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How to create an expenses reimbursement policy for contractors

Companies will usually have an expenses and travel reimbursement policy for employees who spend their own money on company-related activities or purchases. But what about contractors or consultants working for the company? What expenses and travel reimbursement policy should be in place for temporary or contracted staff?

In most cases, companies would expect that contractors and consultants follow the same expenses reimbursement policy to employees. Companies would need to make a decision as to whether contractors and consultants are reimbursed via the same expenses system as everyone else, or handled separately. For ease of approvals and for finance tracking, it would be beneficial to handle all travel expenses in the same way, on the same system. Therefore, for organisations with large volumes of external claimants, using an expenses system that enables non-employees to submit expenses with the same ease as permanent employees is beneficial.

Contractors and consultants should be expected to act with honesty and integrity when they follow any company’s expenses policy. Breaches of policy are serious – and could even be fraudulent – so it’s important that any contractors and consultants are made aware of travel and expenses policies before incurring any unexpected costs to the business.

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Company expenses and travel reimbursement policies for contractors

A company’s travel and expenses reimbursement policy for contractors should cover the same aspects as your employees’ expenses policy. One would expect that to include the following:

Booking travel

If required to travel to work away from home on a particular project or customer site, it’s beneficial to give consultants and contractors access to any system your business uses for its own employees, securing the most economical fares similar to those that would be found by its own staff and ensuring that any necessary approvals are gained before booking.

Where contractors are asked to source and book their own travel arrangements separately, a policy should detail clearly what expectations the business has on fares e.g. the most economical fare should be chosen.

Hotel or lodging

If required to work away from home on a project for a longer period of time, and therefore requiring accommodation, again using any existing system to secure the similar rates to employees and gaining pre-approval would be desirable.

But in cases where this is booked directly, again a policy should detail any limits on lodging costs, perhaps even specifying a limit to hotel star quality e.g. 3 star or below.

Connections via taxis, trains, buses

Where the contractor is travelling to a customer site or project and needs to use public transportation, a policy should be clear about expectations of what type of transportation is used. Perhaps the policy indicates that a contractor is expected to use only standard class train travel, or that they should use public transport rather than taxis where possible.

Travelling by own car

When a contractor is travelling to a project in their own vehicle, a travel and expenses policy will usually state that mileage will be reimbursed at a specified business mileage rate, e.g. IRS business mileage rate.

Renting a car

If the contractor needs to hire a car rather than take public transport, then a policy should be clear about what type of vehicle is expected to be hired. For example, hiring a “flashy” car that’s completely unnecessary and above average costs, is likely to be against policy.


In many countries, employees who travel are given a per diem allowance to cover meals. Contractors would likely be offered the same for the period of time that they are working on site.

Non-reimbursable expenses

Often expenses policies will detail the types of expenses that would not be reimbursed. These might include in-room movies, laundry if only travelling for a short period (e.g. less than 5 days), parking tickets and flight or room upgrades.

Capturing receipts

The benefit of using a modern expenses management tool is that receipts can be digitally captured and claims approved as and when they are incurred. What’s more, they leverage the latest OCR technologies to ensure accuracy of key data that’s required for compliance. If contractors are able to use the same expenses management system as employees, it reduces the amount of time spent on admin for them, project managers and finance teams.

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