Expense policies regulate all aspects related to business travel expenses. They set guidelines that basically stipulate what an employee can spend money on when travelling for business and how much.
The Finance Department usually has a large amount of input on the issue, although other departments such as Human Resources are also often involved.
However, not all companies have an expense policy in place that is tailored to their needs. Some companies fall into this trap by default. Sometimes smaller companies do not have any document that regulates all of these rules and gives them official status so that the team is aware of them and they form part of the company culture to a certain extent. At the opposite end of the spectrum, there are expense policies that are cumbersome, lengthy and complicated, making them difficult to apply and supervise.
The expense policy is unique to each company and should reflect its reality. Having a good expense policy in place is fundamental for effective travel expense management. Here are some tips to bear in mind when drafting or updating an expense policy.
A good aim when creating a policy is striving to be clear and concise. Start by asking which expense situations are most common in your company and where problems usually arise. To structure the policy, consider using sections and separating expenses related to accommodation, restaurants, mileage, etc. The aim is to make it as easy as possible to follow and remember.
Another section that it is advisable to include is a list of expenses that are not reimbursable, or even an overview of contentious cases that commonly arise in the company. Include responses to questions such as “What is the company’s policy on consuming alcohol during meals?”, and the question that commonly follows, “What if I’m taking a client out?”
Another feature to include is all of the formal details related to the expense reporting process. Indicate the periods in which expense reports should be submitted, the need to present receipts (and steps to take when receipts are missing), the format to follow, key figures, etc.
It should be noted that the creation of an expense policy will not be of much benefit in itself. It requires the creation of appropriate control mechanisms. The implementation of an expense policy also requires managers to be appointed to oversee compliance and decide what measures are to be taken to ensure that it is fully observed.
As well as the indisputable need for establishing an expense policy for a company’s finances, there is also a need for a framework of control and reasoning in the event of a problem with reimbursing expenses. Both the employee claiming reimbursement and the supervisor in charge of approving it will be more comfortable if they feel that they are operating in a well-regulated environment.