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10 tips for creating an expenses policy, and some mistakes to avoid

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This article was placed by Concur.

Here are 10 tips for creating or updating your expenses policy – and some mistakes to avoid.

1. Keep it simple

A policy should explain what employees can and can’t claim on expenses – make it easy for everyone to read and understand. Keep the rules simple, and people will be more likely to remember them and follow them. 

2. Make it flat

Research shows that managers are more likely to submit higher “out-of-policy” claims but are only half as likely to have an expense claim rejected. If you set the precedent that it’s okay for some people (e.g. managers) not to comply with the rules, others might think the rules don’t apply to them, either. 

What is best practice? Don’t let your managers get away with claiming more than their direct reports. HMRC doesn’t let managers claim more, either.

3. Make it fair and flexible 

Employees need to be able to claim reasonable business expenses. For example, business travellers shouldn’t have to spend hours searching for a hotel that’s under the limit or feel put-out because they can’t have a cup of tea or a sandwich while off site. The bottom line is: no-one should have to be out of pocket if they spend sensibly and a little flexibility goes a long way, because happy employees are more productive, which leads to long-term business success. 

4. Keep it updated and make it easy to find

Make sure people know where to find your expenses policy – and that they actually read it. Also keep in mind that as the world changes, legislation is updated, and technology advances, it’s a good idea to review and update your policy regularly.

5. Emphasise the positives

The rules are the rules, but there’s usually a good reason for them. Make sure employees know why the rules exist, and they will be more likely to follow them as well as understand why you are enforcing them.

6. Get buy-in 

Get agreement about the policy with both managers and employees up-front. Having discussions with a wide range of stakeholders lets you identify grey areas and decide, together, whether revisions are fair or not.

7. Give managers tools to enforce the rules

Let the policy be the bad guy; not the manager. Consider giving your managers training on how to apply the policy. Maybe consider a solution that automatically flags out-of-policy claims, but also allows users to comment if there’s a valid business reason (so the rejections don’t feel personal). 

8. Use sensible, localised rules

It costs more to stay at a hotel in London than in Bradford – let your expenses policy reflect this so that employees can stay in reasonable comfort in all locations. Also, don’t assume that one-size-fits-all. You may need to create local versions that take cultural variations, differing costs and legislation into account.

9. Pay promptly

Remember, doing expenses can be stressful and even emotional, especially if people aren’t reimbursed quickly – and if employees have paid for them out of their own pocket. It’s best practice to give people an easy way to claim and then reimburse them promptly.

10. Don’t forget the VAT 

Businesses can reclaim VAT on most employee expenses – but only if there are properly documented receipts. Make sure your receipts are captured (HMRC accepts digital receipts – so a photographed copy is enough).

Need some more help creating your own expenses policy? Download the quick guide to ‘How to create an expenses policy’.

Matt Lewis is the EMEA compliance director at Concur. 

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