Creating an Expense Policy that Helps

Defining an expense policy requires you to balance the fine line between cutting down unnecessary costs and setting a policy that is reasonable for employees and managers. Creating a sloppy policy will end you up with increased travel costs; on the other hand, a stringent policy will result in impractical limitations, unhappy travelers and increased risk of expense fraud. Getting the right balance becomes easy when you follow the following aspects:

Consider different costs of living

The cost of living can differ from city to city. Even the IRS allows different per diem rates based on the location. The daily expense rates of cities like New York and San Francisco are more than three times that of standard rates. Considering the same, your expense policy should account for the cost of living variations across the world.

Be specific

Ambiguities in T & E policy can result in huge pain for both employees and administrators, ending up in confusion and continuous clarification requests. Sit with business travelers and the management team to figure out what should be allowed as a reimbursed claim and create a list everybody can understand.

Don’t limit too much

Corporate policies that are too restrictive can make employees go beyond restrictions by adding unnecessary expenses in other ways. Therefore, enforcing sensible expense policies keeps employees productive and happy.

Educating is important

Employees will follow the expense policy if they understand it completely. You should ensure that all employees acknowledge the policy. At the same time the policies should be updated regarding any changes made to the annual policy. Corporate policies should be reviewed at least once a year.

All are equal

Corporate policies should be enforced fairly and consistently across the board, irrespective of the seniority or ranking. Senior management and executives are required to follow the same rules without any discrepancies.

An expense management solution that features the above capabilities can help with policy enforcement and reduce conflicts between employees and management.