Reducing Travel and Expense Policy Violation Rates: Three Key Measures
Travel and expense (T&E) policy violations are a persistent drain on corporate funds, intensifying as employee travel increases. A 2023 survey revealed that 61% of financial executives stated their T&E policies are frequently or sometimes violated, and 73% expect the issue to worsen over the next five years as companies grow. TravelBank CEO Duke Chung noted that violations are not entirely intentional, with inaccessible policy information being a primary cause. Forrester Consulting research shows that by improving compliance rates (from 40% to 91%), companies save an average of $321,000 over three years. This article proposes three key measures: enhancing employee policy awareness, improving booking visibility, and monitoring out-of-policy spending, and explains how modern management platforms can facilitate compliance and savings.
Travel and expense (T&E) policy violations continue to erode corporate funds. The more frequently employees travel, the more severe the violations may become—and as companies expand, this hidden risk could be further amplified.
For example, in 2023, 61% of finance executivesreportedthat their T&E policies were frequently or sometimes violated—and 73% of respondents agreed that as companies grow over the next five years, employee violations of T&E policies will become an even bigger problem.
The causes of this issue are multifaceted.
"Travel and expense management is an area prone to abuse, but not all policy violations are intentional," said Duke Chung, CEO and co-founder of TravelBank. "Some employees book entirely outside the policy, but many simply don't have easy access to the company policy."
When companies invest resources in improving T&E compliance, the results are significant.Research by Forrester Consultingon the total cost of ownership and return on investment of using TravelBank found that the companies in the study increased T&E policy compliance from 40% to 91% within three years, achieving an average cost savings of $321,000. The following three efforts are key to improving policy compliance rates.
1. Increase employee awareness of the policy
When companies store travel expense policy information in static PDFs or on low-usage intranets, employees are unlikely to consult it—let alone comply with it. Ideally, employees booking travel should have immediate access to policy information when they need it, i.e., when they take action on their travel plans.
"Clearly understanding what they can book will encourage most employees to stay within policy," said Chung.
For companies, the simplest way to make policy information easily accessible is to embed policy guidance directly into their travel booking platform. A booking platform with built-in policies can prevent violations at the source, because it alerts employees when their bookings and spending exceed employer guidelines.
2. Improve booking visibility
Booking platforms with built-in policies and cost estimation tools also unlock a higher level of transparency and real-time visibility into travel expenses for companies. Such platforms help employees make more cost-effective choices in their travel plans, and also help company leaders make smarter decisions aimed at saving money and driving growth.
"Increased visibility into booking costs for finance and accounting enables companies to more effectively identify and act on anomalies (policy violations)," said Chung. "It also makes travel budgets more dynamic and realistic, allowing approvers to make informed decisions when reviewing travel requests."
Greater visibility also leads to more accessible and comprehensive reporting. Data and insights on travel and spending can support leaders in revising and improving T&E policies, negotiating favorable agreements with frequently used suppliers, approving appropriate travel based on cost considerations, and developing more accurate spending forecasts.
3. Monitor out-of-policy spending
When companies rely on legacy systems, spreadsheets, reimbursements, and manual processes to manage travel expenses, it is difficult for finance team members to review each transaction for policy compliance. (A stakeholder at a healthcare organizationtoldForrester Consulting that, before implementing TravelBank, the organization found that out-of-policy spending cases took up to two to three months to identify.)
With traditional T&E management, the challenge of keeping track of out-of-policy spending becomes more difficult as companies scale. In 2023,71%of finance executives agreed that travel expense management consumes too much time and effort from finance teams, and companies cannot simply add resources to meet the compliance review needs that come with growth.
A modern travel expense management platform that provides high visibility into bookings and spending allows finance team members to stay informed about policy compliance with less manual effort.
"TravelBank helps companies monitor out-of-policy spending by: flagging out-of-policy options in the booking platform, triggering travel approval workflows when requests exceed budget bookings, providing virtual card integration to set spending limits at the card level, syncing transactions in real time for early visibility, and consolidating travel, expense, and card spending data into a single dashboard so accountants can easily spot discrepancies and violations," said Chung.
A step toward savings
Ultimately, a standardized travel booking process and clear visibility into spending are a powerful combination for reducing policy violations. And the cost savings achievable through improved policy adherence are just one of the overall benefits companies can unlock by implementing a modern travel expense management solution:Forrester Consulting researchfound that TravelBank generated a total of $482,000 in benefits and savings over three years.
To learn more about how TravelBank helps companies reduce or eliminate policy violations, visittravelbank.com。