Employers offer their employees a travel allowance for accommodation, transport, and food during a business trip. But there’s more than one way for a company to cover these expenses.

In this article, you’ll discover your options for supporting the expenses your employees incur during business travel.

What are business travel allowances?

When your employees travel for business reasons, the company should provide a travel allowance to cover the costs of their travel expenses, including transport, accommodation, and food.

Each company’s approach to covering an employee’s travel expenses will vary, but these are the most common approaches:

Provide a company card to charge everything straight to the company.
Issue a daily business travel allowance (per diem) to cover costs.
Agree to reimburse all incurred expenses following the trip.

The average company spends around 10% of their annual revenue on travel — so it’s essential to take the right approach when it comes to travel allowances. But that’s not simple when costs fluctuate, and there’s uncertainty around the global economy.

Business traveller using a travel allowance to make a payment during a work trip.

Business travel compensation

Business travel compensation is an alternative name for business travel allowances. Depending on your company’s travel policy, it can be used to cover:

Air travel.
Accommodation.
Meals.
Transport.

Two commonly used approaches for covering business trip allowances include: handing employees a flat travel allowance (per diem) or covering all incurred employee travel expenses.

Let’s look at each of these in more detail and reveal a third option for ground travel. 👇

Flat travel allowance: pros and cons

Companies that pay a flat travel allowance give employees a fixed amount of money to spend as needed. If an employee spends more than this, they’ll be expected to cover the costs themselves.

Pros of flat business travel allowances

Giving business travellers a fixed basic travel allowance is a straightforward approach that comes with several advantages:

Maintain a consistent spend for every trip.
Removes the need for employees to claim expenses.
Employees have a clear understanding of how much they can spend.

Cons of using flat business travel allowances

The downsides of a fixed travel allowance far outweigh the advantages:

Regular updates are essential to remain in line with inflation and other rising costs.
Employees may have to cover some work-related expenses out of their own pocket.
Employers may hand out more than is necessary.
Some travellers may have enough money while others have too little.
Some employees may opt for the cheapest possible option in order to save money — and could use unsafe travel or accommodation.
Depending on the destination, purpose of the trip, and role of the individual, the amount needed may differ.

An employee outside during an international work trip.

Expense reimbursement: pros and cons

In this case, employers cover all incurred costs during business trips.

Frequent business travellers may have a company card to use during their trip. But, most employees are expected to use their own money and submit expense reports.

As submitting expense reports uses up valuable working time, it’s worth exploring quicker ways to make a claim. Fortunately, several expense management tools can speed up claiming expenses.

Pros of reimbursing travel expenses

Expecting your employees to use their own money and claim back the expenses incurred is time-consuming and potentially puts financial pressure on your employees. But there are some possible upsides with this travel allowance approach:

Businesses only pay for actual expenses.
Give employers more visibility of employee expenses.
Gives flexibility to each traveller no matter the destination, length, or purpose of the business trips.

Cons of reimbursing actual expenses incurred

While there are benefits to reimbursing all employee expenses, there are potentially more drawbacks for employees and employers:

Employees need to submit expense reports.
Employees are out of pocket until they’re reimbursed.
Some incidental expenses may not be strictly related to business purposes.
Adds to the workload for Accounting teams as they need to process expense claims.
Employers must set up clear travel policies so employees know which expenses they can claim.

A business traveller using Bolt to cover their local transport costs.

The importance of a transport allowance

A transport allowance is one of the most essential allowances during a work-related trip — after all, you will be on the move.

As with allowances that cover other expenses, you may be given a company card or a daily allowance (per diem). But these are now both outdated ways of paying for business travel. And this is where Bolt Business will support your corporate travel needs.

With Bolt Business, employers can give employees a company payment method to use when travelling for work with the Bolt app.

When a company creates a Bolt Business account, the employees can set the company as a payment method for work rides in their Bolt app. This allows them to charge rides straight to the company without manually reporting expenses.

With Bolt Business, your employees can charge work rides to your company from the Bolt app. They'll see their remaining travel allowance and can't exceed the set limit.

Business travel meal allowance

To cover the costs of meals during a trip, employers may provide a business travel meal allowance. It can work in one of three ways:

Provide a company card.
Give each employee a daily allowance to cover meals.
Tell employees to pay using their own month and claim back the expenses later.

The downside to the third option is that it leaves your employees out of pocket until they’ve submitted an expense report, waited for approval, and received reimbursement — which can take several days.

Another option is to use Bolt Food for Business.

When your company creates a Bolt Business account, you can give certain employees permission to order food and groceries in the Bolt Food app using a company payment method.

A Bolt courier delivering groceries ordered with a meal allowance in the Bolt Food app.

Finding the right approach for travel allowances

Travel allowances are an essential part of any business trip. And the approach you take towards allowances for employees could influence the success of those trips.

Flat travel allowances (per diem) and expense reimbursement (actual incurred costs) both have their pros and cons., so it is important to consider the specifics of each trip before deciding.

Additionally, a transport allowance is crucial for any business trip, and Bolt Business is a great solution to address this need. Remember, getting travel allowances right is essential for both employers and employees, and it can make all the difference in the success of a business trip.

Get a transport allowance with Bolt Business

The Bolt app gives you a convenient way to travel in 45+ countries and 500+ cities — and you can use it as a business travel app, too.

With a Bolt Business account, you can give your employees a travel allowance in the Bolt app. These spending limits can be daily, weekly, monthly, quarterly, annually, or for one time only — and travellers can’t exceed the spending limit.

Implementing travel allowances in this way means that you’ll only ever cover each traveller’s actual transport expenses. And by getting dropped off at your destination, there are no unexpected parking fees.

Set your employees up for a successful business trip by giving them a business travel allowance with Bolt Business.

A business traveller travelling in a work taxi paid for using a travel allowance.

Travel allowance FAQs

Get answers to some frequently asked questions about travel allowances.

What is a personal travel allowance?

Employers give a personal travel allowance to employees when they’re travelling for work. The company should support employees with the costs of transport, accommodation, and meals during the trip.

How do I ask for a travel allowance?

Start by reading your company’s travel policy; they may already offer a travel allowance. If not, provide a detailed breakdown of the expected costs during your trip and explain why the trip benefits the company.

Following your trip, follow up with your employer and provide proof of all purchases for which you wish to claim expenses.

How do you use a travel allowance?

Some companies will provide you with a company card, allowing you to charge expenses straight to your employer. Other companies will expect you to submit expense reports to claim your outgoings. Remember to hold onto your proof of purchase if this is the case.

Affordable work rides, without the paperwork