We’re not suggesting that – given the chance – your employees would drain you dry with lunches at Michelin star restaurants. In fact, the opposite is more likely to be true; employees in the UK are ‘lending’ their employers £321 million per month through expenses. Still, to avoid either problem, you must have an expenses policy that provides clear guidelines to follow.
To build a foolproof expenses policy, you need to work out the most common and relevant scenarios where expenses may occur and outline the company expectations. Then, put this information together in a clear, readable document.
This document will state exactly what the purpose and scope of your policy includes; what your company will need to process expenses (receipts), and what timeline the employee can expect for approval and re-imbursement. Also, research associated prices and update these every three to five years.
You’ll undoubtedly have specific expenses depending on your industry and business size, but for a typical SME, you should have sections in your policy on:
For more detail, see here for a list of 32 things you’re not expensing that you should be.
It would be fantastic if all SME owners could afford to put their employees up in five-star hotels, but that’s not the reality. Still, your employees will be less than happy if they turn up to a client meeting looking dishevelled from a sleepless stay in a noisy, ten-person hostel room. The cheapest option is not always the best.
Let staff know what to expect by providing a reasonable range of costs (e.g. £80-£100 overnight hotel) for a particular expense. And, tell them if they can travel by business class or economy. If they’re expensing fuel, make sure you have an accurate pence-per-mile.
It’s useful to outline those sorts of expectations, but more generally, you’ll want to create a statement of integrity that gives guidance to employees when they’re trying to figure out what they can and can’t claim. This could read something like:
‘All expenses should be researched beforehand. It is the policy of this company that the option that provides the best value, and aligns with an employee’s needs, as well as the company’s environmental standards, is chosen.’
You have to pay attention to the details when it comes to expenses. This doesn’t mean creating a lengthy, bureaucratic document. You just need to ensure you’ve covered key moments of potential doubt. Remember to address travel insurance, air miles, carpooling, location (e.g. London will be more expensive) and so on, or anything that commonly comes up in your particular employees’ expense claims.
Finally, many companies make the mistake of burying their expenses policy in a file somewhere, making fraudulent claims all the more likely because employees don’t know where to look for the policy. Make sure your policy and expenses claim forms are accessible or pay the price of bad judgement.