Nonprofit and governmental agencies are challenged with maintaining and managing travel policies and procedures.  Establishing a well-defined travel policy, communicating this policy to employees, and consistently applying this policy across your organization will help to lessen the headaches associated with such transactions.  According to a report by the Association of Certified Fraud Examiners, 14 percent of all asset misappropriation schemes were through expense reimbursement.  That percentage is even higher for nonprofit organizations, jumping up to 25 percent.  Seeing these statistics should light your fire to design proper policies and procedures for travel expense reimbursement.

Many variables should be considered when preparing your travel policy.  A great resource is the IRS Publication 463 that is updated each year.  This is an excellent starting point for any travel policy as it includes many best practices and it accounts for tax repercussions of travel reimbursements.  A travel reimbursement policy should define who it applies to and when.  The policy could apply to employees, board members, volunteers, and contractors.  One of the most important items for a solid travel policy is the type of documents required and when the documents are to be turned in for reimbursement.  Obtaining proper adequate documentation can be challenging.  However, with a well-defined travel policy, such challenges will be avoided.  Essentially, you are looking for supporting documentation that will prove the travel reimbursement is a valid expense to your organization.  The policy should address all travel expense possibilities such as airline travel, hotel stays, lodging, transportation, meals and entertainment, and what defines a non-reimbursable expense.

One tricky aspect common among organizations is issuing travel advances.  If an employee plans to travel, instead of issuing them a company credit card or reimbursing the employee when they return, the organization may estimate the costs to complete the trip and issue them funds upfront.  Travel advances can be handled in different ways, but the most important point is to lay out the expectations in the travel reimbursement policy and to complete the tracking of advances once employees return.  You may want to only issue a portion of the advance prior to their trip, and then reimburse the employee for the remainder when they provide supporting documentation.  If a travel advance is issued for more than the trip costs, or if the employee fails to supply documentation, make sure the policy describes what action will be taken to recoup those funds from the employee.

Once the polished travel reimbursement policy addresses all possible aspects for your organization, the final step is to have it approved by management or the board of directors.  It should then be included in an employee handbook or other such documents, which should be offered to employees annually, or when significant changes are made, so everyone is on the same page.  To minimize confrontation sometimes associated with travel reimbursements, the people in charge of administering the reimbursement should apply it consistently across the organization and be able to refer directly to the organization’s travel expense reimbursement policy.

Having a clear and effective travel reimbursement policy in place keeps people accountable, ensures the organization’s compliance with all legal and regulatory requirements, and could potentially save your organization money.