(This article was last updated on 01 March 2024.)
When was the last time you reviewed your corporate expense policy? If you haven’t recently reviewed your policy, then now is the time to do so.
In this guide, we explain what a travel and expense policy is and why it is important. We also provide you with the top 10 tips for implementing expense policy best practices in your company.
Last but not least, we discuss how you can share your expense policy with your employees, and how you can ensure that they follow it. 
Table of Contents
- What is a Travel & Expense Policy?
- What Should be Included in a Travel and Expense Policy?
- Why is a Travel & Expense Policy Important?
- How to Create a Travel and Expense Policy: 10 Best Practices
- How to Share Your Travel and Expense Policy with Employees
- How to Make Sure Employees Follow the Business Expense Policy
- Final Thoughts
Before we reveal our travel and expense policy best practices, let’s look at exactly what a travel and expense policy is.
What is a Travel & Expense Policy?
A travel and expense (T&E) policy is a set of rules designed to help employees manage costs during business trips effectively. This policy makes sure everyone knows how to correctly report what they spend, ensuring all expenses are transparent and within the company's guidelines.
What Does a Travel and Expense Policy Cover?
This policy clearly outlines what kinds of expenses employees need to report and how to do so. Here are the main categories it typically includes:
Air travel: Rules for booking flights, including how to handle upgrades and fees.
Local transportation: Guidance on using taxis, rental cars, or public transport while on business.
Hotels: Instructions for choosing accommodations, including spending limits and preferred hotels.
Company credit cards: How to use the company card for business expenses.
Health and insurance: What to do in case of medical needs and how insurance works during travel.
Meals: Daily budgets for eating out and how to report these costs.
What Should be Included in a Travel and Expense Policy?
When creating your travel and expense policy, it should clarify the following information:
1. Defining Business Expenses
Clearly list what types of expenses are considered business-related and what are not.
For example, if you're flying to another city for a conference, the cost of your plane ticket and hotel stay are business expenses. However, if you decide to go to a movie one evening after your meetings, that's a leisure activity and not covered.
Also, explain how to determine if an expense is essential for business, including who decides and the criteria used.
For instance, imagine you're planning to attend a business conference, and there's a workshop session that's crucial for your work. The registration fee for this workshop would be considered an essential business expense. But, how do you decide if it's really necessary?
Who decides? Typically, this decision is made by a manager or someone in a supervisory role. Sometimes, there might be a team or department dedicated to reviewing and approving these expenses.
Criteria used: The main question asked is, "Is this expense directly related to the company's objectives or your job duties?" If the answer is yes, and attending the workshop could lead to new skills or business opportunities, then it's deemed essential.
2. Spending Guidelines
Set clear spending limits for different aspects of business travel, like meals and lodging.
For example, your company could have a policy that allocates £50 per day for meals and £150 per night for lodging during business travel. This means your employees should aim to find hotels and dining options within these budgets.
Describe the process for when it's necessary to go over these limits, including how to get approval.
If, for instance, your employees are attending a conference in a city where the cost of living is high, finding a hotel for £150 per night might be challenging. They may find a hotel that costs £175 per night because it's the closest one to your conference venue, and staying further away would incur higher transportation costs.
Process for Approval:
Pre-approval: Before booking, you'd need to explain the situation to your manager or the designated approver in your company.
Documentation: Provide a comparison of costs, showing that the overall expense is lower when staying at the slightly more expensive hotel.
Approval: Your manager reviews your explanation and either approves the extra expense or suggests an alternative.
3. Company Credit Cards
State the policy on using company credit cards for personal expenses during business travel, including any allowed exceptions.
The general rule is that company credit cards should not be used for personal expenses. However, exceptions can be made under specific circumstances.
For example, suppose you're on a business trip and you've forgotten your personal credit card. You need to purchase a meal outside of the company's scheduled events.
Provide steps on how to report personal use, if permitted, and reconcile these charges.
Reporting Personal Use:
Immediate notification: Inform your manager or finance department about the personal expense as soon as possible.
Reconciliation process: Submit a report detailing the personal expense along with your business expenses. Arrange to repay the personal amount to the company.
4. Reimbursement Process
Outline the process for employees to submit their expenses for reimbursement, including any required approvals:
Collect receipts: Keep all receipts from your business travel.
Fill out expense report: Complete an expense report form provided by your company, attaching all relevant receipts.
Submit for approval: Send your expense report to your manager or the designated approver within the specified time frame.
Specify the time frame for submitting receipts and what happens if this deadline isn't met.
Employees are typically required to submit their expense reports within 30 days after returning from their trip. If you miss the deadline due to unforeseen circumstances, you need to provide a valid reason for the delay.
Let's say your employees were immediately required to work on an urgent project upon return, causing a delay in their expense report submission.
They should explain the situation to their manager or finance department.
Their reimbursement may be delayed, but as long as they communicate effectively and the reason is valid, they should still be entitled to it.
Why is a Travel & Expense Policy Important?
A travel and expense policy is important for many reasons:
Cost savings: By setting clear spending limits and guidelines, a T&E policy helps companies save money and improve their bottom line.
