Travel Expense Reports: Our Tips for Stress-Free Business Trips

Tom
Tom September 2022 Content Creator 6 min

Table of contents

Travel expenses are likely to incur some of the biggest costs you incur when running a business. With recent inflation all over the world, travel has become more expensive (particularly flights) and business owners must keep a close and critical eye on the costs. 

The best way to do this is with carefully curated travel expense reports. To make sure you can do this with ease after every business trip, we’ve put together a guide on creating travel expense reports so you can take business trips free of stress.

Read on for definitions, essential components of a travel report, and all the legal requirements you need to know about. 

Travel expense reports in a nutshell

  • Travel expense reports are detailed trip reports of your company’s spending while abroad on a business trip
  • A full travel report includes: date, vendor, expense category, buyer, additional notes, subtotal, tax/VAT, grand total, invoice copy
  • Travel expense reports assist with business intelligence, savings, and protection against employee fraud
  • There is no one format for a travel expense report, however a standard template is recommended
  • Save money on travel expenses by digitising your process, creating a clear company policy, and analysing each report individually

What are travel expense reports?

Travel expense reports can take a physical or digital form and are a detailed report of all the relevant details regarding purchases made while on a business-related trip:

  • The purchase itself
  • Date the purchase was made
  • Amount
  • Expense category
  • Original receipts

Should your business ever be audited, expense reports with original receipts are one of the things you will need to produce. 

With travel expense reports, you as a business owner can be reimbursed for your purchases come tax time. 

What are the elements of a travel and expense report?

Here’s a full list of the components you’ll need to include in a travel expense report: 

  • Date (the date on which you made the purchase, which should appear on the receipt)
  • Vendor (including the name, address, and contact details)
  • Expense categories (client, project, account, department)
  • Buyer (you or your employee who purchased the item)
  • Additional notes (anything else worth noting about the purchase)
  • Subtotal (amount paid for the purchase)
  • Tax or VAT (amount of tax or VAT paid)
  • Grand total (the amount paid plus tax/VAT)
  • Invoice copy (a PDF, JPG, or PNG copy of the receipt)

Why are travel and expense reports important?

There are a few different reasons travel expense reports are important for any business owner or freelancer. 

Your tax return

Business travel is, in most places, fully deductible if it counts as a legitimate business expense. To justify a business expense, it should fit into one of the following categories: 

  • Professional development (seminars, courses, learning materials)
  • Recruiting (travel to meet potential employees, introduction dinners)
  • Sales (travel, materials, residence fees)

Among others. Make sure you collect all receipts and invoices you can for each of these purchases, as this will alleviate you from legal trouble should you be audited one day. 

Your business intelligence

Beyond saving money come tax time, travel expense reports are a valuable resource for understanding your business. Developing insights about your purchases when abroad on business will help you make smarter decisions in the future. You can better formulate a budget and identify where you or your employees are overspending and can cut costs.

Your safety

Having your employees create detailed and accurate expense reports when they go abroad will better protect you in the unfortunate case of employee fraud. Always make sure you receive receipts from employees when they’re travelling for the purposes of your business. 

What are the formal requirements for a T&E report?

There are no strict formal expectations of a T&E report. The main thing is that something is prepared with the necessary information for every business expense while travelling. A handwritten summary is sufficient, it’s just less convenient than a digitised expense report with a uniform template. You can also expect better expense reporting from employees if you use a standard template for all trips and projects.

How to save money on travel expenses

Saving money on travel expenses will improve your tax return and reduce the risk of an audit or unjustifiable expense. There are a few ways you can cut costs while travelling for business. 

Go digital

Unless it’s a legal requirement in your country, there’s no reason for you to be keeping a pile of receipts on your desk or going through stacks of paper printing off every expense report. 

Buy and download good accounting software, photograph and save all your receipts, and send all expense guidelines digitally to employees. It’s much easier to keep track of expenses real-time, especially with company spending cards, when all payments and information are digitised. 

Analyse each travel expense report individually

Take a look at each expense report according to project, team, individual, etc. This will enable you to better understand how your company money gets spent by adding unique analysis to the report. 

For example, consider things like: 

  • Which recurring expenses come up that could be cut when this team/employee travels for business?
  • What are the most costly expenses for this particular project?
  • Which regions end up costing more than others to visit, and can they be avoided in future? 

Design a thorough corporate travel policy

Useful for both sole proprietors and company owners with teams going on business travel, a corporate travel policy will set clear guidelines for business related travel. While you might be tempted to blame employees for unjustifiable or extravagant expenses, without a clear set of guidelines on expenses abroad, how will they know what to spend? 

Aspects of your corporate travel policy should include policy on meals with clients and new recruits, allowance for business or economy class flights, hotel booking rules, and a clear layout of the reimbursement process.  

Conclusion: travel expense reports

Above all, good travel expense reports will keep your business spending in check during one of its most crucial spending periods. A thorough company travel policy, digitised accounting software, and individual analysis of each report will lead to an easier tax return and a clearer picture of your company’s spending overall. 

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