What Is an Expense Policy?
An expense policy is a document that outlines business-related expenses and how it is handled. This serves as a guide on how the process of making claims and resolutions when disputes occur over expenses. Primarily, this aims to provide your business a fair system of compensation for your employees who use personal expenses for business reasons.
How to Make an Expense Policy
Creating an expense policy is one way to manage your company's expenses over the years. 43% of the company manually check each expense, matching it to corporate policy. Policy compliance and enforcement shows a great difference in keeping up with the company's budget rather than those who hasn't.
1. Set a Clear Overview and Objectives
Set the rules and limitation on what your employees can request from your company's budget. Control your company's reimbursement, prevent fraud, and ensure your company complies with tax and legal obligations by setting a clear overview and objectives on your company's expenses. Avoid extravagant expenses and approve it accordingly before releasing any budget.
2. Provide Proper Accommodation
Provide proper accommodation for your employees. Check the fix rate of their expenses as well as the purpose of their activity before approving their accommodations. This includes overnight incidental expenses, meal allowances, and training course allowance. Consider your employee's venue, the date of event, as well as the number of participants attending. Always check whether your participants are qualified to acquire the budget.
3. Consider Overseas Travel Expenses
Some of your employees need to travel overseas for business purposes. Consider their expenses on domestic and overseas travel. This includes ticket transportation, hotel reservations, meal allowance, and other travel-related costs. Provide them with the right foreign currency for the trip and give a limitation on how much they are allowed to receive. In short, let them be aware of the business budget. Consider the number of working days needed to process these requests and include it in the policy.
4. Include Purchases of Equipment
When purchasing materials and equipment for the company, all purchases must undergo the proper process. They are required to have their respective request forms, purchase orders, and receipts. Provide a simple policy that states to turn over any equipment or materials used by any employee once he or she resigns or changes job. Your human resources department will be in charge of the redeployment of your equipment.
5. Establish a Clear, Consistent, and Fair Process
Avoid conflicts and delays in providing your budget by establishing a clear, consistent, and fair process when handling your company's expenses. Make sure there are supporting evidences presented every time a request for budget is asked; this includes receipts and invoices for refunds and requests. At the same time, assign people to handle the processing of the monetary budget. Supporting pieces of evidence are important for your sample policy.
6. Review and Update
Once you're done making your policy, proofread and check it from time to time and see if this was properly implemented by the company. Review for changes and update it. Make sure that this is approved and properly communicated to everyone in the group to avoid confusion and delays.