Travel and entertainment policy compliance, also known as T&E policy compliance, is a significant challenge for asset managers. But effective T&E policy compliance is critical, as it protects the fund from both financial risks and legal implications and also fosters accountability and transparency.
In this blog, we will discuss four ways funds can improve compliance with travel and entertainment policy.
- Create and communicate a clear travel and entertainment policy
A detailed, well-structured T&E policy is the foundation of successful compliance. This travel and entertainment policy should set clear guidelines and provide practical advice on approval procedures, travel booking, expense submission, desired booking channels, points of contact, and acceptable expenditures. Additionally, funds should clearly state any expenses that are not allowed under any circumstances.
Setting clear expectations and explaining the essential concepts of your T&E policy minimizes the risk of confusion and ambiguity, reducing the risk of non-compliance. Of course, developing a well-structured policy is only half the battle. To be effective, the T&E policy must be communicated clearly and consistently to all employees. In other words, sending out an email isn’t enough. Regular training sessions, support materials, and workshops all help clarify and reinforce the nuances of the T&E policy. If the workforce is fully informed and understands the importance of compliance, rates of adherence to T&E policy will likely increase.
Asking for feedback is also important and builds engagement on T&E policy. Allocate dedicated time for employees to thoroughly review the travel and entertainment policy. Then encourage them to provide constructive feedback about what they understand and what might require further clarification. Additionally, welcome any questions or concerns about the T&E policy and provide answers in a timely fashion. This proactive approach helps avoid complications that may arise from misunderstandings about T&E policy and contributes to the overall operational harmony of the fund.
- Collect and analyze travel and entertainment data regularly
T&E expense data represents a complete picture of the spending habits of your team. It should be mandatory for employees to provide detailed receipts and supporting documentation for all expenses incurred. This practice not only ensures compliance with tax regulations but also makes it easier to verify which costs have the highest rates of non-compliance. Periodic audits of T&E expense data will also help identify issues early, establishing a reporting mechanism for employees to raise concerns about non-compliant activities confidentially and helping to create a culture of accountability.
- Ensure timely reimbursement
Reimbursing employees for T&E expenses in a timely fashion helps build trust and establish a positive work environment. Prompt reimbursement for relevant expenses as outlined in the company’s travel and entertainment policy demonstrates a high level of consideration for each employee’s financial well-being and reassures employees that compliance is a win-win. After all, travel and entertainment policy compliance is a two-way street where management and employees both play essential roles.
- Reward compliance with T&E policy
Rewarding and recognizing employees who consistently adhere to T&E policy reinforces the importance of compliance throughout the organization. Sharing compliance success stories encourages all employees to prioritize compliant and ethical behavior. By the same token, a lack of communication about T&E policy compliance may unintentionally communicate that adherence to T&E policy is not a high priority for the fund.
Also, it is important to not ignore employees repeatedly fail to comply with travel and entertainment policy. Funds may choose to issue verbal or written warnings after a certain number of infractions, for example. In any case, funds should have a formal procedure for the employee in question to explain the reason for non-compliance to clear up any confusion and ensure the error is not repeated.
Optimize T&E policy with the IVP Expense Allocation Solution
Staying ahead of the curve is essential at a time when every aspect of fund operations is moving toward automation and optimization, and T&E policy compliance is no exception. With the IVP Expense Allocation Solution, funds can revolutionize management of T&E policy, simplifying the process, minimizing the risk of errors, and ensuring compliance — all while saving valuable time and resources. Some of the solution’s most important capabilities with respect to travel and entertainment policy include:
- Detailed analytics: The IVP Expense Allocation Solution delivers detailed analytics and reports for expense management, providing a systematic and efficient way to categorize, allocate, and analyze expenses. The user-friendly interface makes it easy to view, allocate, and review expenses imported from the T&E module, ensuring a consistent audit trail that reinforces transparency and accountability.
- Departmental allocation: The solution enables expense allocation to individual departments, enabling granular insight into departments exhibiting elevated spending rates. This data-driven approach to T&E policy allows more informed decisions about resource allocation and budget optimization.
- Robust exception management: Efficient expense allocation requires robust exception management. In case of deviations from predefined rules that cause exceptions, the IVP Expense Allocation Solution automates rerun and retry mechanisms. These automated procedures help prevent unresolved exceptions, ensuring timely resolution as well as seamless processing and precise expense allocation.
- Automated data collection: The IVP Expense Allocation Solution automates the collection of expense data from invoices, which are sourced directly from accounts payable systems like Concur, Workday, and others. The IVP solution applies predefined categorization criteria and performs policy checks during ingestion that compare each expense to the company’s established travel and entertainment policy. As a result, anomalies like overspending, unapproved vendors, and ineligible employee submissions are detected and flagged as potential violations. These alerts highlight potential non-compliance and prompt appropriate action.
Expense Allocation Solution
This expense allocation solution helps asset managers improve accuracy and efficiency, reduce the risk of errors, and guarantee compliance. It ensures that in-house teams can process most allocations swiftly, allowing them to focus more on exception handling. Accounts payable and expense allocations are also tracked by the platform through customizable reports. Additionally, it offers easy-to-set-up invoice approvals and maintains a detailed audit trail for approvals, rejections, and changes.
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