Staff travel. How to automate travel arrangements

A business trip is the travel of an employee to another locality / another country for a specified period of time to perform official tasks outside his/her place of permanent employment.

The business trip must meet the following criteria:

• Business travel arrangements must be made only by order of the head of the department or company (an employee cannot make a decision about his or her business trip by his or her own discretion);
• It must have a clearly formulated purpose, which must be directly related to the economic activities of the company and the direct functional responsibilities of the seconded employee (production engineer cannot go to conclude a contract with a potential buyer, but the production technologist can be involved in this process, if it is about selling the technological process or mode of production);
• The employee is sent on a business trip for a certain period of time (there are no indefinite business trips);
• The business trip must be documented.

The following travels shall not be considered business trips:

• travel of employees within the same locality (sales manager assigned to the city of Kyiv goes to meetings with clients);
• an employee constantly performs duties outside the settlement (office / warehouse / production facility is located outside the city, employees reach them by shuttle service or by their own forces);
• employees whose work is of itinerant nature (drivers, sales representatives, supervisors, etc.);
• trips to education (seminars, trainings), which are of an advanced training nature, rather than receiving information and consulting services, presentations/sales of a product (service, goods);
• a trip that is not related to the company’s business activities (for example, team building);
• a trip that does not correspond to the direct functional duties of an employee (we gave an example of a technologist and an engineer earlier)
• undocumented travel (if the employee was on a business trip but did not provide documents confirming the trip).

Every company must have a Regulations on Business Trips - this is an internal document that describes all the rules, regulations, nuances of registration of business trips and reporting on its results. 

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What may be attributed to the costs of an employee's business trip?

When sending an employee on a business trip, the company must provide him/her (the employee) with accountable money, namely an advance payment for the business trip.

If an employee does not have enough of the advance payment given to him/her by the company while on a business trip, he/she has the right to use his/her own personal money. And upon return from the business trip - a person may claim reimbursement of expenses. 

Note: This will require documents that will confirm the excess amount of the advance payment.

For what expenses may be given accounted money?

• Daily allowances - travel expenses not documented, namely: meals, other personal needs (when traveling within Ukraine - 650.00 UAH / day, when traveling abroad - 80 euros (dollars) / day);
• Costs for travel to a business trip and to the city in which the employee is on a business trip;
• Expenses for luggage transportation up to 30 kg including;
• Costs of accommodation;
• Costs for rent of a room at the rate of a single room in a hotel (for each day);
• Hotel booking in the amount of no more than 50% of the cost of a place per day;
• Registration of foreign passports, permits for entry / exit;
• Expenses for commissions (in case of currency exchange) in case of business trip abroad;
• Mandatory insurance policies and other documented expenses related to the rules of the country of stay of the seconded person.  

It is forbidden to spend accounted money on:

• The minibar;
• Liquor and tobacco products;
• Entertainment;
• Customs fees related to own purchases;
• Newspapers, magazines, books for own use (not related to the purpose of the trip);
• Clothing costs;
• Hairdressing services;
• Tip money;
• Cab expenses (if this has not been agreed with the management);
• Travel expenses on days that do not coincide with the start and end dates of the business trip.

All expenses must be supported by original documents.

Inappropriate costs incurred on a business trip are not recognized as expenses, but are equated with the concept - additional benefit - essentially any kind of income that the company pays to an employee, if the payments are not wages, and are not related to the performance of the duties of the employee.

The formula for calculating the taxation of additional benefits:

The amount of taxes on the additional benefit = amount of additional benefit * 18% personal income tax + amount of additional benefit * 1.5% Military Fee.

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Documenting an employee's business trip

A business trip is a process that requires a large amount of paperwork, both before a business trip and upon return from it.

At the moment when there is a need to send an employee on a business trip, it is necessary to prepare the following documents:

1. Service memo.
2. An order about the business trip. 
3. Primary documents - all documents which confirm the intention of a business trip, the fact of connection of the business trip with economic activities of the company. 
4. Report on the performance of tasks on the business trip.

