How Flexible Should Your Travel and Expense Policy Be?
A travel and expense policy that’s too rigid can constrain your business and create unnecessary frustration. Here’s how to build the right amount of flexibility in.
“You can’t wear that on stage.”
“Why not? This is my version of the Steve Jobs turtleneck. I always wear a black Metallica t-shirt when I’m presenting.”
“Not going to happen. Take your corporate card to Nordstrom and buy a sport coat before tomorrow.”
That was the conversation a few years ago between the chief of staff for the president of North American sales and my direct report, “Charles.” Charles was heading to Chicago for our biggest partner’s annual conference. The president would be presenting, and Charles had a big role to play as the “demo guy,” showing off our latest product release to a live audience of 15,000 people and another 30,000 watching online.
Charles did indeed go to Nordstrom with his corporate card and bought a blue sport coat (to wear over his Metallica t-shirt). He looked great. The presentation and demo went off without a hitch. Afterward, Charles swore he was going back to his black t-shirt and never wearing that jacket again.
Inflexible policies create confusion and frustration
After the trip, Charles filed his expense report with the legacy expense software our company used. It was the normal slog—he lost a receipt from one of the meals, and his flight was flagged by the system even though he booked the one the chief of staff told him to.
I approved the exceptions and thought everything was fine, but a week later, the $300 expense for the sport coat was denied and marked personal. I swung by the desk of our finance lead and explained the situation. The division president and his chief of staff had authorized this purchase. It had to be reimbursed. We looked up the expense policy together, and there, on page 18, it said, “Clothing expenses: non-reimbursable.”
My finance counterpart assured me it would be taken care of, and we used the “notes” field to write a lengthy explanation.
Another week later, the expense came back again. Denied. There was no way around the policy. Clothing purchases would not be reimbursed, period. I went up and down the chain: To my manager. To the chief of staff. No luck. No one could grant an exception to the “no clothing expenses” policy.
Meanwhile, $300 was due on Charles’s corporate credit card. We had joint company and personal liability cards, so Charles was liable for the $300 charge. I assured Charles I would make it up to him, even paying the $300 out of my own pocket if that’s what it took. Charles reluctantly wrote a check to Amex.
A time-consuming workaround
To make a long story short, finance and I agreed we would issue Charles an “on-the-spot bonus” of $600 for his great work in Chicago, and after taxes, it would make him whole for what he paid for the jacket. Not only did it cost the company an extra $300, but it took hours and hours of effort across the team to figure out a solution. Charles didn’t feel great about the resolution either—it was a lot of hassle for a sport coat he pledged to give to Goodwill.
Expense policy fail
In this case, the travel and expense policy didn’t work for the company or employees. It’s enough work to travel and get on stage in front of 45,000 people. The last thing you need is a big headache to get reimbursed. As a manager, it was a big waste of time, and I was going to think twice before asking Charles to do an event like that again. Charles ended up leaving the company six months later. I had to consider—did the jacket incident factor in his decision?
Designing your expense policy for flexibility
Hopefully, other organizations can learn from this incident and not repeat the same mistakes.
1. Start with a clear travel and expense policy.
Ideally, it should fit on one page. A long, wordy expense policy results in confusion because no one actually reads it. In the case above, even the president and chief of staff had no idea the clothing expense wasn’t allowed. (See more tips for creating or updating your travel policy here.)
2. Allow discretion for managers and budget owners to buy what the business needs.
In this case, the clothing expense was business-critical. It was our biggest partner’s conference. Surely there should be some discretion to approve this type of purchase, even if it needs to go to the division president. Having powerful, flexible approval rules that you can easily modify when you need to can provide the proper guardrails while enabling the business.
3. Use expense management software that automatically flags policy violations.
In this example, Charles had no idea the clothing expense wasn’t allowed until it was denied weeks later. Ideally, your expense management solution should flag the issue right at the point of purchase and coach employees to make more informed purchasing decisions. With a connected corporate card and expense management solution like Center, Charles would have gotten a notification on his phone immediately, and as his manager, I would have seen the policy violation at the same time. We could have gotten ahead of the issue without cutting a check to the credit card company.
Your expense management processes shouldn’t be a driver of employee churn in your organization. Your employees work hard and make sacrifices to travel for the company. The last thing they need is an arduous expense report process. Hit the “easy button” for traveling employees with a solution that simplifies spending and frees employees to focus on their real job.
See how your company stacks up
We invite you to take our 2022 Expense Management Benchmark Assessment to learn more about how your organization stacks up against similar companies. After taking the short survey, you’ll receive a customized report with findings and recommendations to optimize your travel and expense policy and process.
Photo Credit: Hunters Race