Hi Friend,
I need your urgent help with this matter. We are an IT company, and our client is requesting our employees to visit their offices in India as part of the project requirements. The client is covering the costs of flights and accommodation. However, for other expenses such as food, transportation, and daily travel, we are providing advance cash to employees, which they use during their trip and then submit the receipts to us.
What are your thoughts? Should we continue giving them advances and follow the current process, or should they incur expenses and seek reimbursement from us? Please advise if there is an existing policy regarding this matter.
From India, Pune
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I need your urgent help with this matter. We are an IT company, and our client is requesting our employees to visit their offices in India as part of the project requirements. The client is covering the costs of flights and accommodation. However, for other expenses such as food, transportation, and daily travel, we are providing advance cash to employees, which they use during their trip and then submit the receipts to us.
What are your thoughts? Should we continue giving them advances and follow the current process, or should they incur expenses and seek reimbursement from us? Please advise if there is an existing policy regarding this matter.
From India, Pune
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Dear Deepti,
Whether employees spend on their own and later ask for reimbursement or they take an advance and then submit the bills, the larger issue is having a policy that creates slabs of permissible expenditure. Any expenditure employees will have to bear on their own. Therefore, first create a policy that defines a permissible limit of expenditure depending on the employee's designation/rank. While defining the policy, include the following additional points:
a) What would be the process of the submission of the claims, i.e., how it is to be routed.
b) Turnaround time for the accounts department for the settlement of the claims.
c) If the advance is taken, then within how many days of completion of the travel, they need to submit the bills. Will the accounts department allot any reference number for the advance for easy settlement?
d) What will happen if it is discovered that fake bills are submitted or bills are padded? What will be the process of the inquiry? What could be the maximum punishment?
e) What will happen if the employees link their Earned Leave to their outstation visit? How to demarcate the line that divides their personal and official expenditure?
f) What will happen if the near and dear ones also travel along with the employee? How to demarcate the employee's expenditure and their family's expenditure?
Hope the above points are sufficient.
Thanks,
Dinesh Divekar
From India, Bangalore
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8220Whether employees spend on their own and later ask for reimbursement or they take an advance and then submit the bills, the larger issue is having a policy that creates slabs of permissible expenditure. Any expenditure employees will have to bear on their own. Therefore, first create a policy that defines a permissible limit of expenditure depending on the employee's designation/rank. While defining the policy, include the following additional points:
a) What would be the process of the submission of the claims, i.e., how it is to be routed.
b) Turnaround time for the accounts department for the settlement of the claims.
c) If the advance is taken, then within how many days of completion of the travel, they need to submit the bills. Will the accounts department allot any reference number for the advance for easy settlement?
d) What will happen if it is discovered that fake bills are submitted or bills are padded? What will be the process of the inquiry? What could be the maximum punishment?
e) What will happen if the employees link their Earned Leave to their outstation visit? How to demarcate the line that divides their personal and official expenditure?
f) What will happen if the near and dear ones also travel along with the employee? How to demarcate the employee's expenditure and their family's expenditure?
Hope the above points are sufficient.
Thanks,
Dinesh Divekar
From India, Bangalore
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Travel policy is one of the major headaches for many companies.
Most people are generally honest, but there are always a few bad apples who will find ways to rort the system.
Many companies have found that having a set per diem allowance for employees to cover accommodation, meals, incidentals such as dry cleaning, taxis, etc. Usually, the company will organize and pay for the travel, e.g., flights, trains, etc. With this system, the employee has to book his own hotel/accommodation, etc. They are responsible for making their allowance stretch to cover the costs.
As various cities and towns have differing accommodation costs, the allowance has to take account of this so, for example, Delhi hotels will be more expensive than those in a small town. So you might have a higher per diem for employees who need to go to Delhi, Mumbai, etc. Same with meals, food may cost more in bigger cities.
Now you can probably see the flaw in this system. Give an employee x rupees for his trip. If he is smart enough, he will find a hotel for y rupees, eat street food, and generally find cheap ways to get around. In the end, he may be able to save some of the money he was given. I know this because I have done it.
However, some employers find this is easier than trying to get employees to bring back receipts and account for their expenses, particularly those who overspend without regard for the company's money.
As Dinesh has said, whatever you do, YOU MUST cover all the bases and make the policy as comprehensive as possible. Once you formulate the policy, you then run a training session to make sure everyone who needs to travel understands the policy to the letter. They also need to know that transgressions will be dealt with severely. You must have penalties in place and strictly enforce them to warn others.
From Australia, Melbourne
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Most people are generally honest, but there are always a few bad apples who will find ways to rort the system.
Many companies have found that having a set per diem allowance for employees to cover accommodation, meals, incidentals such as dry cleaning, taxis, etc. Usually, the company will organize and pay for the travel, e.g., flights, trains, etc. With this system, the employee has to book his own hotel/accommodation, etc. They are responsible for making their allowance stretch to cover the costs.
As various cities and towns have differing accommodation costs, the allowance has to take account of this so, for example, Delhi hotels will be more expensive than those in a small town. So you might have a higher per diem for employees who need to go to Delhi, Mumbai, etc. Same with meals, food may cost more in bigger cities.
Now you can probably see the flaw in this system. Give an employee x rupees for his trip. If he is smart enough, he will find a hotel for y rupees, eat street food, and generally find cheap ways to get around. In the end, he may be able to save some of the money he was given. I know this because I have done it.
However, some employers find this is easier than trying to get employees to bring back receipts and account for their expenses, particularly those who overspend without regard for the company's money.
As Dinesh has said, whatever you do, YOU MUST cover all the bases and make the policy as comprehensive as possible. Once you formulate the policy, you then run a training session to make sure everyone who needs to travel understands the policy to the letter. They also need to know that transgressions will be dealt with severely. You must have penalties in place and strictly enforce them to warn others.
From Australia, Melbourne
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Tour & Travel Policy.docx
TRAVEL POLICY.zip