Best practices for creating a business travel policy

An effective business travel policy sets clear booking rules, embeds spending limits into your workflow, automates approvals, and enforces compliance before money is spent. Instead of relying on employees to interpret PDF guidelines, modern policies are built directly into booking and expense systems to prevent violations at source.

If you have employees travelling around the world without an automatically-enforced travel policy, that means three things: lots and lots of receipts, policy violations, and absolutely no real-time visibility.

Instead of drowning in receipts and manual approvals, you can implement a well-structured travel policy that controls costs, cuts admin time, eliminates policy violations before they happen, and gives you complete visibility into your largest variable cost centres.

What is a business travel policy (and why do most fail)?

A business travel policy defines the rules for booking, expenses, reimbursements, and safety during work trips. The policy covers everything from pre-booking procedures all the way through to spending limits and expense submission.

But rather than being digital and built into an expense management tool, many travel policies exist as PDFs on your intranet. And, unfortunately, not all employees read them. And if they do, they’re unlikely to refer back to them for every work-related expense, it’s too long-winded and inefficient. Instead, they book an out-of-policy hotel, spending £500 of company money without you knowing about it until it’s too late.

As Payhawk CFO Konstantin Dzhengozov, explains:

Most travel policies don’t fail because they’re poorly written. They fail because they rely on employees to remember them. By the time finance reviews the expense, the cost is already locked in.

By implementing an automatic travel policy into your booking workflow, you can police it before they spend funds, not after.

The core components of an effective travel policy

Here are four key components when creating your travel policy.

1. Clear booking procedures and allowable expenses

Make sure employees understand your advanced booking requirements so there’s time to find the best rates and generate financial visibility. Be clear about whether they should use a managed travel platform or book directly, etc.

Your travel policy is yours to customise, just make sure employees know where they stand. Here are some things to think about:

• Transport. State whether they’re to book economy for short flights (less than four hours), allowing premium economy for long haul, and business class for director level or if travel is overnight.
• Accommodation. Implement maximum night rates by location, i.e. London might be a higher rate than Manchester.
• Meals. Set per diems rather than receipt tracking.
• Incidentals. Tips, limited Wi-fi, and parking.
• Visa and passport fees. For those travelling internationally.

You’ll want to be as clear as possible. Don’t leave room for ambiguity. For example, ‘reasonable meal cost’ is confusing. Give limits for breakfast, lunch, and dinner.

2. Spending limits and per diems

You can simplify employee spending with per diems. This means there’s no need for finance to chase receipts, and you implement spending limits with fixed daily amounts for travelling employees.

You can adjust the per diem rate to reflect local costs; for example, a daily meal in London is more expensive than in other European capitals.

This is a problem Payhawk helps Porsche e-Bikes overcome, as Gabriela Leovac, Accountant at Porsche e-Bikes, explains:

The biggest problem was business travel expenses. We didn't have a system that let employees submit their trip expenses easily. And we wanted to find something that allowed employees to use corporate cards, apply for a daily allowance, upload all of their travel and work expenses, and get fast approvals.

3. Company card guidelines and approvals

Corporate cards keep your spend 100% visibility while eliminating out-of-pocket expenses. With them, you can set clear usage rules, transaction limits, and build in custom approval requirements.

You can create streamlined approval workflows that route requests automatically, with low-risk bookings automatically approving, for example, standard rail fares, airport parking, or pre-approved accommodation. Then, any spend that is high-value or out-of-policy requests would need management approval.

Linking corporate card usage to your policy means that if an employee tries to book a first-class flight (when your policy states economy), the card will decline automatically.

Note: With spend management software, approvers can act on the go from their phone, reducing unnecessary approval bottlenecks.

4. Duty of care and ‘bleisure’ rules

Always communicate emergency protocols, travel insurance, and any guidance for high-risk destinations within your travel policy. Outline who handles rebookings and how employees can access help 24/7.

Also stipulate what happens if employees add leisure nights to the work trip. Explain who pays for the extra nights and whether your insurance covers this.

The benefits of a robust travel policy

There are many benefits to a comprehensive digital travel policy; here are just five.

