Managing business expenses is a problematic topic for most businesses. Therefore, an expense policy must be created at the earliest in the life of a business, to save time performing this task.
However, creating an expenditure policy is not enough, it must also be adapted to the activity of your company and update it to follow the evolution of your entity. An up-to-date spending policy will save your business valuable time and money and avoid misunderstandings about excessive expenses.
Why set an expense policy?
In an increasingly complex environment, it is essential to have an overview of the expenses incurred. As a result, companies establish an expense policy to educate their employees on the rules in place during a business trip.
An inexistent or poorly designed spending policy is part of the hidden costs of inefficient expense management!
These guidelines relate to business expenses, such as mileage expenses, food, transportation, and how they are reimbursed.
Basically, this document is the reimbursement regulation of the company to which the employee must comply. The employee must comply. The formalization of these practices improves the transparency and the visibility on the possible leaks of costs.
How to set an expense policy?
First of all, we must identify the expenses to be included in the spending policy. The document needs to be as clear as possible in order to avoid misunderstanding.
Thus, you will need to:
- Detail the types of fees your company reimburses.
- Determine the spending limits for each type of expenditure (travel in economy class, avoid luxurious hotels during business trips, set a ceiling for certain expenses such as meals, etc.)
- Check the legal framework: many regulations limit the reimbursement of expenses, sometimes according to certain criteria (length of the trip, distance from the headquarters, etc.)
- To prevent your expense report from being considered a benefit in kind, get familiarized with the laws in effect that concern your industry.
- List your partners: If you have an agreement with a hotel chain, an airline or a particular means of transport, it is necessary to specify to your employees.
- Setting up a controlled framework is also an option.
Your expense policy can include a lot of items as long as it is consistent and legible. Be sure to include some of the frequently asked questions to answer queries that are not directly part of the spending policy but are essential to the assimilation of these rules.
You need to also be careful when communicating the rules: Writing a spending policy is not enough, you need to also know how to communicate it.
How to optimize professional expenses?
As a result of developing your spending policy, it is necessary to monitor and verify that it is being followed. To be able to do this, here are a few recommendations:
effective policies must be equitable. All employees are entitled to be reimbursed for expenses incurred if these costs are in accordance with the terms and conditions. In the same way, business leaders must set an example by applying their spending policy too.
Same with equity, try to be flexible with respect to spending limits. Indeed, the rates vary from one country to another; for example, taxi fees in Geneva are not the same as fees in Kuala Lumpur. As a result, set rates in line with the destination of your employees. Of course, you always have the right to refuse excessive expenses, but always make sure that you do so only in the case of obvious overruns.
After writing your spending policy, make sure it is available and sent to your employees. Indeed, by email or through your internal network, always make this document available. This way, you ensure compliance with the rules on the one hand and a decrease in fraud attempts on the other hand.
For a proper application of the spending policy, it is necessary that the company is reactive. In fact, make sure to pay back your employees quickly when they incur compliant fees. As a result, the employee will not be in an uncomfortable situation if they often must incur business expenses. The company must also adapt its spending policy by regularly updating it in the face of changes in the environment.
Be at the cutting edge of technology:
To ensure optimal application of the spending policy, the expense management process needs to be optimized. In order to meet the various demands of time, reimbursement or compliance, it is important to have new technologies making the process easier.
From time to time, ask for feedback on this expense management to actively involve your employees. They will feel involved in the process and will not feel it as a constraint.
Today, expense management solutions exist to meet this need. They allow the automation of the process from the receipt to accounting by optimizing the control and the respect of the rules in force.
An Expense Management Solution like Expensya allows you to automate the establishment of your expense policy by configuring expense rules, reimbursement caps, and alerts in the event of non-compliance with the policy in place directly from the platform, the whole being ultra-configurable according to several criteria, periods, distances, travel time, etc.
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