All operational costs incurred while traveling for professional purposes are travel expenses.
A business travel trip often comprises a number of paid-for elements such as flights, trains, taxis, hotels, WiFi, meals, and so on: these are collectively referred to as travel expenses and will often be categorized as such in a company’s accounting system and financial reporting.
For organizations, travel expenses can account for a substantial proportion of controllable costs – often, they are the second-largest area of such outlay after salaries and benefits. Traditionally travel expenses have been seen as difficult to control as the purchasing is undertaken by the traveler, not the organization’s purchasing department. By aggregating their organization’s demand, travel managers can negotiate discounted rates with preferred suppliers. These will form the basis of a travel policy. Travel expenses incurred by travelers that do not use approved suppliers (sometimes known as “leakage”) can lead to short- and long- term lost revenues for a company because such expenses do not take advantage of negotiated rates, so may be more expensive, and also because they cannot be aggregated to drive possible discounts in the future. Increasingly, the business travel management function is turning to business travel solutions (e.g. corporate travel software) and travel expense software help target non-compliant bookers and increase travel expense policy compliance.
For a business traveler, travel expenses usually refers to expenditure which they have themselves incurred and for which they are submitting a claim for re-imbursement, via their organization’s travel expense software or expense management process. Such re-imbursement is often subject to a judgment of compliance against their company’s travel expense policy.