As an entrepreneur just starting out, drafting and implementing an expense policy is probably not high on your list of priorities. Even though you’re probably more interested in growing your team or acquiring new users, it’s important to spend some time thinking about the future, too.
What’s an expense policy?
- A clearly defined list of all expense categories that can be claimed
- A step-by-step guide on how to claim expenses
- What happens in the event of a dispute concerning expenses
Now, let’s take a look at the basics.
Why do you need an expense policy?
But even when you already have rules about employee spending, it can be worth to formalise them by creating an expense policy. Writing everything down in an official document ensures that everyone is on the same page, which helps to simplify and speed up the reimbursement process.
How do you set up an expense policy?
Because we’re developing a financial policy, it should be based on your company's financial situation. In order to set appropriate budgets, it’s a good idea to talk to your CFO — if you don’t have one yet, consider getting professional advice.
The same goes for setting the various expense categories you allow employees to claim. Consider what they need to excel at their job, but also think about what they shouldn’t be able to buy.
When enforcing your new policy, it’s vital to be fair to your team. Treat employees equally and avoid making exceptions — this helps make everyone feel more valued.
Also, keep a close eye on the time it takes to process employee reimbursements. You wouldn't ask your friends or family for an interest-free six-week loan, so you probably shouldn't ask your staff either.
A great expense policy should be easy on the eyes. Pay attention to the language you’re using — is it clear enough for anyone to understand? Don’t go into too much detail when it’s not needed — you don’t want to end up with a 40-page document that no one will read.
While you're at it, your expense report processes should be user-friendly too. Take a look at our free expense report template, and see what you think.
Treat your expense policy like you treat the business as a whole. The state of your company is changing all the time, and the rules should reflect that.
For example, the rules and allowances you set in year one probably won't still be applicable by year five. Your team will have grown, and your expense policy should reflect this growth.
If you haven’t done so already, read up on all local laws that affect your policy. Be sure you know which kind of documents to keep, and for how long — you want to avoid any surprises on that front.
Once again, be sure to get professional advice where necessary. The consequences of getting these steps wrong are too significant to just wing it on your own.
6. Consider how technology could help
Lastly, consider the ways technology can be used to innovate your expense workflow. Integration between expense management tools and accounting software allows for many previously time-consuming tasks to be streamlined and simplified, saving your finance team from manually processing expense information.
Not only can this save you and your team time and effort, but it can also help improve the accuracy and consistency of your records, leaving you better placed to cope with the possibility of audit.
Automate your expense policy
Using Spendesk has perks for employees, management, and the finance department. It'll save everyone valuable time with its modern take on expense reporting.