- This article was last updated on 12 May 2023 -
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 Practice Tips
- How to Share Your Travel and Expense Policy with Your Employees
- How to Ensure that Your Team Follows the Business Expense Policy
- Final Thoughts
What is a Travel & Expense Policy?
Before we reveal our travel and expense policy best practices, let’s look at exactly what a travel and expense policy is.
A travel and expense policy outlines the responsibilities and duties of business travel in regard to expenses. It lays out a clear direction for every employee to follow in order to maintain the validity of their costs. Additionally, it helps them use sound judgement when spending and reporting company expenses.
A travel and expense policy also identifies and describes the types of costs that an employee must report. It goes through each area in depth and explains how to track and report that specific company expense.
These categories usually include:
Air travel
Local travel
Accommodation
Corporate credit card expenses
Medical and insurance expenses
Food and beverages
What Should be Included in a Travel and Expense Policy?
When creating your travel and expense policy, it should clarify the following information:
What is a legitimate business expense? What is not?
How do you determine if an expense is necessary for your business? Who makes this decision, and how can they be sure that it's necessary before approving payment of an expense?
Are there any limits on the amount of money that can be spent on a single business trip or other travel-related activity (e.g., meals)? If so, what are those limits, and how will they be enforced?
Under what circumstances are employees allowed to use company credit cards for personal expenses while traveling on company business (e.g., if they have forgotten their wallet)?
How are employees reimbursed for their travel expenses? Are they allowed to submit expense reports, or is there a process by which they must obtain approval before spending company funds on business-related travel?
If so, who will review these reports and what additional information do they need before approving payment of an expense?
How long do employees have to submit receipts for reimbursement purposes? What happens if the employee doesn't meet this deadline (e.g., is he or she still entitled to reimbursement)?
Why is a Travel & Expense Policy Important?
A travel and expense policy is essential for a variety of reasons. It boosts the bottom line, prevents occupational fraud, simplifies the booking and reimbursement procedure, and aids in compliance with tax laws.
Processing expense receipts, verifying expenses, auditing, and reimbursing employees for out-of-pocket expenses all need a significant number of resources. A clearly defined travel and expense policy can significantly simplify the process.
It also helps employees to have a clear understanding of what they need to do before, during, and after a work trip if a set travel and expense policy is in place.
How to Create a Travel and Expense Policy: 10 Best Practice Tips
To make your travel and expense policy a success, we recommend that you follow our top 10 tips.
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.
How to Share Your Travel and Expense Policy with Your 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:
Sharing the policy via email (this is a great way to encourage sustainability among employees)
Printing and distributing paper copies of the policy
Sharing it via an expense management app
You should also make sure everyone has access to the information at all times by posting it in break rooms or printing it out for distribution at new hire orientation days.
If you issue credit cards, you should also include a copy of the policy with them so that employees know what they can and cannot expense before they make any purchases on behalf of the company. If you don't already have a communication system in place for expressing changes or updates related to policies like these, consider adding one now.
If you have employees who work remotely, send them an email detailing what they can and cannot claim as an expense. This will ensure that everyone is on the same page about your policies, as well as help to avoid any confusion down the road.
How to Ensure that Your Team Follows 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 close with 44% of voters admitting that they have not read their company's expense policy and 56% of voters saying they have.
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:
Give them a copy of the policy to read and ask them to sign an acknowledgement form
Provide training on why it is important to follow the policy
Make sure they understand what constitutes an allowable expense, who can authorise it, and how much they are allowed to spend on each type of expense (e.g., airfares)
Once you have done these things, monitor and review their expenses regularly with them so they don't forget about any details or get confused by them later. This will help avoid any unnecessary costs from being incurred by employees in relation to their travel plans.
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.
