What is T&E?

What does T&E mean?

T&E is essentially any cost associated with business travel. That could mean airfare, the mileage put on an employee’s personal car, or lunch purchased for a client meeting, as long as the cost was incurred during business travel and fits within the company’s T&E policy.

Every company has its own T&E policy, but most follow similar frameworks, with expense categories built around IRS guidelines for tax deductions. 

Common T&E expenses include:

• Flights, car rentals, train tickets, taxis, tolls, and other costs associated with transportation
• Meals and refreshments
• Conference fees and event passes
• Entertainment expenses for clients
• Laundry during extended trips
• Paid access to WiFi and related expenses for communication
  

T&E expenses typically do not include:

• Capital and equipment expenses 
• Personal expenses that are not related to business travel
  

You’ll want to develop a clear company policy for your employees around T&E, including what’s reimbursable, how they can go about seeking expense reimbursement, how long it will take to get paid, and how the money will arrive. 

Why T&E matters for your business

T&E can have far-reaching implications for your company’s bottom line. Here are a few reasons why:

Tax reporting and compliance 

The IRS maintains guidelines around which business travel expenses are tax-deductible. Running afoul of these rules can result in penalties if you’re audited and found to be noncompliant. To avoid that, you’ll want to ensure all T&E reimbursement claims are reviewed against your expense policy, and that every expense is backed up with receipts (paper receipts can be scanned and digitized). A robust T&E process can ensure every reimbursement request is reviewed for compliance.

The business trips associated with T&E must also be “necessary” (for a legitimate business purpose) and “ordinary” (standard practice in your industry).

Budgeting 

T&E costs can add up fast, especially if there’s a large segment of your workforce hitting the road on a regular basis. With that in mind, make sure you take every opportunity to control costs, such as by partnering with third-party corporate travel providers with access to discounts, and by creating expense policies around hotel bookings, rental cars, upgrades, classes of travel, etc. You can also require pre-approval of some costs before they’re incurred to ensure employees have secured the best pricing.

Employee satisfaction

If employees are putting up their own money to cover travel expenses, paying them quickly and reliably as soon as possible after they submit expenses for approval can help ensure they are satisfied with your expense approval and reimbursement process. That can build trust and goodwill with your workforce, especially among frequent travelers.

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4 common challenges managing T&E

For finance and HR managers, T&E comes with a host of challenges and risks that can be managed proactively with the right planning. Here are a few worth thinking about:

1. Managing spend 

Without clear guidelines, employees can easily overspend on travel. The wrong flight or hotel can add hundreds or even thousands of dollars to every trip. With that in mind, you’ll want to make sure you not only take steps to keep costs under control, but have clear visibility into T&E spend at any given time. You may set spending limits for some items, such as a per diem for meals or caps on airfare.

2. Policy enforcement 

Especially for large and fast-growing organizations, it can be difficult to ensure every business travel expense is in line with your corporate travel policy. Policy trainings, detailed expense reviews, pre-approvals, and even software can help you boost compliance.

3. Inefficient expense reports and approval processes

Expense reporting, approval, and reimbursement can involve complicated handoffs between employees and managers, HR departments, and finance teams. If approvals move through the process manually via email or messaging, T&E could be draining valuable hours from your staff’s workday. You may be able to save employees time, too, by issuing corporate credit cards that streamline the expense reporting process.

4. Managing fraud risks 

Expense fraud—duplicated or fake receipts, for example—can creep into your paper trail undetected without the correct tools and processes in place to detect it.

Best practices for T&E management

To avoid some of the pitfalls common to T&E in business, and to streamline the process of reimbursements, there are a number of best practices you’ll want to consider following. 

Develop a comprehensive T&E policy

Corporate travel programs aim to organize T&E policies and reimbursement in a cost-effective, compliant, and scalable way. They provide guidance for every aspect of travel—from how to book trips to which employee expenses are reimbursable—usually with the goal of keeping a lid on costs and ensuring that everyone is getting the best travel deals as they book. These policies also outline the process for expense approval and reimbursement.

Automate what you can with expense management systems

If your T&E approval and reimbursement flow is manual, you could be wasting untold hours of employees’ time, not to mention introducing the risk of errors related to noncompliance and underpaying employees. Expense management software that integrates with payroll can speed up the process with automation while helping to prevent costly and time-consuming mistakes.

Gain real-time visibility into T&E spend

To manage costs and avoid budget-busting surprises, CFOs and finance managers should be able to track expenses in real time. Ideally they can drill down into cost centers to see where expenses are stemming from and alert managers if they’re trending high. Modern travel expense management software can provide this functionality, and some platforms integrate across the entire expense lifecycle—for example with a mobile app that employees can use to upload receipts at the point of sale, and workflows to move expenses through the approval process.

Audit and optimize travel expense management

IRS rules around travel expense deductions change, as do best practices for T&E and the technology available to improve your corporate travel program. Make sure that you regularly audit your T&E policy and processes to ensure you’re up-to-date with the latest regulations and industry standards for efficiency.

Boost T&E compliance with automated workflows and red-flag detection

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Emerging trends in T&E for 2024 and 2025

T&E is evolving as business norms evolve. Here’s a look at three trends reshaping T&E this year that you may want to incorporate into your expense management process.

Sustainability

Increasingly, businesses are seeking to reduce their carbon footprint, and employee travel is a prime target to achieve these ends. You can encourage or incentivize employees to book lower-carbon flights, take the train, or book an electric car rental. Some corporate booking software can even account for low-carbon travel preferences and incorporate that logic into the search and booking process.

AI

T&E software is getting smarter. In addition to automatically routing expenses for approval and reimbursement, some platforms can use AI to detect fraud or flag expenses that may be noncompliant. The result can be higher rates of compliance with your corporate travel policy and less time spent on reviews.

Hybrid and remote work

Since the surge of hybrid and remote work during the pandemic, it has become more common for employers to have staff distributed around the country or even the world. Companies that value in-person time may have a large share of their workforce traveling at certain times throughout the year for summits, meetings, trainings, and similar corporate events. That means T&E costs need to be factored into annual planning, and guidelines need to be accessible to a wider base of employees who may not be regular business travelers.

Streamline T&E approvals and reimbursements

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