How to create an effective expense policy

Expense policies set out the rules for how your employees can incur expenses on behalf of your company. Implementing a robust and efficient expense policy is essential for effective expense management. Both business spending and potential fraudulent expenses are controlled, whilst employees feel confident that they are always compliant with company regulations.

In order to produce an effective expense policy there are a few things to consider:

Is your policy fair?

Your expense policy will be affecting your employees; if you make your policy too strict or unachievable then you might end up frustrating them. Unfortunately, if your employees feel that they are being treated unfairly then they may use this as an opportunity to vindicate fraudulent expense activity. Instead, you should always strive to create fair policies that give realistic and attainable regulations. For example, if an employee is conducting business in Tokyo they may require a different spend limit to an employee conducting business in Mumbai.

Therefore, you need to create a policy that takes into consideration the context of the expense. If you are using a manual expense process then it may be difficult to factor this in. However, by utilising an automated expense platform like ExpenseIn you can assign customised policies to fit in with your employee’s differing expense needs.

Is your policy easily accessible?

In order for your employees to actually adhere to the company guidelines, they need to be able to access this information. Not only does the policy need to be accessible, it also needs to be understandable. Requiring continual clarification can be exhausting and grey areas may even result in disputes over what is deemed the correct process. By keeping your policy jargon-free and unambiguous employees will feel confident in their ability to execute the correct decisions.

Is your policy enforceable?

Just issuing a company policy is not enough; you need to ensure that it is also being enforced. This is where employing a cloud-based expense management solution is crucial. Manually crosschecking your company’s policy with numerous expense claims is time-consuming and error-prone. Implementing a system like ExpenseIn provides automated policy enforcement. Policy violations get flagged upon submission so employees are able to rectify the expense claim before it continues on for approval.

Is your policy easy to adhere to?

Making the expense process as pain-free as possible will be instrumental in guaranteeing that your employees comply with your policy regulations. For example, if you employees have to hoard paper receipts of all of their purchases then they may be running the risk of losing them or partially destroying them. Without corroborative evidence of the expense incurred, they are unlikely to be compliant with company policy and could face the prospect of not being reimbursed.

In order to make compliance easier, you should consider swapping a manual process for digital one. With ExpenseIn’s easy to use mobile app your employees can take a photo of their receipts on the go. Digitising their receipts means that are never missed or lost again.

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