Prevents fraud: It reduces the risk of occupational fraud by setting clear rules for expense reporting and reimbursement.
Simplifies booking & reimbursement: A well-defined policy makes booking travel and processing reimbursements easier and faster, reducing administrative burden.
Tax law compliance: It aids in compliance with tax laws and regulations related to business travel expenses, helping avoid legal and financial penalties.
Streamlines expense management: With clear guidelines, the process of collecting receipts, verifying expenses, and auditing becomes significantly streamlined.
Clarifies employee expectations: Employees benefit from knowing exactly what's covered, how to report expenses, and how to get reimbursed, reducing confusion and potential disputes.
Improves resource allocation: Reduces the need for extensive resources in managing and auditing travel expenses.
Policy transparency: Employees have a clear understanding of what is expected of them before, during, and after a work trip, ensuring all actions are in line with company policies and legal requirements.
How to Create a Travel and Expense Policy: 10 Best Practices
Creating a travel and expense policy that’s easy to follow and enforces accountability can significantly impact your company's efficiency and bottom line.
Here are ten best practices to guide you:
Make your travel and expense policy clear.
Provide easy access to your travel and expense policy.
Build a fair travel and expense policy.
Make your travel and expense policy easy to follow.
Be clear about the consequences of misreporting expenses.
Ensure timely expense reimbursement.
Implement a policy for extenuating circumstances.
Require itemised receipts.
Automate your expense management system.
Enforce your corporate expense policy effectively.
Before we dive into each of these best practices, it’s beneficial to start with a solid foundation.
For those looking to draft or revise their policy, we recommend using an Expenses Policy Template as a starting point. This template can save time and ensure you cover all necessary aspects of a comprehensive expense policy.
Click here to download our free expense policy template.
Now, let’s explore the ten best practices in detail.
1. Make Your Travel and Expense Policy Clear
A clear and straightforward policy ensures that everyone follows the rules accurately. Simplicity leads to better compliance and fewer misunderstandings.
Write simply: Use easy words and short sentences. Your policy should be as simple as reading instructions for a common household appliance.
Ask for opinions: Once you've written the policy, let your team read it. Ask them directly, "Is there anything confusing here?" This helps you see where you need to make things clearer.
Update with feedback: Use the feedback to make changes. If someone doesn't get it, it's a sign you need to make it simpler.
Remember: The goal is to make a policy that everyone can follow without getting confused. A clear policy means fewer mistakes and questions, making everyone's job easier.
2. Provide Easy Access to Your Travel and Expense Policy
A policy that is hidden away in a folder in the HR department does not allow employees to familiarise themselves with the rules.
So, make sure all of your employees have easy access to the business expenses policy.
The best way to achieve this is by uploading your expense policy to a cloud-based platform. This ensures it's never lost and can be accessed anytime, from anywhere.
So, how exactly do you do this?
Choose a reliable cloud service that your company already uses or one that's known for its security and ease of use.
Upload the policy document and make sure it's formatted for easy reading on both computers and mobile devices.
Inform all employees about where the policy is stored and how they can access it. You might even consider a quick tutorial or guide to ensure everyone is comfortable using the platform.
3. Build a Fair Travel and Expense Policy
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. This inclusive approach guarantees that the policy is balanced and considers the needs and perspectives of all employees.
Regularly seek feedback from employees who travel often. They can offer valuable insights into what's practical and necessary, helping to refine the policy to be both fair and effective.
Here’s how to achieve this:
Organise brainstorming sessions or surveys with employees across different roles and departments to gather suggestions and concerns.
Specifically, reach out to frequent travellers for detailed feedback on their experiences and needs.
Use this feedback to create or update the policy, ensuring it's aligned with the actual requirements and challenges faced by employees.
4. Make Your Travel and Expense Policy Easy to Follow
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 their purchases, then they may run the risk of losing them or partially destroying them.
To avoid this, implement an expense management solution, like ExpenseIn, that allows employees to upload receipts directly from their smartphones. This method prevents the loss or damage of paper receipts and makes tracking expenses easier.
Expense management software can also help guide employees through your expense policy before they submit their expenses with automated policies. This reinforces the rules and helps reduce incorrect expense claims.
Select an expense management system with user-friendly features like mobile receipt uploads and policy acknowledgement prompts.
Offer training sessions to help employees get familiar with the new system, highlighting how it makes reporting expenses simpler and more accurate.
Keep the system updated and solicit feedback from users to continuously improve the process.
5. Be Clear About the Consequences of Misreporting Expenses
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 clearly outline what is considered expense report fraud (like claiming for higher expenses than incurred) and the consequences of these actions (such as having to repay the amount or facing disciplinary measures).
Here’s how:
Include a straightforward section in your policy document that explains the repercussions of misreporting expenses.
Make sure every employee reads this part of the policy and understands the seriousness of following the rules.
Keep the policy up to date and revisit it with your team regularly to ensure everyone is aware of the guidelines and any updates.
6. Ensure Timely Expense Reimbursement
Delays in reimbursing employees can strain workplace relationships and morale. So, prompt action on expense claims is crucial.
