Corporate Expense Policy Best Practices: 10 Tips
- This article was last updated on 5 August 2022 -
When was the last time you reviewed your corporate expense policy? American business magazine Forbes recently published an article about corporate expense policy best practices. The author claimed that many companies have been revisiting their business expenses policies during the global pandemic to tailor them to the new working norm.
If you haven’t already reviewed your policy, then now is the time to do so. In this guide, we provide you with the top 10 tips for implementing expense policy best practices in your company. From being transparent and operating a fair system, to acting promptly, requiring itemised receipts, and automating the system – these are the expense policy best practices that every company should be focusing on in 2022 and beyond.
1) Be transparent
The number one rule is, that a simple and easy-to-follow set of procedures will be much more accurately adhered to than a complex one. That’s why it’s important that you write your policy so it’s easy to understand for your employees.
Once you create a draft for your corporate expense policy, encourage your employees to read it and ask them if there are any items they don’t understand. Then, take their feedback onboard to develop an expense policy that is simple enough for every employee to comprehend and follow.
2) Provide easy access
A policy that is hidden away in a folder in the HR department is not giving employees the opportunity to familiarise themselves with the rules. Therefore, make sure all of your employees have easy access to a clearly written business expenses policy that they can consult.
The best way to do this is through uploading your corporate expense policy to a cloud-based system that provides easy online access. That way, there’s no chance of ever losing the policy document and employees can access it around the clock. It also saves your finance or HR teams time in constantly having to provide the policy document to those who have misplaced it.
3) Operate a fair system
Another vital expense report best practice is to ensure your policy treats all employees fairly. Don’t settle for a top-down policy where someone in an authoritative position structures the rules in a way that only benefits themselves.
Instead, involve every team in the process and always consult those who travel most frequently when updating your corporate expense policy. This can provide you with a fresh viewpoint, allowing you to come up with better and more efficient ideas for implementing a reliable policy.
4) Make it easy to adhere to
Making the business expense process as pain-free as possible will be instrumental in guaranteeing employees comply with your policy regulations. For example, if your employees have to hoard paper receipts of all of their purchases, then they may run the risk of losing them or partially destroying them.
If you’re investing in an expense management solution with a receipt scanning feature, however, then your employees can upload their receipts with their smartphones during their business trips – as long as they have access to the internet.
Automated expense policies are also beneficial in helping employees adhere to your corporate expense policy. ExpenseIn increases expense policy awareness by enforcing staff to accept policies before they submit their expenses. This helps employees to adhere to the rules, while cutting down on claims which don’t meet a company’s requirements.
5) Be clear about the repercussions
Did you know that dishonest expense claims cost UK companies over £100m each year? Rather than turning a blind eye to expenses fiddling, it’s important for employers to be clear about the consequences of exaggerating corporate expenses for an employee’s own financial gain.
Having a clear cause and action relationship between misuses and penalties will make the process very simple for everyone to follow and they won’t be able to dispute it when they are penalised for their faulty expense reports.
6) Act promptly
Slow employee expense reimbursement is damaging to workplace relationships. Therefore, one of the most important expense management best practises is to ensure you act promptly once an employee submits their claim.
Automated expense management software can make this process a lot easier for you. Look for a solution that lets you approve claims on the go, like ExpenseIn. Both the ExpenseIn app and web portal allow managers to view claims, check attached receipts, and see policy issues from anywhere at any time.
7) Establish an extenuating circumstances policy
There are times when it may be reasonable for an employee to exceed an established business expenses policy, but it’s important that you handle this in the right way. Treat these situations in a case-by-case manner and be sure to remain transparent with the rest of the company. Explain to your workers why this particular expense was allowed to exceed the corporate expense policy, and let them know how doing so will help the company as a whole.
This transparency not only allows everyone to be on the same page, but also establishes trust among your employees.
8) Require itemised receipts
We can’t talk about expense policy best practices without mentioning receipts.
Whilst not always possible, requiring that itemised receipts are submitted through a receipt scanning system will make employees less likely to abuse the system. This system can extract the data, merchant, item type, and value from a snapshot of a receipt uploaded by employees. This saves even more time while also ensuring accuracy.
ExpenseIn offers a receipt scanning feature, along with the ability to handle emailed receipts. If employees have booked a flight or ordered a corporate related product or service online, then they can simply forward the email receipt to ExpenseIn. The software will then automatically create an expense ready for submission.
9) Automate the system
We’ve spoken a lot about automated expense management software throughout this guide, but the benefits really are infinite.
Digital expense management systems enable you to set limits and terms for claims that will prevent abuse from being attempted in the first place. They also allow you to speed up reimbursement, increase compliance, and save your finance team considerable time and effort. Plus, with features such as real-time reporting, your company will always have access to the latest and most accurate expense data.
10) Enforce your corporate expenses policy
As the famous phrase goes, “actions speak louder than words”. This is particularly true when it comes to implementing expense policy best practices. Just issuing a written corporate expense policy is not enough; you need to ensure that it is also being enforced.
While expense management software is great for automatically enforcing policies, those in executive positions can also do their part to ensure everything is running smoothly. Start by regularly monitoring expense reports to identify key trends. You should also organise face-to-face meetings with any employees who are continually having expense claims being flagged.
Finally, be sure to set a date for how long workers can claim an expense, as you don't want to receive receipts that can no longer be utilised for tax reclaim.
There are a lot of variables that affect expense policy compliance amongst your employees. However, it's not rocket science to implement an expense policy that works for your business. To recap, here's what you can do: