Everything you need to know about T&E
Every dollar counts in business – but one of the biggest leaks in your budget often hides in plain sight: travel and entertainment expenses (T&E).
These costs include everything employees spend while traveling or entertaining clients, from flights and hotels to dinners and ground transportation. Without the right systems in place, that T&E spend can spiral quickly.
Expensify simplifies every part of the T&E process – from booking travel to snapping receipts to getting reimbursed in realtime. This guide covers the basics and best practices so your team can spend smarter.
Key takeaways
- T&E spend spirals without realtime tracking: creating cash flow issues and budget surprises for businesses.
- Manual expense reports take 20+ minutes each; and with error rates around 20%, the time lost adds up fast without automated solutions like Expensify.
- Expensify's integrated platform handles everything: from travel booking to receipt scanning to reimbursement in one place.
- Poor T&E visibility leads to: policy violations, fraud risks, and frustrated employees waiting for reimbursements.
- Start with automated receipt scanning and Smart Limits: to prevent overspending before it happens.
What is T&E’s meaning in business?
T&E stands for “travel and expense” or “travel and entertainment” – the business category that covers every dollar your team spends on the road.
For anyone wondering about T&E’s meaning, it encompasses all work-related travel costs and client entertainment expenses. These T&E expenses vary by industry and company, but common examples include:
Airfare
Hotel accommodations
Car rentals
Meals while traveling
Tips, tolls, and parking
Expenses associated with entertaining clients
Together, these costs form a big part of many operational budgets – especially for businesses with client-facing roles or distributed teams.
Why T&E matters more than ever in 2025
As business travel bounces back and remote work becomes the norm, T&E expense management is harder to track and control.
According to Deloitte's 2024 Travel Survey, 55% of companies report increased complexity in enforcing compliance when it comes to T&E expense policies.
Without a solid process and toolset, companies risk:
Overspending due to lack of realtime visibility
Frustrated employees waiting on reimbursements
Expense fraud slipping through the cracks
Month-end close delays due to messy or missing reports
The most effective solutions connect travel booking directly to expense tracking, so transactions appear automatically with policy checks built in. This end-to-end approach eliminates the gaps where overspending and compliance issues typically occur.
Common T&E expense categories
Here are just a few of the most common business expenses that fall under T&E:
Flights, trains, car rentals, and mileage
Hotels and lodging
Meals and per diems
Client gifts or entertainment
Ground transportation (taxis, rideshare, parking)
Learn more about properly organizing your business expense categories for better tracking and reporting.
Developing an effective T&E policy
A clear T&E policy sets the foundation for a compliant and cost-effective program. It helps employees understand what they can spend, how to report it, and when they'll be reimbursed.
A strong policy should cover:
What expenses are reimbursable (and what aren't)
Spending limits for each category (meals, lodging, etc.)
Preferred vendors or booking guidelines
Use of company vs. personal cards
Receipt requirements and documentation standards
Be sure to include booking guidelines or preferred vendors in your company's travel expense policy to streamline the approval process.
Best practices for T&E expense management
The right tools and workflows can make T&E expense management less of a chore and more of a strategic advantage. These best practices will help you simplify approvals, reduce policy violations, and make expense tracking painless for everyone – from your team in the field to the finance folks at HQ.
Create a clear policy
This is your first line of defense. It keeps spending predictable and employees informed.
Educate employees
Make sure travelers and managers understand what's allowed, how to track receipts, and how to submit expenses.
Use technology
Ditch manual entry and spreadsheets. Modern platforms automate categorization with intelligent receipt scanning that captures merchant details, amounts, currencies, and dates with near-perfect accuracy. The best solutions also flag out-of-policy spend and notify approvers instantly.
Set smart limits
Establish per diem or category caps that auto-enforce themselves without micromanaging. Advanced systems can set different limits for different employee levels and automatically adjust based on trip duration or destination.
Audit and review regularly
Spot check reports to ensure compliance and catch fraud early.
Leverage data and insights
When you use automated reporting tools, you can spot trends, identify savings, and make more informed budgeting decisions.
Building your T&E budget with confidence
A solid T&E budget keeps spending predictable and aligned with business goals. Instead of reacting to overages or surprise costs, you can plan ahead, allocate resources wisely, and adjust based on what the data shows.
Here's how to build a budget that actually works and stays on track.
Analyze past spending
Review historical expense data to see where money goes and which categories drive the most cost.
Establish spending guidelines
Set guardrails for each category based on your analysis, then bake them into your expense policy.
Estimate future T&E spend
Account for seasonality, travel frequency, and projected growth. Use forecasting tools or dashboards to stay agile.
Allocate and monitor
Assign budgets to departments or teams. Monitor T&E spend in realtime to avoid surprises.
Adjust as you go
Budgets aren't static. Adjust based on actual usage, changing business needs, or economic shifts.
Common T&E challenges (and how to fix them)
Even with a policy in place and a budget set, managing T&E can still feel messy. From late reports to overspending, common pitfalls can drain time and money if left unaddressed.
