Creating a company expense policy helps ensure that expenses are handled efficiently within the business, preventing any misuse of company funds. It establishes guidelines for employees on what expenses are allowed and how they should be submitted for reimbursement – this can help to reduce any disagreements or misunderstandings about expenses down the line. Also, it can contribute to a positive workplace culture by creating a sense of fairness and transparency around expenses.
In this blog post, we will discuss some tips for creating an expense policy that works for your business. Let's dive in.
A company expense policy is a document that outlines how expenses should be managed and tracked within a business. It typically includes details such as what expenses are allowed, what the limits are for each type of expense, who is responsible for submitting receipts and invoices for reimbursement and how to create an accurate expense report.
The first step in creating an effective company expense policy is to set out the rules. This includes specifying what expenses are allowed, what the limits are for each type of expense and who is responsible for submitting receipts and invoices.
In addition to setting rules about which expenses are allowed, it is also important to specify how these expenses should be submitted for reimbursement. This includes specifying a deadline for submitting receipts and invoices, as well as specifying the format that expense reports should be in.
Once you’ve decided on the level of detail for your policy, it’s time to draft the document itself.
Your company expense policy should be clear, concise and easy to understand. It should cover all of the key points that you want to communicate to employees regarding expenses.
If your policy is too long or complex, employees are likely to skim over it or not read it at all. Keep it as short and simple as possible while still covering all of the important points.
Here are a few tips for drafting an effective company expense policy:
No company expense policy is perfect and will always reflect the unique needs of a business.
To account for these discrepancies, it’s important to leave room for exceptions in your policy. This way, employees can still make decisions that fall within the bounds of the policy but may not be explicitly mentioned.
For example, your company expense policy may state that business travel expenses must be pre-approved by a manager. However, there may be instances where an employee needs to book last-minute travel and cannot get approval in time.
In this case, the exception would be that the employee can still book the travel without prior approval but should mention it to their manager as soon as possible.
Once you’ve drafted your company expense policy, it’s important to get feedback from your employees. They will be the ones using the policy on a day-to-day basis and may have valuable insights into what works well and what could be improved.
Before rolling out the policy, send it out to a few key employees for their buy-in. Incorporate their feedback into the final version of the document.
Then, once the policy is finalized, hold a meeting with all employees to go over the main points of the policy.
Make sure that everyone understands the policy and knows how it will be implemented within the company.
Encourage employees to ask questions and address any concerns they may have. By getting buy-in from your employees, you’ll be more likely to successfully implement the policy and avoid any future confusion.
As your company grows and changes, so will your expense policy.
It’s important to review and update the policy regularly to ensure that it still reflects the current needs of your business.
Keep in mind that the policy should be flexible enough to adapt as your company changes.
If you find that you need to make any major changes to the policy, consult with an attorney to make sure that you comply with the law.
One common problem with company expense policies is that they are too restrictive. This can often lead to employees feeling that they are not able to spend company money appropriately, which can be frustrating and lead to a negative workplace culture. To avoid this problem, it is important to strike a balance between setting rules that are too restrictive and rules that are too lenient.
Another common problem with company expense policies is that they are not enforced consistently. This can often lead to employees feeling that the rules are unfair and that they are not being treated equally. To avoid this problem, it is important to enforce the policy consistently and fairly across all employees.
Also, to ensure that employees are adhering to the company expense policy, you can make use of an expense management platform like Penny Inc. Such a platform gives you real-time visibility over your employees’ spending, allows you to easily track how much is going in and going out, and helps you minimize employee fraud. You can sign up for a free account today.
Creating a company expense policy can seem like a daunting task, but by following these five steps, you can create a policy that works for your business. By establishing clear guidelines for employee expenses, you can avoid any confusion or misunderstandings and ensure that company money is spent responsibly.
