An expense policy is like a living, breathing organism. It’s forever evolving to keep up with your business – and the world around us.
Failing to change your policy when new events happen can be disastrous. When you don’t account for changing circumstances, it results in unnecessary spend. An outdated policy also invites employees to simply write their own rules or ignore it.
Did you write your policy before the advent of Uber or Airbnb? You definitely will have written it B.C (Before Coronavirus).
With 60% of workers admitting they would like to work from home more often than they did previously, there will potentially be even more spend taking place even further from business HQ.
So, it’s probably time you review your existing policy to factor this in.
Though there is no one-size-fits all when it comes to expense policies, there are components that are important – no matter your company’s shape or size. So how do you create one that’s just right for your business?
Here are 10 tips and tricks from Pleo, picked up from the 9000+ customers across Europe that we’ve helped to manage expenses.
1. Rules Designed for Everyone
There’s likely to be fewer morale problems if your employees see your expense policy as a fair one. But a lack of transparency – no matter how small – creates confusion for your team. And this confusion makes bending the rules much more likely.
After all, if your teammate had that expensive flight allowed, why shouldn’t you?
You shouldn’t plan to treat different employees differently, so make sure your policy can be applied company-wide, no matter which function of the business you sit in.
2. Employee Buy-In
Your employees are more likely to stick to an expense policy if they had a hand in creating it.
When you include them, they will no longer view it as something imposed by some random executive in a lofty office, but rather as something they have ownership over.
Hold company-wide meetings to crowdsource ideas for the first draft: I’ll bet they come up with lots of great ideas you simply wouldn’t have considered! Then once you’ve written the final draft, allow them to see it one more time for any final suggestions.
3. Make it User-Centric
Do you know one of the main reasons why workers violate expense policy rules?
It’s not being able to understand them.
Don’t write your policy in arcane, hard-to-grasp language. It doesn’t matter how fair the policy is if nobody will read it. Getting rid of all jargon, corporate-speak and getting right to the point will help you do this (for example: “Evening meals must not exceed £X.”)
The more specific it is, the better.
4. ... But Don't Be Too Strict
Remember, your goal isn’t just to keep costs down; it’s also to ensure that your employees engage with their work in a productive way. Straight-jacketing them with too many rules interferes with their ability to do this and can overwhelm them.
A big no-no is forcing your employees to take inconveniently-timed flights. If you had to take the cheapest early morning flight, but it meant you didn’t get much sleep the night before a big meeting, would you be able to do your best work? Probably not. The same goes for each and every one of your staff.
Covering only the cheapest expense options may seem cost-effective but long-term, it can be detrimental if employee relationships suffer.
5. Make it Accessible
An expense policy won’t be effective if it isn’t accessible. Your employees need to be able to refer back to it in order to find their answers, so make sure it’s easily accessible no matter where they might be.
You could, for example, put the expense policy on the web in the form of a company “Wiki”, or create a visual one-pager that staff can have on their phones.
6. Education, Education, Education
Make policy education an integral part of every employee’s onboarding. During this process, test the employee’s understanding of policy specifics to ensure that they’ve understood the information in the correct way. Emphasize the purpose and benefits of your policy every chance you get.
Once a year, hand out the latest iteration of your policy to every single employee. This is so they know what the changes are (and there will be changes if you’re updating on a regular basis).
Then, have them sign off on it. This is not to hold a gun to their heads to bind them into a punishing company policy, but rather to make them feel ownership of a policy that’s there to help them do their best work.
7. Clear, Flexible Providers
Do you want to allow employees to sleep in a first-class hotel or fly business class? Should you limit your team to public transportation or is “Ubering” it okay?
Whatever decisions you make, you need to include them in your expense policy while keeping them flexible enough to accommodate local actualities. This way, your employees are empowered to make good decisions while on the road.
8. Establish Spending Categories
To craft the specifics of your expense policy, you’ll need to establish spending categories.
List every spending category you can think of (Travel, Food, Equipment etc.), then create monetary limits for each. To avoid confusion, set specific amounts for everyday expenditures.
If your expenses are likely to be atypical and tough to categorise, you could decide to set aside a certain monetary amount per day for expense allowances instead.
Either way, it’s crystal clear in the employee’s mind exactly how much money they have to play around with.
9. Documentation Requirements
If you’re not using an automated expense solution, be clear about how many days from the purchase that an employee can submit a receipt. Will it be 5, 30, or 60 days?
Specifying which documents the employee submits for reimbursement is important to make sure your team get their money back on time. These documents (a receipt, for example) need to have all the requisite details, too; like the date the transaction occurred, the amount, and the name of the store. Make sure your team knows this upfront so they don’t encounter any frustrating delays.
Having complete expense records establishes a paper trail. It also demonstrates to HMRC that the expenses incurred are legitimate ones - and not ones that are personal or non-business related.
10. Integrate with An Expense Management System
The simplest way to avoid inaccuracies, mistrust and unnecessary bureaucracy is to integrate with an expense management system.
Then, no longer is your expense report a dry, lifeless document. Instead, it becomes a vehicle to make and adapt to changes to your organization in real time. Tying every expense to a particular client can give you granular data on your ROI that’s super relevant. What’s more, you can see what’s working and what’s not.
So, there you have it…lots of wonderful pointers on crafting a well-rounded expense policy.
One that is fair. One that is good for the company.
One that gives you actionable insights on how to better run your business.
Pleo offers smart credit cards that entirely automate expense reports for teams, and gives managers real-time visibility of business spend. All Ecovis Wingrave Yeats clients enjoy exclusive discounts and benefits through our partnership.
To guarantee these rates and find out how Pleo can transform your business, contact
Liz Sheldon directly:
+44(0)203 514 3158