The American Express 2023 Expense Management Trendex report reveals that 65% of expense processors allocate an average of one hour to review one monthly expense report. In the meantime, 76% of workers spend 30 minutes or more writing their reports.
The standard procedure of sorting receipts, counting twice, and making sure that each claim is within the company policy can be tiresome.
Since it is done monthly among teams, departments, and offices, one task of administration becomes a burden on productivity.
Also, vague policies or too many reviews of the manuals lead to delays. Instead, employees get irritated with report forms, the finance departments waste more time on checking the facts, and insignificant mistakes or violations of policies can be overlooked.
Due to this, it is important that there is a strict adherence to the travel and expense policies.
What Is Travel and Expense Policy Compliance?
Travel and expense policy compliance implies that employees follow the company’s rules and regulations when travelling on business and providing the corresponding expenses.
In practice, the employees should make reservations through authorized avenues, select an option that does not exceed the spending limits, and use a preferred vendor. They should also have receipts, turn them in on time, record expenses correctly, and get the approvals prior to or after the trip.
By adhering to these rules, organizations can easily control their expenditure and limit financial exposure when employees follow them. The practice also maintains the travel costs in line with the internal policies and regulations that make the whole process transparent and accountable.
Why Does Travel and Expense Policy Compliance Matter?
Corporate travel and expense policy compliance ensures that travel is organized, open, and financially sound.
Flights, hotel, and other bookings done beyond the channels approved are normally costlier; adherence to the policy will help to eliminate unnecessary expenditure.
It also makes it easy to audit and keep records. Clear, consistent documentation of expenses is necessary among regulators and tax authorities.
Unless well managed, duplicated reimbursements, exaggerated claims, or violations of the policy will sneak in.
Unbridled expense claims are part of fraud and it constitutes to 17 percent of all business fraud, as well as costs U.S. organizations approximately $1.9 billion annually.
Regularity is equally significant to employees. Travel and expense policies that apply equally to all individuals will help to avoid misunderstanding and the impression that someone is receiving special treatment.
Lastly, compliance assists companies in better planning their budgets. By keeping the employees within the established policy boundaries, organizations will have a better understanding of the expenses accompanying travel.
What Are the Common Causes of Non-Compliance?
Although organizations have travel and expense policies, cases of non-compliance are even greater than those expected. This occurs due to a lack of communication, processes, or even tools.
- Employees are not always aware of the existence of a policy, and in cases where they require it, they might struggle to find the latest version.
- If travel regulations or the spending cap appear overly stringent or unrealistic, employees may seek alternative ways to complete their journeys more conveniently.
- Booking travel through the non-approved platform is faster or easier than the official system of the company.
Approximately 20 -30 percent of travelers report that their company policy is inflexible or too strict.
- In most companies, policy breaches are only realized after the expense report has been forwarded, and it is difficult to rectify the situation since the money spent has already been incurred.
How Can You Improve Travel and Expense Policy Compliance?
Employees need a travel and expense policy that is easy to understand, clear, and simple to follow.
Enhance compliance with travel policy without complicating the whole process using these methods.
1. Make Your Policy Easy to Understand
Documents filled with jargon makes employees get overwhelmed. The police should be simple, summarized, so that employees know what they can and cannot do.
2. Automate Policy Enforcement at the Point of Booking
Instead of detecting policy violations after spending, it is effective to guide employees while they are booking their travel. Display only the compliant options at first so that the employees will be able to make the right choice without any doubt.
As an example, ITILITE can in-source company travel rules into the search results, automatically highlighting or limiting those flights and hotels that are outside the policy.
Through this automation, the reduction of expense report rejections was 90 percent, and it saved more than 5 million dollars.
3. Implement Pre-Trip Approval Workflows
Pre-trip approval processes allow managers to look at the travel plans early and ensure they are in line with company policies and budgets. This will allow managers to identify a possible overspending before the bookings are completed.
4. Use Real-Time Dashboards to Monitor Compliance
Real-time dashboards allow organizations to see how well teams are following policies and where spending might be going off track.
5. Train Employees Regularly
Many companies explain travel policies during onboarding and rarely talk about them again. But policies can change, and employees may forget the details over time. Short refresher sessions or occasional reminders can help keep everyone aligned and aware of the guidelines.
6. Reward Compliant Behavior
Adherence may not be based on rigid regulations, but it could be promoted using incentives. The employees who perceive the personal gains of being budget-conscious are more apt to do so when they perceive that they get a personal benefit from it.
As an example, ITILITE has a savings program whereby employees contribute to a portion of the savings made upon booking travel, which is under the allowed budget.
How Does Technology Drive Better Policy Compliance?
Checking compliance of travel and expenses in most organizations are done manually.
But now the technology started changing the platforms as a modern travel and expense booking platform. Using this, employees need not have to look at everything afterward.
Typically, the modern platforms should include these several features that help organizations maintain better compliance, such as:
- Policy guardrails at the time of booking, which automatically steer the employees to compliant travel options.
- Automated separation of the expenses to sort receipts and claims appropriately.
- Flagging of non-conforming or unusual expenses upon submission (automatically).
- AI-based anomaly detection based on finding suspicious or abnormal spending patterns.
- Live compliance dashboards to demonstrate how well the teams and departments are adhering to travel policies.
- Advanced reporting and analytics that aid finance teams in tracking compliance trends.
Platforms like ITILITE use tools such as the IRIS AI travel intelligence engine. It helps to study booking patterns and highlight potential compliance issues early. Real-time insights help them address small issues before they turn into bigger problems.
What Are the Unique Compliance Challenges in the IT Industry?
IT professionals spend a lot of time in the client offices, project sites, data centers, or industry conferences. When the change of plans is required in a rush, employees need to book the trip as soon as possible.
Many IT companies have remote or distributed groups in various cities or nations. Such diversity also complicates the situation of a finance or travel team to be consistent and ensure that everyone is operating on the same travel policies.
IT may involve international travel that are normally expensive, require more approvals, and additional documentation.
This can be simplified with a platform such as ITILITE. This platform assists IT firms in tracking travel and expense compliance as bookings, policies, and expense tracking can be done in a unified platform.
How ITILITE Helps You Achieve Near-Perfect Policy Compliance
ITILITE is designed to make compliance part of the process itself, so employees naturally follow company guidelines while booking travel and submitting expenses.
- When a company sets its travel policy in the system, the rules are automatically implemented on all the bookings. Only those options that are in conformity with the policy can be seen by the employee, and those that are outside the policy lines are marked or blocked.
- The platform also integrates traveler reservations, travel expenses, and corporate card information.
- The real-time dashboards allow managers to understand and identify areas that require improvement within a short time.
- For travelers who need help during booking, quick human support may reduce the chances of employees booking through external websites or tools.
- On top of that, using tools like IRIS AI travel intelligence engine analyzes booking patterns and suggests travel options that are both policy-compliant and cost-effective.
Struggling with policy compliance? Automate it. ITILITE enforces your T&E policy at the moment of booking — not weeks later on an expense report. See how companies achieve 90%+ compliance rates.
