Do you have a company expenses policy in place? If so, it might be time to dust it down, and bring it up to date. If not, and you have employees, it’s definitely worth getting an expense policy document written down.
Common examples of employee expenses
Your staff are going to be claiming for a variety of expenses, depending on the nature of your business. Usually, expense claims fall into a few categories:
Transport costs, such as plane or train tickets
Mileage claims when using their own car for work
Business hospitality and entertainment (aka networking and schmoozing)
Sustenance, or ‘food and drink’
Training courses and materials
Credit card fees
Why do you need an expenses policy?
Having a policy in place will make expense management much easier, with a smarter, more efficient system.
An employee expenses policy will also help you fend off any issues around fraud or breaches of compliance. Every employer hopes to be safe from this with their workforce, but it never hurts to be prepared.
The National Fraud Authority found that over £100 million is being lost every single year from businesses across the UK due to false or exaggerated claims. Having a clear and robust document in place will cover your back, and protect against any potential issues.
Making the expenses process slicker and safer will then have a positive impact on the time and resource spent on it. Great for giving you some extra breathing space to focus on building your empire.
What should a company expenses policy include?
If you’re about to sit down and put your own policy together, we’d always advise speaking to legal, HR and payroll experts first. They will be able to guide you in the right direction, and ensure you’ve got all the necessary bases covered.
As a rough guide to get you started though, here are some vital pieces of information which you should include in your expenses outline:
A clear and transparent summary of how your business handles employee expenses
What does and doesn’t qualify as an expense
How to go about making a claim
How long they should expect to wait before the cash hits their account
What happens in the event of a dispute around any expense claim
Other expenses policy advice
Be sensible but fair
It’s important to strike a balance between being lenient and protecting your bottom line from unnecessary spending. Save costs where you can but make sure staff don’t feel unjustly hard done to either.
Expense management software company, Webexpenses found that 43% of employees felt that an unfair company expense policy was a reasonable justification for fraudulent claims.
Make it a conversation
Canvas opinions, be transparent, ask for feedback, and listen to suggestions, taking action where relevant. Getting staff involved in refining any company policies is a great way to get them on board.
Keep things simple
Make sure your policy document is short, sweet (but still informative) and free of confusing industry jargon that doesn’t need to be there.
Refresh it regularly
Experts recommend revisiting and updating your expenses policy every few months to take any changes (such as inflation or cash flow) into consideration.
Whenever you do make any changes to the policy, it’s also a good idea to seek legal advice and then make sure updates are communicated clearly to your workforce.
Be accurate and specific
Things like mileage expenses and spending limits are fine details which are crucial to make explicit. That way, everybody knows where they stand on what can be spent and what qualifies.
Are you a small business, limited company, LLP, sole trade, contractor or partnership looking for some support with your accounting? Get in touch on 020 3355 4047 or via firstname.lastname@example.org for more info on our comprehensive and affordable services.
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A content writer specialising in business, finance, software, and beyond. I'm a wordsmith with a penchant for puns and making complex subjects accessible. Learn more about Elizabeth.