How Automation Is Bringing T&E Policies to Life

Ethan Laub
Ethan Laub
Director Product Management, Mobile & Travel, Coupa Software

Ethab Laub leads development of new products and partnerships for Coupa's mobile and expense management applications.

Read time: 10 mins
How automation is bringing T&E policies to life

automation teYou know that 50-page Travel & Expense Policy that you used as a doorstop back in the '90s?  Almost nobody read it, and yet whole forests were cleared so that everyone in corporate America could pretend to.

During the onboarding process, employees would be given these lengthy policies. Then, they would collect dust as people moved on with their business lives. Needless to say, that made policy compliance difficult to achieve, and made it hard for companies to adapt their policies to changing market and business conditions.

These days, electronic systems are breathing new life into T&E policies by embedding guidelines and guardrails into the same systems employees use to book travel and report their expenses. Now your policies can travel along with your employees, delivering relevant information at the time when it’s most useful, rather than overwhelming employees with a lot of information they may never use.

It’s much easier for employees to stay compliant with their company’s travel policies when tools are guiding them through the process, flagging items that may run afoul of certain restrictions, and keeping them abreast of special arrangements that can save the business money. And it’s easier than ever for administrators to tailor the rules to each destination and type of traveler, and make improvements to the program—not every two or three years when there’s a policy review, but in real-time as the need arises. Here are some examples:

1. Destination-specific expense limits

Where employees are traveling matters a lot in terms of what the rules and limits should be. $20 won’t get you much of a meal in Paris, but it might get you a feast in Indonesia. Lodging, transportation and other expenses also vary greatly by city.

In days of static policies, it wasn’t feasible to list and maintain rates for hundreds of cities. So, policy authors would come up with a single fixed limit in each category for employees to shoot for, no matter where they were going.

Now you can be much more refined. There are a lot of great data sources that benchmark costs around the world. One of my favorites is the GSA per diem benchmark report. Business Travel News (BTN) is another great source. Not only do program managers not have to come up with their own limits, they can take this data and tailor it to their needs and upload it into their expense solution so that category limits are dynamic depending on where the person is traveling.

For example, if you’re an investment bank or high end consulting firm, you’re probably not going to use the GSA per diems as they are. You might want your employees to have a little better travel experience, so you could add 20 percent to the benchmarks before uploading them to your system. Conversely, if you’re looking to tighten the reins you might lower some limits in order to push employees to two- or three-star hotels, instead of four or five star ones.

2. Better airfares

On the travel side, in the paper world it was hard to establish reasonable benchmarks for airfares since they are priced dynamically and change often. Today’s online booking tools can track and flag the lowest available fares and present them to employees inside very nuanced guardrails specific to city pairs, travel dates and permitted cabin classes.

3. Automated policy guidance

Online booking and expense management tools let administrators embed policy messaging in relevant areas, so no one has to memorize anything to stay within policy. When an employee starts an expense line for a particular category they can receive instant policy guidance as well as notifications about any preferred pricing arrangements the company may enjoy. This makes training new employees on your T&E policy much easier. You just need to show them how to use the tool; all the rules they need to know will be in there.

4. Easy updates

In the world of paper policies, making changes to the company’s T&E policy was a slow, painful process and travel managers had to make sure the updates were distributed to every employee and they were trained on them. With automated tools, you can make changes and they’ll be reflected instantly. While it’s still a best practice to communicate the changes, it doesn’t have to be a huge administrative effort because users will see the change the next time they go into the tool.  

Let’s say your company has signed a deal with Hilton Worldwide. Your online booking tool and expense solution can work in tandem to communicate that to your employees.  When employees are booking a hotel reservation, your online booking tool can display Hilton as a preferred vendor. And when employees create a hotel expense, you can add policy language to the expense line that says, “Did you know we’ve signed a new deal with Hilton? It offers favorable pricing, free WiFi, and other perks. Please take advantage of it!”

Instead of doing a full review and rewrite of the T&E policy every two or three years, companies can quickly respond to changing business and market conditions. Many tools also allow you to test out the impact of policy modifications you’re considering, before you roll them out.

The best compliance is full compliance  

It’s important to embed your policy in both your travel and expense systems. If you don’t, you won’t have full compliance and your employees will be in the dark about policies on roughly half of their spend. But nobody needs to have or read the policy in its entirety, except for the program administrators and the people who’ll be configuring the systems.

The worst thing you can do is have no policy at all. Perhaps it’s an over-reaction to the draconican policies of the past, but I have seen several companies tell their employees to “spend the company’s money as if it was your own.” Well, there’s way too much room for interpretation there. I might be perfectly comfortable spending $100 of my own money for extra legroom on a long flight, but my CFO may think otherwise.

You do need policies in place. But the key is to have the right level of specificity, and to use technology to make it easy for employees to comply by embedding them into the same systems that they already use every day.