acts, laws, and regulations that apply to your company and the processes that need to be followed to ensure compliance.

Beyond standard IRS requirements, your travel policy also needs to account for various industry-specific regulations. For instance, medical product manufacturers must comply with the Physician Payments Sunshine Act (PPSA), which requires detailed disclosure of any payments made to physicians or teaching hospitals. Similarly, publicly traded companies need to follow the Sarbanes-Oxley Act (SOX), which mandates thorough reporting and verification of all financial statements to prevent accounting fraud. These regulations can significantly impact how you structure your travel expense policies.

Make sure your business travel policy clearly outlines which laws apply to your company and builds in the necessary compliance measures. This proactive approach will help protect both your company and your travelers from potential regulatory issues.

Tip

Review your duty of care policies quarterly, focusing on everyday risks like safe hotel locations and medical coverage, not just crisis scenarios. Update regularly to ensure ongoing compliance.

5. Company travel policy exceptions

Some companies opt to build executive-level travel policies that allow for higher expenditures on airfare, lodging, ground transportation, and meals due to the executives’ elevated standing within the organization. While the standard corporate travel policy is meant to apply to the majority of workers, many companies use an executive policy to accommodate the needs and expectations of select high-value employees.

Unlike the standard corporate travel policies that are communicated to all employees and made readily available online, the executive-level travel policy is often only communicated to company executives and executive administrators and is not shared widely among general employees.

Beyond the executive travel policy, your company may also extend spending limits for employees who

conduct business travel more frequently than others. Furthermore, employees who travel more than six hours to their destination or spend over a week on a trip may also be granted larger expense category limits or higher allowances on lodging and airfare.

Consider creating exceptions for the following categories:

Executives: Many organizations opt to provide policy exceptions for executive business travel or implement an executive-level travel policy that has more expansive travel options.

Long trips: For travelers taking longer than average trips, some organizations allow for upgraded business class air travel as well as higher-level accommodations than the policy typically allows.

Seasoned travelers: For employees who are constantly on the road, some are given an enhanced business travel policy that allows for higher-level travel options.

Tip

Implement tiered travel policies for executives, frequent travelers, and long trips. Offer enhanced options while maintaining transparency and fairness across the organization.

6. Compliance incentives

Effective corporate travel policy enforcement requires a balanced approach that goes beyond traditional expense report software and automated tools. Consider implementing the following measures to incentivize compliance:

Financial rewards

Companies can share cost savings directly with employees who make policy-compliant travel choices. When employees book travel under budget, they receive a percentage of the savings as a reward, though it's worth noting these incentives are typically subject to taxation.

Points-based programs

A structured rewards system can track savings against predetermined travel budgets. Employees earn redeemable points for staying under budget, which they can exchange for various perks, including gift cards, travel upgrades, or charitable donations in their name.

Contests

Creating friendly competition through leaderboards and contests can significantly boost compliance rates. Valuable prizes such as premium parking spaces, complimentary meals, or additional paid time off can effectively motivate employees to make cost-conscious travel decisions.

While some organizations opt for punitive measures to enforce compliance, this approach should be carefully considered as it may negatively impact employee morale. A more effective strategy typically combines clear policy communication with positive reinforcement mechanisms that reward desired behaviors rather than punishing infractions.

Tip

Encourage travel choices that uphold policy compliance through competitive, non-punitive measures.

Drafting your travel policy

Now that you have a clear idea of the elements of a corporate travel policy, it’s time to put it all together.

The policy development process isn’t complicated. But it demands careful consideration and thorough planning. To be effective, your travel policy must be aligned with your company’s business goals while reflecting its unique culture, employee expectations, and history.

Here’s what you need to consider when drafting your travel policy:

Business goals

Companies often implement travel policies to manage escalating travel costs and complexity. Whatever your reasons may be, defining clear, strategic goals that align with your organization’s business goals is the key to success.

To get started, work with stakeholders to prioritize several goals for the travel policy. How much do travel expenses have to be reduced? Does employee safety need improvement? Are there any legal or IRS compliance issues that need to be addressed?

Without clear goals, your corporate travel policies risk becoming fragmented, which could lead to inconsistent spending, reduced cost control, employee frustration, and potential overspending. In turn, this lack of strategic alignment can result in inefficient travel management and missed opportunities for optimizing travel spend.

Audience

Applying an inclusive development process that considers multiple perspectives is key to creating a sense of ownership among employees—and ensuring your policy’s success.

For example, you may find that the per diem rates for meals are too low for expensive cities like New York and San Francisco. Or that your policy of requiring manager approval for expenses over $100 slowed things down unnecessarily. These insights can only be gained by speaking with employees about their experiences.

When introducing new spending guidelines, be transparent about why they matter. Show employees how these policies protect the company's financial health and, by extension, their own job security. Frame changes as a team effort, not a top-down mandate.

Budget

Start by setting clear spending limits for travel and lodging. If you don't have historical data, benchmark against industry standards to create your initial budget framework. Then, look into the following areas to further validate your calculations:

• Historical spend: Examine travel expenses from previous years to understand spending trends, traveler numbers, and business travel frequencies
• Travel patterns: Identify the most frequent travel destinations, preferred airlines, commonly booked hotels, and top traveling departments or employees
• Expense categories: Break down spending beyond airfare and lodging. Analyze costs for meals, transportation, and incidental expenses to create a comprehensive budget picture
• Internal experts: Engage with frequent travelers and cross-functional teams (legal, HR, IT) to gather detailed insights about anticipated travel needs, including conference attendance and client meetings
• External resources: Utilize industry benchmarks from organizations like the US Travel Association and General Services Administration (GSA) per diem rates

Be sure to regularly review travel expenses—ideally quarterly—to ensure ongoing alignment with business goals and financial constraints.

Conclusion

While there is no standard way to craft a corporate travel policy for your company, an effective one will always be clear, fair, and balanced.

When employees understand exactly what expenses are covered, how to book travel, and what the reimbursement process entails, they feel more confident and prepared. This clarity minimizes confusion, prevents inadvertent company travel policy violations, reduces spend leakage, and streamlines the entire travel experience.

When employees perceive that everyone is subject to the same reasonable standards, it boosts morale and creates a sense of organizational unity. Inconsistent resource allocation, on the other hand, can lead to dissatisfaction and potentially harm team dynamics.

And when employees understand how and why a travel policy must strike a balance between cost management and employee comfort, they will be more appreciative of the difficult compromises that sometimes have to be made by finance.

There’s no reason why a corporate travel policy can’t be a win-win for both the company and employees.