Upon return from a business trip, the employee must provide the following documents:

1. Report on the completion of tasks on a business trip.
2. Advance report.
3. Passport with border crossing marks (if case of a foreign business trip).

What to do if there are no original documents confirming expenses, or documents filled out with errors?

Example 1. If an employee has lost receipts or other supporting documents.

The accountable person must request a duplicate document and provide it.

Example 2. If documents are lost and cannot be recovered. 

The amount of expenses is not compensated to the employee. 

However, if the employee spent the advance of the accountable money, and did not confirm it with documents, he/she is obliged to return the amount of money (not documented) to the company.

Example 3. If the documents are lost, the head of the company decides to “forgive” the employee their loss, and approves reimbursement of expenses or offsetting the accountable advance to expenses. 

In this case, it is necessary to equate the amount of money spent to the concept of additional benefit, and accrue taxes, namely 18% personal income tax and 1.5% military tax.

Example 4. An employee returned from a business trip abroad and at the customs point did not mark the border crossing. 

The director of the company shall make an inquiry to the State Border Service of Ukraine asking to confirm that the employee had crossed the border in certain terms. Without confirmation of the State Border Service, the amount of advance payment (including daily subsistence allowance) must be returned to the company or equated with additional benefit with further payment of personal income tax and military tax.

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How to automate the process of registration of business trips and documentary evidence of expenses?

The business trip paperwork is a very sensitive, time-consuming and labor-intensive process. In addition to drawing up a list of documents, all documentation must be agreed upon (in the manner approved by the company) and signed. Often the life cycle of registration of business trips is a long procedure, and brings little joy in the lives of employees (both accounting, human resources and business traveler).

We live in a time of active development of IT-technology. IT-technology allows us to automate a lot of routine tasks, and free up our time for the intellectual development of the individual.

What is the procedure of an employee’s business trip automation? Depending on the specifics of work and internal regulations, the process may be different. We would like to give an example of a procedure from a pharmaceutical company.

Step 1. The employee who is sent on a business trip (the initiator) creates a Business Trip Request (hereinafter, the request) no later than 4 business days prior to the business trip. This document is automatically filled in with the following information: 

• information about the employee; 
• his/her time card number; 
• the subdivision in which he/she works.

The employee has to fill in the following fields on their own:

• travel period;
• the place/city where the employee is going;
• the purpose of the business trip and the tasks;
• the cost items and estimated amounts that the employee plans to use on the business trip (daily subsistence allowance, accommodation, travel, etc.).

Sep 2. After completing the request for a business trip, the employee sends it to the manager for approval. After the request is approved by the manager, a package of documents (a service memo, a business trip order) is automatically generated for further signature by the initiator and the manager. If the company uses an electronic document flow, it takes no more than 2 minutes to sign the documents.

Step 3. After approval and signing of the Business Trip Request, information about the business trip is automatically transferred to:

• to the document management department - in the form of a Travel Order;
• to the personnel department - in the timesheet;
• to the accounting department (treasury department) - information on the amount of money to be given out on report;
• to the payroll department - to calculate average daily earnings;
• to the management accounting department - to the travel plan;
• to the travel agency - if the purchase of tickets and accommodation is paid for by bank transfer.

Step 4. Upon return from a business trip, the employee generates a Business Trip Report and an Advance Report on the basis of the previously generated application. Using electronic document management, a person signs these documents and sends the original receipts to the accounting department for verification and approval.

Automation allows you to: 

• simplify the process of business trip documentation; 
• reduce costs to pay for routine, repetitive operations of employees of accounting and human resources departments; 
• relieve the manager (an employee going on a business trip) from unnecessary work not related to his/her direct functions; 
• ensure transparent control of travel expenses; 
• establish a unified policy for documenting business trips.

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