Why it is Time to Upgrade Your Expense Policy
Do you remember the last time you reviewed your expense policy? If you are running a mid-sized business, then chances are there that the policy hasn’t been upgraded for many years, perhaps since the time you first wrote it.
Your policy might not have been revised, but the way your workers’ expense has. The way employees are spending money has been entirely transformed in the past few years, and for several business expenses, you are likely to see a digital receipt than a physical one.
Despite the shift, many expense policies are significantly outdated, thus generating an opportunity for confusion, annoying your workers, and adding to the workload of the finance department. An old expense policy makes it easy for them to submit outright or exaggerated fraudulent expense claims. More than 70% of employees in the U.S. admit to submitting a claim that stretched the truth at least once every year, and 15% over-claim every time.
Each time it happens your business loses money. The out-of-policy claims cost companies 260 U.S. dollars per staff, every year. Moreover, many resources are wasted as multiple expense claims are filled out inappropriately.
Expense Policy Makeover
Your expense policy is a critical tool in boosting the worker’s expense behavior. By educating your staff and setting out what can be and cannot be claimed, you can minimize incorrectly filled and fraudulent claims. So, the policy must be a daily updated tool, widely published for the business to check and read. And not a contract that a staff glances at once when they get their document, then never refer to once more.
Here we present a few key points to consider if you are planning to upgrade your business expense policy.
- Consult Your Major Stakeholders
The CFO and the finance department aren’t the only workers who need valuable input on the policy. You must speak to other leaders and managers who all are responsible for signing employee reimbursement requests, as they are significant allies in ensuring that staff reports their expenses on time. The policy is more likely to be followed when you get the individuals on board by generating a contract that works effectively for them.
- Review Expense Types Your Staff Claim
The expense management policy must cover each conceivable expense that your workers should claim for and include information that makes it clear what is and isn’t allowed. The common sections that you may require include dining and entertainment for customers, car rental, travel expenses, and more.
Consider questions like:
- What happens when a spouse accompanies the staff on a trip?
- What if employees extend their business trip over a weekend?
- Does the policy support employees who are working from home?
- Set Realistic Limits
Any open-ended policy is asking for a problem. Calculate how much travel, accommodation, food, and drink is likely to cost in such areas where the staff work from or travel to. Hence, you must set realistic limits based on such likely expenses. Also, you need to give a detailed explanation of payback periods so that your workers know when they will get the money.
- Content and Format
You cannot expect your staff to read and remember multiple pages of a word document. Hence, work with an external or internal designer to develop a user-friendly expense policy document that will impress your workers. Include the policy in your expense management solution dashboard, making it available for workers each time they expense something.
- Communicate About Policy
The policy will only be effective if workers know about it. Mailing this policy to your staff isn’t enough, it is unlikely that most of them will read it. Rather, introduce all the changes to the policy during meetings. Your workers will hear more from someone presenting, and they will get the opportunity to ask questions that may help make the policy even better.
- Focus on Automating Policy Enforcement
Online expense management platforms are specifically built to help organizations automate their expense methods. It enhances the submission and automatically enforces policies. Submitted expenses are examined against polices and immediately flagged out or rejected if it is non-compliant. Expense automation enables users and approvers to instantly see expenses that are out-of-policy and add an explanation or eradicate them from their expense list.
- Review and Update Daily
The document will inevitably require upgrading- changes in internal policy and staff behavior mean that you need to take a proactive approach towards the new policy. Book daily meetings to review expense procedures and documents. Such daily upgrades and changes offer you another opportunity to communicate the expense policy, thus ensuring it stays top of mind for workers.
Your expense policy is critical. Companies following traditional methods like Excel sheets for managing expenses experiences higher costs and longer payback periods than business leveraging a cloud-based expense management software.