You claimed for what? No, really, did you? Wow…

Claiming expenses is part of everyday business life, and anyone working with a reputable company is no doubt working within a clearly-defined expense management system – but what should you claim for, and how do you know what’s appropriate and what’s not…? This Solo Expenses guide to expense etiquette explains all…

The trouble with money is that the way you use it speaks volumes about you before you’ve even said ‘hello’. It sends out subliminal messages to the people you’re dealing with; messages that can be so subtle you don’t know you’re sending them, and your client isn’t aware they’ve picked them up and reacted accordingly.

Take the example of the supplier who intentionally drove an older car. His reasoning? He thought clients would recognise that he was being frugal, and that his products would therefore be reasonably priced and represent good value.

This thought process was fatally flawed. Low price doesn’t necessarily represent good value. What’s more, it overlooked that he would have been better advised to market his product on its quality rather than its price. He failed to realise that his old car suggested that he wasn’t doing too well in business, and that potential clients therefore judged his product to be inferior – the polar opposite of what it actually was. Result? Fewer sales.

Using money to send the right signals in support of creating and maintaining a successful business is a skill that can take years to hone, but expense management is a good place to start, for employer and employee alike. Good expense management will help sort the right from the wrong and the good from the bad, and make sure everyone is happy with the company’s expenses structure. More importantly, it will send the right signals to clients.

From the employer’s point of view
Children and pets need to have behaviour boundaries defined by parents or owners, who ought to be in charge. In a workplace scenario, it’s your job, as business owner, to define the boundaries for your employees, and there’s no better place to start than with business expense management. You’ll be creating the rules for Test 1. Why is that important? Look at it this way. What if everyone in your sales team were to claim for a fictitious journey of 80 or 90 miles every month? At 45p a mile, the figure recommended by HMRC, that’s almost £500 per employee per year being syphoned from the business.

The most transparent way to ensure only legitimate expenses are claimed is with an effective system – and the most efficient way to that these days is with business expense software in the form of an expense management app like Solo Expenses.

Using such an app means online expense management can be within your grasp in minutes. Because it’s easy to use and fair, it streamlines the expense management system in your company, saving on fraudulent expense claims through its inbuilt features. And because it’s easy to use, employees will take to it, and enjoy recording expenses at the time of the spend, and claiming online whenever they have the time. For larger companies, it’s even possible to integrate company credit cards, so there’s no need to mix employee and company money.

So, what can be claimed for? Apply these three test questions. If you can answer Yes, No, and Yes to them, it’s probably OK to claim the expense. If not; stop and think if you really should make the claim. Remember, claiming an expense you didn’t incur is theft. It’s a sobering thought.

Apply these three tests
Test 1. Is it allowed by company policy?

This is the easiest one. If the company has a good expenses policy, everyone will know what they’re allowed to claim, and what they’re not. Well-defined and well-understood rules work well; failure to have them is likely to result in inflated claims.  (As an employer, you’ll be interested in the raft of legitimate expenses in the HMRC list here.)

Test 2. Will I regret it tomorrow?
If your valued client suggests a double brandy after the meal you’ve just about to pay for on your company credit card, it might be a good idea to refrain from ordering one yourself. Imagine standing at the boss’s desk and answering the question: “Why did you need a double brandy too?” If the expense was incurred for the business, the expense is allowable; buying yourself a double brandy might not be seen as important to the business… Think of it this way: If it’s not necessary for business, and you wouldn’t buy it for yourself, why should the company buy it for you?

Test 3. Is it appropriate?
Taking a valued client for a pub lunch round the corner if he’s spending the day with you is probably fine; taking him to the opera in the evening or Wimbledon the following day is probably less so. Adding the cost of a few days holiday in New York to your expenses after you’ve been on a business trip would no doubt be frowned upon.