Per day and mileage allowance account for a significant proportion of a company’s expenses and, as such, it is important that they are managed in an organized way that can be monitored.
One step that is advisable for any company that wants to manage its travel expenses effectively is creating a business travel and corporate representation policy. A business travel expense policy is a key part of the expense management process, as it is the document that sets out the regulations that govern all aspects and processes related to travel expenses. It is the ideal place to establish the control mechanisms that put the field of corporate travel expenses in order.
Business travel expense policies set out the regulations that govern all aspects and processes related to travel expenses and corporate representation.
As such, all of the issues related to defining and regulating allowances and travel expenses should be included in the policy. Information must be included in relation to what type of allowances the company gives its employees, conditions for claiming back expenses, whether or not the approval of a supervisor is required, etc.
It is advisable to go into great detail when defining the policy. There should not be any grey areas that anybody involved in the process is unsure about. This is equally the case for expense reporters and for staff responsible for the administration and validation of these expenses.
As the expenses related to per day and mileage allowances affect the employee directly, they should be negotiated with the management board of the company and included in the collective bargaining agreement. As corporate travellers are affected directly as well, they should also be included in the company’s travel policy, usually in an annex, which is more flexible that the travel policy itself. The amounts covered by per day and mileage allowances are subject to change, either for internal decisions in the company or external causes such as changes in the legislation or taxation rules. Updates are usually applied on an annual basis or every few years, adding the RPI differential and sometimes an additional percentage.
Amounts and updates in relation to per day and mileage allowances are usually indicated in the company’s collective bargaining agreement and travel policy.
Remember that a company’s expense policy is a key factor in the effective management of per day and mileage expenses. It is important that all of the finer details of the issues are perfectly clear in the policy so that the employees are familiar with the company’s rules and take them on board.