How to get a winning T&E expense policy

A well-executed company expense report policy can cut costs, improve administrative efficiency, and enhance employees’ overall T&E experience. You’re spending money to make money, after all, so you want to be sure everyone’s on the same page while carrying out the company’s mission—on the road, at the office supply store, or while entertaining clients.

For expense reports to be accurate and compliant, your expense report policy needs to be rock-solid. It needs to spell out the entire process, from to getting expenses pre-authorized to reimbursed. So whether you’re creating a new expense report policy or refreshing your existing one, make sure you consider these components to make sure you’re covering all the bases:

1. Well-Defined Expense Guidelines

The primary goal of your policy is to set employees’ expectations by defining what your company will and will not reimburse—and under what conditions. Employees are often using their discretion when booking travel arrangements or buying lunch in a faraway city, but guidelines like these will help them make reasonable choices:

  • Should they use a company booking website when reserving airfare? Are they required to select the least expensive fare for nonstop flights? When can they book a business-class seat?
  • When can employees use their personal travel reward memberships, like hotel chain points or airline frequent flyer miles?
  • Will your company pay for alcoholic beverages, sporting event tickets, and in-room movies? Under what conditions?

Don’t forget to state the potential consequences for non-compliance. You can discourage minor infractions like excessive tipping to more fraudulent behavior like “padding” expense reports by taking a strong stance on disciplinary measures.

2. Distinct Timeframes

It’s important to keep your expense report process moving along for both optimum cash flow and employee customer service purposes: your finance team wants to account for their expenses as soon as possible and employees want to be paid quickly. Establish a timetable so everyone from the individuals submitting expense reports to the workers processing them are aware of deadlines. You will likely want to include details about submission grace periods and occasions when you’ll deny reimbursement for late or incomplete submissions.

3. Easy-To-Follow Expense Reporting Procedure

What do you want your employees to do before, during, and after they incur expenses? Your procedure should be designed for ease-of-use so employees get on board with the process and avoid mistakes and frustration—and so your automated system can be developed to fit your workflow. Remember to include information in your policy addressing:

  • PRE-APPROVAL PROCESS. If you use a formal pre-approval system to control spending before it happens, give employees and managers instructions on when they need to submit requests and get them approved—and how to tie approvals with the expense reports they’ll submit later.
  • RECORDKEEPING. Encourage employees to keep good records (e.g. original receipts, the names of people involved, the business purpose) that are detailed enough in case the IRS needs more information or there are any disputes.
  • COMPLIANCE AND APPROVAL ROUTING. Let employees know how many levels each type of expense report (based on employee hierarchy, dollar threshold, etc.) needs to travel, and how this can impact their approval timeframe or record-keeping requirements.

4. Straightforward Employee Communications

Once you’ve established your expense report policy, make it easy for employees to understand and access. Try to avoid using too much jargon and consider putting it into more than one format (e.g. downloadable PDF, slideshow or video) so people can read through it at their convenience, at home or in the office. And make sure managers at all levels are familiar with the policy so they’re able to answer employees’ questions and support their spending activities.

When it comes time to writing a corporate spending policy, continuous improvement is the name of the game. Encourage your employees to provide feedback so you can make adjustments to your guidelines and processes and achieve ongoing optimization. Let us know if you have anything to add to our list of must-haves—and what makes your expense report policy a success.