Use automated expense management software to speed up the review and approval process. Solutions like ExpenseIn allow for quick claim approvals from anywhere, ensuring no unnecessary delays.
Choose an expense management tool that offers mobile access, allowing managers to approve claims on the go.
Train your team on using the software to ensure they can submit claims easily and managers can review them efficiently.
Set up notifications for submitted claims to ensure they are addressed as soon as possible.
7. Implement a Policy for Extenuating Circumstances
Recognise that sometimes, employees may need to spend more than the usual limits due to special circumstances, and it's important to have a clear approach to these exceptions.
Handle each exceptional expense report on a case-by-case basis, considering the specific reasons and needs behind the extra expenses.
Communicate openly with your team about any exceptions made to the expense policy. Explain why the decision was taken and how it benefits the company, ensuring everyone understands and agrees with the rationale.
This open approach helps maintain trust within your team, showing that policy exceptions are made thoughtfully and fairly.
Here’s how to apply this:
Set up a process for employees to submit requests for exceptions, detailing the circumstances and justification.
Review each request promptly and communicate the decision clearly to the involved parties.
Share a summary of such exceptions and the decision-making process in a way that respects privacy but ensures transparency, like in team meetings or internal newsletters.
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.
Here’s how to set up the process:
Select an expense management tool that has the capability to scan and organise receipts, and can handle receipts sent via email.
Provide training for your team on how to scan and submit receipts properly. Make sure they understand why providing detailed receipts is crucial.
For online purchases, employees should know how to forward their email receipts to the system, which will prepare the expense report automatically.
9. Automate Your Expense Management System
We’ve spoken a lot about automated expense management software throughout this guide, but the benefits are infinite:
Prevent misuse: Automated systems let you set clear rules for expense claims, reducing the chances of policy violations.
Faster reimbursements: Automation speeds up the review and approval process, ensuring employees get reimbursed quickly.
Enhance compliance: It becomes easier to adhere to company policies and external regulations, thanks to predefined guidelines and checks.
Save time and resources: Your finance team can focus on more strategic tasks instead of getting bogged down by manual expense processing.
Access to accurate data: Enjoy real-time insights into your company’s spending patterns, helping you make informed financial decisions.
By adopting an automated expense management system, you streamline financial processes, ensuring efficiency and compliance across the board.
10. Enforce Your Corporate Expense Policy Effectively
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.
Use expense management software that automatically checks claims against your policy. It points out when something doesn't match the rules, saving you from having to look at every single report yourself.
Periodically review expense reports to ensure compliance and identify any recurring issues. If you spot a problem, you can fix it before it happens again.
If you notice any patterns of non-compliance, talk to the employees involved to clarify the policy and expectations. Direct communication can resolve many issues before they become habitual.
Make sure everyone knows the timeframe for submitting expenses. This prevents the submission of outdated receipts and keeps the expense reporting timely and relevant.
Learn more about how to enforce your business' expense policy. here.
How to Share Your Travel and Expense Policy with Employees
It's important to share your corporate expense policy with all of your employees. You can do this in a variety of ways, such as:
Email the policy: Sending it via email is not only sustainable but also ensures that all employees have a digital copy they can refer to anytime.
Distribute physical copies: For those who prefer paper, consider printing copies and handing them out, especially during new hire orientation, to ensure everyone has access.
Use an expense management app: If your company uses one, sharing the policy through the app can make it easy for employees to access and follow the guidelines.
Accessible locations: Place printed copies in common areas like break rooms or include them with issued company credit cards, so employees have constant access to the policy.
Update communication: Establish a method, like a company newsletter or email alerts, to inform staff about any policy changes or updates, ensuring everyone stays informed.
Guidance for remote employees: Specifically reach out to remote workers with an email that outlines what expenses they can claim, keeping them aligned with in-office staff.
Pro Tip: Introduce a "Policy Ambassador Program." Choose a few employees from different teams to be policy experts. They'll learn all about the expense policy and help others understand it too. This makes getting answers easier and helps everyone follow the rules better.
How to Make Sure Employees Follow the Business Expense Policy
Recently, we ran a LinkedIn poll in which we asked who has read their company's expense policy. The results were staggering with 44% of voters admitting they have not read their company's expense policy.
It’s vital to make sure that your travel and expense policy is clearly communicated to all team members so they know what they can and cannot spend the company's money on.
To ensure that your team follows the corporate expense policy, you should:
Share the policy: Give every team member a copy of the expense policy. Ask them to read it and sign a form saying they understand it.
Offer training: Explain why following the policy is important during a short training session. Discuss how it helps manage the company’s money wisely.
Explain what’s allowed: Make sure everyone knows which expenses the company will pay for, who decides if an expense is okay, and how much they can spend on things like travel or meals.
Check expenses together: Regularly go over expense reports with your team. This keeps everyone on the same page and clears up any questions.
Pro Tip: Regularly invite team feedback. This "Feedback Loop" helps identify and address concerns quickly, showing your team their input matters. Use this feedback to refine your policy, ensuring it's both effective and considerate of your team's needs.
Final Thoughts
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.
