update-expense-policy
Finance strategy 3 min read

5 tips to effectively update your expense policy

Faustine Rohr-Lacoste

So you've read up on the benefits of having an expense policy, and you've set one up for your company. Great decision! It's important, however, to avoid seeing it as a static entity that never changes.

Your company is constantly changing, so the policy will end up being out of date before you know it. Instead, you should treat it as a dynamic and ever-evolving document that adapts to the needs of your company.

In this article, we'll take you through some best practices to keep your expense policy perpetually updated.

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Regularly check your expense policy

First and foremost, it's crucial to schedule regular checks of your policy. A lot can change in a little time — maybe you've hired new employees, secured a round of financing or something else happened that impacts your expense policy. In this case, it's vital to go back to the document and see how it can be made relevant again.
 
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It's as simple as setting up a recurring reminder at an interval that makes sense for how rapidly your company is changing — if it's a fast-moving startup you might want to check in more often than if it's an older enterprise. Again, try to be adaptable — even corporates can have tumultuous periods.

Look at the state of your company

Companies are always in flux — many parts of it are always changing, meaning it can change a lot in a relatively short amount of time.
 
Because of this, it's key to constantly pay attention to the state of your company — how much has it changed since the last time you updated your policy? The things you should focus on vary per business, but here are some general ideas to get you started:
 
  • Revenue: Look at the amount of money the company is making. If it's much more or less than before, consider changing the flexibility of your expense policy.
  • Team and travel needs: Maybe you've hired lots of people, or needed to let some go. Perhaps there's a new international sales team that needs to travel a lot. Tend to the changing needs of your team by adapting your policy.
  • Strategy: Has the strategy of your business changed recently? Did you rethink its environmental responsibility, requiring everyone to travel by train instead of taking a plane? These kinds of things warrant a fresh look at your policy.

Listen to your employees

Even if you're trying your hardest to adapt your expense policy to what your company needs, you might still miss certain things. That's why you should always keep a close eye on what your employees are saying — look out for an indication that your team feels limited by the current policy, and look if you're able to make the appropriate changes.
 

Even if you don't notice any problems, it's a good idea to actively ask around what your employees are expecting from their expense policy. This offers a new perspective on your choices, and you might end up with some new ideas to implement.

Fluctuating travel costs

Something you can't miss when updating your expense policy is the category that is most susceptible to changes — travel reimbursement. If your company covers any kind of travel, periodically check if the reimbursable amounts are still in line with the actual costs.
 
Gas prices are changing constantly, which can change a lot for workers that commute by car or often take to the road for a business trip. This goes both ways — when prices go up, employees end up having to pay, but when prices go down, your company is technically losing money. Either way it's worth looking up your local gas prices and adjusting your expense policy accordingly.
 
The same goes for air travel — flight prices can vary wildly, and if your company is dependent on air travel, it's smart to see if the current policy still covers your needs.
 
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Keep track of local laws

 
In many countries, local rules can define certain aspects of your expense policy. Take Germany, for example, where the per diem system regulates how much employees are reimbursed when traveling for business purposes.
 
It's a particularly complex system, with different amounts depending on the destination. These are recalculated every year by the German government in order to accurately represent the cost of a business trip there. In this case you would need to rethink travel allowances every year, but these kinds of rules vary by country — make sure to check your local regulations to see if they affect you.
 

These tips should ensure you have a policy that's future-proof and adapts to your changing business. Don't be afraid to keep changing it every once in a while — the best expense policies are never done.

Download our free expense report template

 

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Faustine Rohr-Lacoste

Faustine is Head of Community at Spendesk. She is in charge of CFO Connect, a community of modern finance leaders.