A well-presented policy is a well-read policy
Put the work in. Get your designers or external designers to build a document that will impress your employees. Get your marketing team to look at the language. Yes, the expense management platform will alert employees when they make a mistake, but they will make less mistakes if they’re engaged with the policy from the beginning.
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Short, simple and well-structured
Not only do you want your employees to read the policy, but you also want to ensure that they remember its main points. A spreadsheet with the name of a rule and its description may be all that is required. How simple you can keep your policy will depend upon the nature and size of your business. If you have different rules for different levels of superiority or your employees travel across a number of jurisdictions, your policy will likely be more detailed than the example below. But, if you can, your employees will appreciate something short and simple.
Simple also means a standardised set of rules – it means leaving no wiggle room and no room for questions. Essentially, don’t fill page after page with exceptions, because there shouldn’t be any. If you’re asked by an employee if they can get away with an expense generally not allowed, it’s a lot easier to say no when you don’t offer exceptions. Your finance team’s workflow is less and the employee knows exactly where they stand.
Depending upon the size of your business, there may not be one expense policy for everyone. If you need to split your expenses across departments and seniorities, it needs to be made clear in your policy who you are referring to. Your senior sales team is likely to travel more than your HR team for example, and your policy should reflect this. If your company works with per diems – especially across borders – this will also add a layer of complexity. Make sure you set different rules for different employees and trips in a way that ensures everyone knows where they stand and what they have to do.
The ‘must haves’ for a good policy
The introduction and general rules
The first essential is an introduction. Build trust by explaining to your employees why an expense policy is being set up and how it can help them. It keeps them safe, especially in hazardous destinations, streamlines the travel & expense process, and helps the company to save money.
If they know what is expected, they will be able to represent your business both at home and abroad. The three major takeaways from a policy introduction need to be:
- Travel plans and expenses should be fully documented
- Employees should use their best judgment and distinguish between comfort and extravagance
- Employees should not use travel and expenses for their own enrichment (and that includes loyalty points and air miles).
The consequences of any deviation from the above need to be spelled out clearly. You can also go on to explain the workflow for filing expenses, which will state that expenses must be filed as soon after the purchase as possible (usually within 30 days) and that all the relevant information should be included on the invoice or receipt. You can then describe how the approval process works and how long you expect repayment to take (if an employee is making out-of-pocket expenses and doesn’t have a corporate credit card).
Explain how employees will be able to better understand these rules by engaging with them on a day-to-day basis through an expense management app if your company is using one. We will describe in more detail how an expense management system can work in the proceeding section.
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An in-depth look at three key expense categories:
1. Transportation costs
Particularly when international travel is involved, transport is likely to be a significant expense. Let’s look at air travel first. Let your employees know what is expected of them when booking travel – for example:
- Can senior employees fly business class?
- Are there maximum budgets for certain destinations?
- How far in advance should employees purchase tickets (if possible)?
- What can’t be claimed as an expense (priority boarding, upgrades etc)?
On-the-ground travel is perhaps more complicated. In fact, it’s one of the most contentious areas of expenses. As we’ve already seen, fuel in particular is open to fraud. So, what do we want to say in an expense policy about ground travel:
- You will want to state in the clearest language possible that employees should always seek the most affordable form of transport
- What’s the maximum taxi expense?
- Car rentals can be spiralling costs, so make sure they are pre-approved with clear rules about what is expected.
- How should employees claim for mileage and fuel?
- What can’t be claimed? Usually upgrades, speeding fines and parking tickets
Lodgings should be simpler, but again there’s a lot of ambiguity here. You need to ask yourself:
- What is the maximum amount that can be spent?
- How much can be spent in different countries and cities, depending on average cost?
- What elements of lodging do I not want to reimburse – the mini bar, for example?
- How many days does the employee have to stay in a hotel before laundry expenses are reimbursed?
There are a lot of extras that can come with even just one night spent in a hotel.
As discussed, some companies will include food costs in their per diem rates. If you aren’t using per diems, you need to ask yourself:
- How much can an employee expense for breakfast, lunch and dinner?
- Will I allow more to be spent on food in certain countries and cities, where the cost of living is higher?
Things get more complicated when the employee is entertaining guests. Make sure the entertainment is not lavish, excessive or inappropriate in nature. Do you, therefore, want to limit the amount spent on each guest? However you decide to reimburse such meals, you should always ask how many attendees there are, who they are and the purpose of the entertainment.
Meet your compliance surveillance
What’s the goal of having a comprehensive Travel & Expense Policy? Make your employees comply with it – and Rydoo can help you with that. Upload your T&E Policy to our platform and let us be your surveillance, inspecting expenses incurred by your business travelers. Want to know more about this and many other features of Rydoo? Book a demo with one of our specialists.