1. Cost control. The most obvious benefit is cost control. With a policy, you can set clear spending limits, enforce advance bookings where necessary, and guide employees to preferred suppliers to reduce your travel costs.
2. Automatic compliance. Employees have to follow your rules and guidelines, and with specific approval systems in place, they can’t spend randomly outside of policy.
3. Enhanced duty of care. Knowing who is staying and travelling where means you can locate and support travelling employees immediately during emergency situations.
4. Employee satisfaction. Having a system that guides employees throughout the entire process of booking to expensing means they’re not stressed when travelling.
5. Efficiency gains. Having a system that intelligently extracts information from receipts, reimburses to the employees’ bank accounts, and keeps spending in line with policy means there’s much less admin work for finance teams.

Best practices for travel policy implementation

There are a few things you should consider when implementing your travel policy.

1. Make sure you require advanced bookings. Implementing 7-14 day windows through your booking tool means last-minute trip bookings don’t become the norm. Instead, the longer timeframe gives your AI travel agent the chance to find the best flight and accommodation rates. You can still create approvals for urgent travel situations.
2. Use preferred supplier. To keep supplier pricing consistent in both pricing and quality, embed specific hotel chains and airlines as default options in your booking process.
3. Streamline expense submission. Be sure to use an expense management tool that comes with a mobile app for submitting receipt photographs. You need the app to automatically categorise the expense and support the ability to link your company cards to make everything efficient and accurate.
4. Conduct regular audits. You want to avoid all instances of corporate fraud, and you can do this by conducting random spot checks to identify whether your policy needs some adjusting.
5. Communicate with and train your teams. Make sure every travelling employee and manager knows how to use the system and get the most out of it.

How Payhawk transforms travel policy management

Traditional travel policies are enforced after the money is already spent. This means employees book a hotel, submit the expense weeks later, finance realises the spend violates company policy, and you have no choice but to swallow the cost; there’s nothing you can do about it.

This isn’t a great way to maintain company cash flow, particularly if you plan to scale and grow. Problems like this will keep happening and escalate further as you hire more team members. Implementing a travel policy management system like Payhawk helps you enforce policy before booking.

Policy-first booking

Upload your travel policy, and our AI travel agent enforces it automatically. Employees will only see in-policy options, and out-of-policy choices will flag upfront with clear explanations.

Embedded approvals

With Payhawk, you can set approval logic as simple or sophisticated as you need. You can have the system auto-approve low-value bookings and route high-value requests to specific managers. And if exceptions crop up, you can escalate these to budget owners. Approvers have all the information at their fingertips, including all the expense context, and they can approve just with one click from any device.

Automated expense capture

All travel that employees book through Payhawk captures automatically. When employees purchase on Payhawk cards, the transactions match instantly using AI-powered OCR. That means finance isn’t chasing receipts or entering data manually. Krasimir Angelov, Finance Manager Europe & Managing Director at FFW Bulgaria, shares how Payhawk OCR has transformed their processes:

The integrations with accounting and travel booking systems help us to minimise the time spent on transferring the data and ensuring the quality and accuracy of the data transferred.” Krasimir continues, “Embedded technologies such as the OCR allow us to reduce the time we spend processing and entering data.

Real-time visibility

Our system lets you see who’s travelling, where, and what they’re spending, all in real-time. You can track spend against budgets continuously and spot saving opportunities quickly instead of reacting weeks later.

For finance leaders, this means more predictable travel budgets, fewer month-end surprises, and better short-term cash planning across entities.

Seamless reconciliation

Expenses flow directly into your ERP with complete audit trails, which means you can drastically reduce time spent on reconciling your accounts, sometimes from days to just hours, like

Eduardo Felipez, Management Accountant at Heroes:

We have five entities, with approx 300-500 expenses a month... It used to take me one whole day per entity to review, import and export. But with the direct Payhawk integration to NetSuite, I spend just an hour daily on this. It's an enormous help.

Transforming how you manage business travel

A static PDF travel policy can’t ensure policy enforcement. You can’t rely on employees to read, interpret, and remember all your rules and guidelines each time they spend company money.

That’s why you need your policy embedded into your spend management platform. That way, you automatically enforce policy before booking, automate all approvals, which reduces bottlenecks, and capture expenses automatically to minimise fraud and improve data accuracy and spend visibility across all your entities.

Ready to transform how you manage business travel? Book a personalised demo to see how Payhawk automates policy enforcement and gives you complete visibility into travel spend.