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Travel and Expense Policy – part two February 25, 2010

Posted by solutionsbconsultants in Accountability, Increase Profitability, Travel Policy.
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With the goals and objectives mentioned in Part I, let’s begin.

Common Sense: If it can be accomplished via video conference, then don’t fly. For example, many IT courses are available via e-learning instead of a flight. Spouses and other non-employee travel with a company employee should not be allowed due to abuse and liability.

Budgets: Travel should be budgeted in advance. I recommend $400 domestic airfare, $1500 international airfare, $100 domestic/$200 international per hotel day, $100 for taxi and $50-$75 per day for meals with a maximum of a 15% tip. One employee may pay for additional employees of the company if it is more convenient.
Here’s a hint: Use the Radisson and Holiday Inn instead of the Hilton or the Hyatt. With that being said, there will be some variance for not booking 14 days in advance and for execs who insist on flying business or first class.

Hotel Amenities: No hotel amenities will be reimbursed so don’t use the honor snack bar. The exception would be internet service for those travelers that do not have a wireless internet card, dry cleaning for stays exceeding five days and one ten-minute phone call per evening if the traveler does not have a company issued or reimbursed cell phone. Room service is discouraged unless there is a good business purpose.

Approval: There should be a hierarchial system in place for travel approval but it should only be for exceptions as follows:
1) Not booking more than 14 days in advance
2) Out of budget request
3) Flying business class or greater
4) Person booking is not a supervisor, manager, director etc.
5) Not specifying a specific business purpose – there should always be some type of ROI for the company when someone travels
6) Not using a preferred vendor

Reimbursements: All travel expenses should be submitted for reimbursement within ten (10) days of return. The IRS limit is 120 days but what we have found is the longer someone waits, the greater chance of loss of receipts. Original receipts are required for all reimbursement and this means the detailed receipt (not the receipt that only shows the total). For example, a receipt must have the date of purchase, the vendor name, an itemized list and unit price of the purchased items and the total amount.
This eliminates liquor, multiple entrees and other non-deductibles from being reimbursed. For convenience, I would issue frequent travelers – four or more trips per year an American Express card. Amex has great electronic record keeping and if you migrate to a full-blown travel and expense package, you can easily integrate their data. Finally, approval of reimbursement should NOT be done by a supervisor or department head. Better to let accounting or procurement sign off – they are less likely to let unauthorized purchases slip through the cracks as they are more objective in their review. Infrequent travelers may require corporate booking of their transportation and hotel. We designated a person in procurement and accounting to take care of these folks who might undergo a hardship if they had to use their own funds to prepay.

Conferences: There is no reason to really stay in the conference hotel if more reasonable accommodations are a couple of miles away. The organized traveler should be able to plan his/her day in advance to avoid any inconvenience.

Saturday stay over: If savings for a Saturday stay over (when not required) are greater than the hotel and meal allowance for an extra day, the traveler may choose to stay over on Saturday.

Cancellations: Must be reported to accounting or procurement and the ticket put in the company “bank” for future travel. Cancellations should require the approval of a division vice-president or greater to dissuade abuse.

Rental Cars: Rental cars are approved on a trip by trip basis. For instance, a conference usually would not require a rental car. But a trip to meet with suppliers and factory tours may require a rental car. Rentals should be non-luxury, economy or mid-size cars from an approved supplier.

Domestic Travel: Travel under 250 miles should be accomplished by vehicle as the costs in time traveling to the airport, delays in airport travel, taxis and other factors make this type of travel cost more cost effective. Air travelers should be responsible for packing their bag appropriately within weight and girth limits. Additional bags for stays less than five days are the responsibility of the traveler. Non-stop travel is preferred, however, if a connecting flight within four hours is available and the difference is $200 or more than a non-stop, the traveler would be required to take one connecting flight. All flights under five hours in duration much be flown “coach”.

Think about these tips and let me know if I left anything out – I will follow up shortly with more on this in Part III.

Yours in Supply Chain,

Steve

Remember what the Aberdeen Group says……….

“For a typical enterprise, it takes an increase
of $5 in sales to equal the impact of
a $1 reduction in procurement costs.”

If you have a topic of interest you would like me to discuss in our blog, “in-person”, or see a typo, just send me a comment or email me directly. I would like to hear from you!

Respectfully,

Steve Gordon
Senior Consultant
Solutions Business Consultants
http://www.costavoidance.org
__________________________________
”Bringing Service, Value, and Efficiency to the Supply Chain”

steve@costavoidance.org
(865) 356-3575
Skype: stevegordskype
Blog: https://innovativeconsultant.wordpress.com/
Linkedin: http://www.linkedin.com/in/stevegordonthecostsavingsguy

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