Friday, May 03, 2013

SOP Friday: Travel Policies

Earlier, we covered in-town or local travel as part of normal Employee Expenses. Here we cover out-of-town travel.

From time to time you need to travel out of town. As with everything else, it's good to have a travel policy in place before you need it. If you're a one person shop, it's good to have a written policy (and follow it) so you can justify your expenses if you get audited. As you grow, members of your team may need to travel for business.

Out of town travel almost always falls into two categories: Service delivery or training. Training includes conferences. In some cases out of town travel might include sales.

Travel policies are pretty straight forward. So I'm going to post a sample and then discuss the few variables you need to make some decisions on.

Policy Memo: Out of Town Travel

Date: November 2013

To: Staff of KPEnterprises

From: Karl W. Palachuk, President
 KPEnterprises Business Consulting

Re: Travel Out of Town

Please note the following guidelines for out of town travel:
  • “Out of Town” travel consists of any travel to a location more than 30 miles from downtown Sacramento.
  • Day travel (without overnight) consists of driving, train travel, light rail, and the occasional plane ride.
    • If travel is by mass transit, driving to the station/airport is your commute. Therefore it is not covered by our reimbursement policy.
    • If travel is by mass transit, your time is paid from the time you arrive at the station or airport until you depart the same for home.
    • If travel is by automobile, your mileage is covered from your house to your destination and back to your house.
    • If travel is by automobile, your time is paid from the time of your departure to the time of your arrival back home.
    • Mileage will be reimbursed at the current rate.
    • Meals will be reimbursed at a reasonable rate.
    • Meals with clients will only be reimbursed if approved prior to the trip.
  • Overnight travel must be approved by the Service Manager.
    • You will take into consideration the balance of labor costs, travel costs, and the time constraints of client. These factors will help determine whether legs of travel will be by public transportation, car, plane, etc.
    • If a car is rented, it should be an economy class car. Accept the insurance options even though they are a total rip-off. There’s no point in increasing our liability unnecessarily.
    • If you wish to pay for a rental car class upgrade, you may pay for this yourself.
    • If a hotel room is approved, it should be a Courtyard by Marriott or similarly-priced hotel.
    • If more than one employee is traveling to the same location, each employee will be allowed to have a separate hotel room.
  • Airline Travel
    • We will pay for economy class fare for airline travel of four hours or less (total travel day) and business class travel for any travel day greater than four hours. If you want additional upgrades such as first class, you may pay for these yourself.
  • Reward Programs
    • KPEnterprises does not have any company-sponsored or company-enrolled reward programs for “frequent flyers,” hotel awards programs, frequent car rental programs, etc.
    • If you use such programs, all “rewards” are yours to keep and use as you see fit. They will not be considered compensation by KPEnterprises and are not part of your employment or benefits package. If any government agencies tax such programs, you will be responsible for such taxes.
    • KPEnterprises will pay for the lowest priced alternative that fits within reasonable travel parameters. If you wish to spend more in order to obtain miles or points, you will be responsible for the difference in cost.

Notes Regarding the Travel Policy

The key to success with a policy like this is Keep It Simple. Your travel policy should be fair and common sense.

The mileage and "commute" rules are similar to those discussed in the Employee Expenses post. The goal is to mesh well with that policy and stay within the spirit of tax regulations. You also don't want the employee to be out of pocket for reasonable work expenses.

You can define out-of-town as you see fit. We used Microsoft Mappoint to plot the expected driving radius for 30 minutes and 45 minutes from our office. The resulting map included almost every client we had. Rather than make technicians look up a convoluted map, we just drew a circle around it and that came about to about  miles. That's where we came up with that number.

When I travel personally, I never accept the insurance add-on rip-offs because my insurance company is always reminding me that I am covered and don't need them. But when anyone else rents a car on my behalf,  I absolutely want the "walk away" coverage. This is a reasonable expense and you need to figure out how to pass it on to the client.

One item where you might want to save a little money is with shared hotel rooms. I travel a lot and I really appreciate the opportunity to have privacy and feel that I am truly "off work." So I never share a hotel room. The two times I have made an exception to this I did not sleep well. That's just me.

Another area you might want to look at is frequent travel programs. I don't need the hassles of trying to maintain a company-wide program and split up points among employees.

My final advice on travel policies is to make them as short as possible. Don't worry about complicated scenarios unless they arrive. Update the policy when you have some new or different circumstances. And be flexible about one-time events. For example, if and employee wants to take a side trip to go to a wedding as long as they're across the country, just work out a fair deal. Start with an "exceptional" ruling and don't create a complicated policy that will never be used again.

Comments welcome.

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About this Series

SOP Friday - or Standard Operating System Friday - is a series dedicated to helping small computer consulting firms develop the right processes and procedures to create a successful and profitable consulting business.

Find out more about the series, and view the complete "table of contents" for SOP Friday at

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Next week's topic: Healthcare and Other Benefits


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