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Expense policy best practices

1. Make the policy simple to understand

The policy must be clear and easy to understand. Every company needs a policy in place to exemplify how business should be conducted responsibly. Having this policy in place will help to prove or explain any queries surrounding expense reimbursement. Make sure the expense policy isn’t overly complex or long-winded. Employees shouldn’t have to read a book before they plan a business trip; it should be dynamic, based off customer and revenue data, adapting to the current situation. It’s critical to make sure that it’s easy to understand, so that there’s no confusion and frustration.

2. Collect relevant information only

Some data is necessary; merchant, amount, date, category and payment method. After this, any additional data can be added, but there is little point in wasting time collecting and sorting through irrelevant data. Software is available that can extract the relevant data automatically, saving both time and money.

3. Tie spend to customer and revenue data

To effectively forecast, manage and justify expenditure, you should tie your expense policy to customer and revenue data. This will enable you to take a dynamic approach to expense management, ensuring that spend only occurs when a positive return is predicted. In doing so, you will be able to calculate the resultant return on investment and understand its impact on company profits.

4. Submitting and approving claims

If you want your employees to submit their expenses at a certain time or day, make this clear in the policy. Also be prepared to then approve them in a similar time frame. Make it easier for employees to submit their expenses, this will improve the time frame. Newer expense technologies automate this process and allow for instant reimbursement when spend is under a certain threshold. They also make instant receipt submission seamless through dedicated mobile apps that encourage expenses to be submitted straight after spending has occurred. Submission should be immediate on a line-by-line basis and it should not be a requirement to submit monthly reports.

5. Avoid exceptions

Ensure the same policy is upheld for all employees. If you need to manage exceptions, deal with simple exceptions: rules and alerts. Your expense management solution should provide an easy way to set up basic rules that can apply to categories, departments and spend thresholds. Whenever a certain rule is breached, the employee receives a notification that the expense isn’t compliant with the company policy.

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