Here are the most frequent challenges companies face – and how to fix them before they derail your process.
Problem: Policy confusion
Solution: Create a simple, searchable policy. The best travel booking tools prompt employees with policy reminders while they book, preventing violations before they happen rather than catching them after the fact.
Problem: Budgeting blind spots
Solution: Use realtime data to see where every dollar goes before the month ends.
Problem: Manual processing
Solution: Automate expense reports, approvals, and reimbursements. Look for platforms that can submit reports automatically when spending patterns indicate a trip is complete, and that flag errors or missing receipts instantly.
Problem: Compliance issues and fraud
Solution: Set rules, auto-flag issues, and review reports regularly.
Problem: Mobile workforce struggles
Solution: Give your team mobile-first tools that work offline and sync when connectivity returns. The best mobile apps let employees submit expenses, check policy limits, and even book last-minute travel changes from anywhere.
T&E tax implications
T&E expenses don't just affect your budget; they have tax consequences, too. Knowing what's deductible, how to document reimbursements, and what the IRS expects can save your business from compliance headaches down the line.
Here's what to keep in mind.
Deductible vs. non-deductible expenses
Meals are generally 50% deductible in the U.S.
Entertainment is largely non-deductible post-2017 tax reform
Travel must be directly business-related to qualify
Employee reimbursements and tax reporting
Accountable plans: Reimburse under an accountable plan to avoid tax impact to employees. This requires business connection, adequate accounting, and return of excess amounts.
Nonaccountable plans: Any reimbursements become taxable income to the employee
Record-keeping requirements: Track who, what, when, where, and why for every expense to maintain audit readiness
Impact on employee's taxable income: Proper documentation ensures reimbursements don't become additional compensation
Use tools like Expensify to maintain clean, audit-ready records that meet IRS requirements automatically.
Future trends in T&E management
The way companies manage T&E is changing fast, driven by tech innovation, shifting workforce expectations, and a growing emphasis on sustainability.
Staying ahead of these trends helps you future-proof your process and deliver a better experience for employees and finance teams alike.
AI and automation
Expensify is reshaping expense management with its AI-powered framework built on three core pillars: Deep AI, Surface AI, and Elevated AI.
Deep AI leverages 15+ years of proprietary expense data to automate low-level tasks like receipt scanning with near-perfect accuracy.
Surface AI takes it further by using contextual data to ask smart questions and clarify ambiguous expenses in realtime.
Elevated AI delivers superhuman insights because it proactively identifies anomalies, suggests actions, and acts like a virtual CFO at scale. This isn't just automation; it's anticipatory intelligence embedded in your workflow.
Smarter fraud detection and duplicate identification
Personalized alerts and suggestions
Integrated booking
The most streamlined approach combines travel booking with expense management in one platform.
When employees book through an integrated system, transactions appear automatically with receipt data, policy compliance checks happen in realtime, and expense reports practically build themselves.
This eliminates the usual gap between booking travel and tracking the associated costs.
Employee-first experience
Faster reimbursements = happier teams
Better UX drives higher compliance
Sustainable travel
Track carbon impact and prioritize eco-friendly travel options
Cloud and mobile-first tools
Submit expenses on the go, access reports anytime
The bottom line? T&E management is shifting from reactive admin work to proactive business intelligence. Companies that embrace these trends now will have smoother operations, happier employees, and better financial control as the business landscape continues to evolve.
FAQs about T&E expenses
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T&E stands for “travel and expense” or “travel and entertainment.” It covers employee costs for travel and client-facing activities.
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The T&E process typically includes: spending, documenting, submitting, reviewing, and reimbursing. Automation tools can simplify each step.
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T&E expense reporting refers to the process of tracking and submitting travel-related business expenses for approval and reimbursement.
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A T&E transaction is any cost related to employee travel or entertainment like airfare, hotel stays, meals, or event tickets.
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Employees, managers, accounting teams, and auditors all play a role in approving, reimbursing, and reporting T&E expenses.
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T&E operating costs refer to the expenses associated with running and managing your travel and expense program itself. These include both hard costs (software subscriptions, processing fees, staff time) and soft costs (employee productivity lost to manual processes, delayed reimbursements affecting morale, compliance risks from poor oversight).
Many companies underestimate these hidden costs – like the administrative burden of chasing receipts or the opportunity cost of finance teams spending hours on manual expense reviews instead of strategic work.
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Yes, but you must follow IRS rules. Maintain detailed records and submit expenses within a reasonable time frame.
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Few are. Generally, only entertainment that includes the cost of food/beverage with a clear business purpose might qualify. Check current IRS guidelines.
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Use mobile-first tools like Expensify. Realtime notifications, receipt scanning, and unlimited virtual cards streamline everything, no matter where your team works.
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T&E cards are typically limited to travel and expense. The Expensify VisaⓇ Commercial Card works like a smart business card with realtime spend tracking, policy enforcement, and up to 2% cash back on US purchases.*
*1% back on all US purchases, or 2% if you spend $250K+ per month across all cards.
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