Do You Need an Expense Policy?

If you're concerned about keeping your company’s business travel expenses and overall expenses down, then the first thing to do is make sure that everyone is on the same page. An expense policy provides clarity on what can be spent and when, to all employees in the business.

Why do you need an expense policy?

Most employees in a business want to do the right thing when it comes to making an expense claim, but sometimes they just don't know what the right thing is and what constitutes a genuine expense for business purposes. This is where an expense policy comes in useful. This policy enables your employees to make sensible decisions with what they can and can not reimburse on their claim form. A clear, unambiguous policy helps prevent frustration, mistakes, and even the risk of expenses fiddling or fraud. It also supports finance teams by simplifying expense reports.


Sample Employee Business Expense Policy

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So, where do you start?

If you don't already have an expense policy, it can be a bit overwhelming to start from scratch. Every employee expense policy needs the right amount of detail for transparency within the workplace. Fortunately, you can find good examples online to learn from - You can use our free expense policy builder - which not only describes the structure of a best-practice policy, it also explains what each section should cover and includes some words you could use as a starting point.

Looking for some tips?

Here are a few things to think about when you start writing (or revising) your policy.

  1.  Ditch the jargon

Write the policy to cover the basics but don't be afraid to revise it later. It probably won't be perfect on the first attempt, so remind people to use common sense as well. Also, be sure to edit it for clarity before it's published - double-check to make sure it's easy to read and not bogged down in jargon. Avoid creating a document made up of excessive pages, your employees won’t take the time to remember every single detail. Instead, your policy should be short and concise for all your workers to follow. The easier a policy is to understand, the easier it is for your employees to adhere to. Therefore, taking the pressure from expense management off of your finance team when reviewing the related expenses incurred on a business trip and factors such as foreign currency.

  1. Make it fair

No one should have to be out of pocket if they spend sensibly for business reasons. Create a business expense policy that is generally regarded as fair for all employees, from line managers to C Level and then make it easy to find and follow. A good policy is applicable to most employees in most circumstances. For example, you might want to create a section detailing issues relating to exceptional circumstances, that require prior approval. Try to avoid different rules for different sets of employees if you want it to be considered fair. Having a clear and structured business use expense policy in place for your employees will strengthen the relations between your employees, regardless of your company size or culture. Willing employees will be more likely to submit their reimbursable expenses on time, this in turn, reduces the amount of lost receipts that could have been used to reclaim VAT for tax purposes and the ability to streamline process from authorisation to reimbursement.  

  1. Invite participation

Get buy-in from your staff before you implement the policy by asking team members to participate in the process, for example. If they help develop the expense policy, they'll see why the expense process is necessary and will be more likely to adhere to the rules and encourage others to do the same. This creates an element of trust with your employees as they will have a greater understanding of their budget on business journeys, dependent on the nature of the business trip or business expense such as car rental, public transport, car parking, hotel rooms, meals, or air travel. By grouping or categorising your expense policy, this will help create a standardised set of rules across your organisation.

Find out more with our best practice expense policy whitepaper or click the policy template builder above.


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