Major hint for employers paying expenses: why you should set up a proper policy18 June, 2020 11:40 am
We live by rules. They’re the glue which holds every facet of society together. They govern everything we do – and your company’s expense management system should be no different.
Well, almost no different. The rules governing your expense management system are more appropriately called a policy, and no company or organisation which pays employee expenses should be without one.
Put simply, an expense policy is the framework of rules under which employees can claim expenses; the things they can – and perhaps more importantly – can’t claim for.
There are advantages for employer and employee alike. There’s no argument about what can and can’t be claimed when travelling on company business, so the hassle, non-productive stress, and wasted time involved in ‘discussing’ a dubious claim after the event is avoided.
What are the advantages?
But it runs deeper than that. For the employer a good policy will eliminate fraud, streamline the whole claim – approve – reimburse cycle, control spending, and allow more accurate financial planning. Those latter two can be significant, but are often overlooked.
When it comes to creating a policy, brevity is best. You’ve got to ask yourself is a long document with fall into the ‘TLDR’ bracket, standing for ‘too long, didn’t read’. If the document is too long, it’s more likely to be open to interpretation, and that’s going to negate its value. Far better to fall back on that other acronym – ‘KISS’. Keep it simple, stupid.
OK, how do I create a policy?
ExpenseOnDemand has taken the stress out of setting up a policy – we’ve done the gard work by creating a quick expense policy guide, which you can read here. (you’ll find the same thing runs through everything we do – aim for minimum effort from our clients to deliver maximum benefit).
Group the rules by category, such as mileage, accommodation, subsistence, and incidentals attached to those three.
Spend time setting out what won’t be covered – examples chosen at random might include membership of professional bodes (unless required by the company), fixed penalties such as speeding tickets or parking fines, credit card fees, and even any expense not covered by a receipt. Be clear on these when developing the policy, rather than bringing them in later.
Making sure it’s fair
Creation of a policy for an expense management system shouldn’t be draconian, and should seek to be fair to employer and employee alike. That’s why it’s advisable to discuss any proposed policy with someone qualified in employment law – as we said earlier, we live by rules, and a good employment lawyer will make sure you operate fairly and within them.
And finally, awareness of the policy ought to be incorporated into the induction process for any new employee, making the rules clear from the outset. Operating safely within a company’s financial policy is no less important than operating within the health and safety rules, and is deserving of the same status.
Picture: Tirachard Kumtanom | Dreamstime