How to Keep Employees From Thinking the Sky's the Limit on Travel Expenses

NEW YORK ( TheStreet) -- From hotel rooms and dinners out to bar tabs and room service, it's easy for a two-day business trip to turn into a $1,000 proposition. For many small businesses, entertaining new clients and visiting vendors is a part of life -- but so is managing costs. If you're interested in ensuring that your employees do "more with less" while on the road, you're not alone. Our experts weigh in on the best ways to prevent expensive expenses.

Before you can complain about a hefty expense report, you have to make sure employees understand what they're allowed to buy, how they are expected to travel and the type of places they are encouraged to stay and dine, says Elaine Varelas, managing partner at outplacement and career services firm Keystone Associates.

"For some companies, $10 is an enormous expenditure, and for others, you've got to hit the $1,000 mark before it even gets on their radar," Varelas says. "Managers have to be clear when conveying expectations."

Anytime a manager sends someone out on the road for the first time, they need to give that employee an overview of what is expected and how much they should look to spend, Varelas says. Employees don't need to leave the office until they have a dollar figure in mind, as well as suggestions on restaurants and hotels that are within the company budget.

Smart employees traveling for the first time will ask for recommendations, Varelas says, which can open up a broader dialogue.

"It's ideal if they ask, 'Which restaurant would you recommend I take our client to?'" and you can either say, 'Don't go overboard' or 'Don't be afraid to go up a grade with this client,'" she says.

While some companies offer strict per diem allowances for lodging and food, Varelas says she's "not thrilled" with that idea, simply because costs vary so widely from city to city.

"Markets can be so significantly different for food and hotels that most managers may want to offer a cost range. In Buffalo, dinner might cost $35, but in Boston, it's probably going to be $60. The important thing is that you have those conversations in advance so no one is surprised," she says.

Also, managers may want to caution that "I expensed this because I saw someone else do it" is not an acceptable defense when it's time for receipts to be turned in. Some employees may be treating top clients to dinner and drinks, while others will be meeting with lower-level customers for whom lunch or coffee is more than enough.

"If an employee hears, 'Oh, she got to expense a $200 dinner,' they may think it's OK for them. They need to be told that it's not about where you get to eat -- it's about the client," Varelas says.

Unfortunately, some employees who work with high-end clients may start to think they deserve all the perks their customers are getting, says Susan Blond, president of Susan Blond Inc., a publicity firm with well-known clients in the music industry.

"Usher needs a very special jet. We just need a regular one," Blond says. "There is a level of luxury that our clients are used to, and occasionally our account people get a bit caught up in that when they travel."

With that said, Blond says there are some travel-related expenses that are a necessity.

"Our industry is an image-based one, and I don't think it serves us or our clients to have our staff removing their underwear and shoes from their luggage because we wouldn't pay overweight baggage fees," she says.

In terms of destination-related expenses, Varelas says that overall there needs to be a lot of flexibility when it comes to employees who have to be on the road frequently and may need the occasional dry cleaning, room service or technology expense.

"Everyone is allowed to forget something once and replace it, as long as it's not your Louis Vuitton purse," she says, adding that a one-time expenditure for an employee who forgets his or her phone charger, for example, is acceptable.

"But after the first time, the employee should be advised that almost every hotel has a lost and found box with phone chargers in it. They need to be advised to look for a spare, or buy a new one for themselves," she says. "This isn't about outfitting your family with chargers and leaving one in every room of your house."

When it comes to parking, Varelas says that parking in big cities can be a "huge issue," and that employees should be required to provide a reason for parking on a certain day at a certain time.

"Outline when it's appropriate and when it's not. It can become an issue to look through every parking expense and say, 'What was the purpose? Were you going to a meeting, or going to the mall for a personal convenience?'" she says.

Overall, managers must walk a fine line when approving expenses, Varelas says. While you don't want to be too strict with too many "hard and fast rules," you also don't need to push through expense reports without really looking at them.

No matter your company policy, managers should foster an ongoing dialogue about expenses as the company grows and the employee's role evolves, says Dana Manciagli, career expert and author of Cut the Crap, Get a Job.

"Managers should meet with every employee prior to a trip and clear up any questions on expense report guidelines," Manciagli says. "While on the road, employees should be encouraged to email or call with any questions they encounter."

Also, before an expense report gets filed, managers should make it clear that any infraction on an expense report can be grounds for termination, Manciagli says.

"Employees should know not to pad their expenses in any way or pick up another employees' expenses or guests if they are traveling together," she says. "Make them get in the habit of writing down every penny spent."

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