Top 5 tips to creating an expenses policy that works for you

Top 5 tips to creating an expenses policy that works for you

By Lewis Hughes
22 February 2017

If you have employees that claim expenses, it’s vital that you have a supporting expenses policy in place. Fuzzy or unwritten rules, historical beliefs and poor controls can have a significant impact on your bottom line. 

With only a couple of months until the end of the financial year, now is a great time to start thinking about reviewing your expenses policy or creating a new one. 

Why do you need an expenses policy?

Having a clear and defined expenses policy in place provides your colleagues with a high level view of what is expected, and specifically guides them on what is and isn’t acceptable, helping them to understand exactly what they can claim for. 

Clearly defining what employees can claim for and how much they can spend can also save your organisation money and improve efficiency. For example you may choose to enforce the quickest or shortest mileage route between destinations which will save on employees over claiming mileage. 

Things to remember when creating your policy

There are a few important things you should definitely try to consider when you’re writing your policy. We’ve listed our top 5 tips:

  • Be fair with your expenses policy. Employees will respect a difference in the amount a director can claim for, but they will be less happy if the amount is significantly lower without due justification.               
  • Ditch the jargon.  Keep the policy basic and easy to understand. This will reduce ambiguity, so employees are clear on what the policy means.
  • Consider and acknowledge regional price differences. For example hotel prices and meal prices will differ in different locations and regions.
  • Ensure the policy is easy to find for employees. Use an intranet and/or have a hard copy in the staff room.
  • Keep it positive. Expenses should be pain free for your employees, the more positivity that surrounds the policy and everything associated with it, the easier it will be to implement.

The essentials to getting started

You need a starting point and that is deciding what your employees can claim for and how much they can spend. Keep in mind our top tips and start by mapping out this essential information. 

What can I claim for?

Firstly, employees need to know which expense items they can claim for. You need to develop a list of legitimate expense items that suit your business and the sector, industry and ethos of your company. It doesn’t have to be exhaustive list, you can always add further items later.

How much can I claim for?

Employees need to know how much they can spend. Start by looking at your existing staff expenses and where the typical spend falls. Travelling sales colleagues are a good example – what are the average costs of the various expenses related to travel? Do these costs match up to your organisation’s expectations? Consider using industry wide guides, such as for hotels or overnight accommodation, which will help you decide what is a reasonable spend allowance for each expense item.

Writing the policy

Once you have your list of expenses and the spending limits you’ll find that the policy almost writes itself. All that’s left is to get the policy written, share it with staff and make sure employees adhere to it. 

Keep your expenses policy up to date

For your expenses policy to remain effective and relevant to both the needs of your employees and organisation you need to keep it up to date. You can amend and change your policy at any time and in fact it’s worth scheduling an annual review of your policy to make sure it’s performing as it should. 

The key point to remember is that your expenses policy isn’t about limiting what employees can claim for, it’s about providing a fair policy for your employees to follow and having a policy that works for your organisation.

For more guidance download our free guide Creating an Expenses Policy.


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